Posted:
7/15/08
Important Facts You Should Know...
about the Loan Application Process
Overall Project Review –
Information Required Prior to Approval
- Profit and loss detail as well as balance
sheets for the 3 most recently completed fiscal years and current
year to date (for completed months).
- A completed Loan Application.
- A description of the project.
Document Collection – Information
Required After Approval and Before Closing
- Complete legal description of the property
to be used to secure the loan.
- Signed acceptance of the terms of the loan
commitment.
- Certificate of Good Standing.
- Signed Supplemental Mortgagor Commitment
whereby the church agrees
not to borrow additional funds without contacting the Cornerstone
Fund.
- A current (less than 6-months old) “as
completed” appraisal for construction projects or a complete
appraisal for non-construction loans. The Fund will engage an
MAI appraiser of your choice. Appraisals may be waived for loans
of $250,000 or less if the property value can be readily determined
by other means.
- For all loans in excess of $250,000, a Phase
I Environmental Study is required showing that there are no environmental
problems associated
with the property. In the event that a Phase I indicates a problem
or potential problem a Phase II Environmental Study and potentially
a Phase III Environmental Remediation may be required before the loan
can close. The Fund will engage all environmental studies.
- A current ALTA Spotted Plat of Survey (may
have a different name in some states) is required.
- A copy of the construction contract is required
for all construction loans.
- Insurance is required as follows:
- Liability Insurance with coverage in the amount
of $1,000,000 per occurrence and $2,000,000
in aggregate.
- Property Insurance equal to or greater than
the loan balance. The policy must carry an Agreed-Amount endorsement
and a have a Replacement Cost settlement provision. The
covered causes of loss shall be Special Form. The Fund
should be named as mortgagee and as additional
insured.
- All general contractors must furnish evidence
of general liability, (with minimum coverage as shown
above), worker’s compensation, automobile and excess
liability insurance naming the church and the FUND
as additional insured.
- If the church is acting as the General Contractor,
they must obtain a certificate of liability insurance
from every sub-contractor naming the church
and the Baptist General Conference Cornerstone Fund as
additional insured.
- A "Builders Risk" policy during
the period of construction. This policy should be for the full
amount of the construction less excavation, landscaping, parking
and paving, and outdoor fixtures and must name the Fund as mortgagee
and as additional insured.
Loan Closing and Funding
- Closing is scheduled by the church (at least
5 days notice must be given to the Fund).
- Church executes mortgage and note (prepared
by the Fund).
- Title Insurance Company records mortgage.
- Commencement of construction escrow phase
(if applicable).
- In cases where the church is purchasing or building its first
building, it must apply for a property tax exemption and furnish evidence to the Fund
proof of granted exemption.
- All construction loans are funded through a 3rd party escrow. The
purpose of the construction escrow is to make sure that lien waivers are collected
and that no encumbrances to title develop during construction phase.
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