Loan Evaluation

The majority of JEMS’ loan requests are generated through their existing network in the real estate community. Attorneys, engineers, vendors and suppliers all provide referrals to JEMS. In addition helping to establish a client base, these referral based clients have the advantage of being known to the referring agents and having established reputations as reliable and respected members of the business community. Obviously, JEMS has a higher comfort level in providing financing to such customers as they have many common trade refereces that JEMS can easily review. In fact in many instances other businesses such as lumber yards will participate in loans with JEMS or will provide additional second mortgage financing demonstrating their confidence in the performance of the borrower and the project.

Once JEMS receives a loan request there are a series of evaluation procedures that are initiated.

Market Analysis
JEMS will analyze the specific market in which the loan will exist. This analysis will take into consideration comparable sales and current property listings. JEMS will inspect properties in both categories. In addition, JEMS requires independent appraisals in any community they are not intimately familiar with.
Site Review
JEMS will conduct a site inspection to ensure its suitability for the proposed construction and to identify and site specific characteristics that might impact marketing or construction budgets. Such characteristics might include wetlands, ledge, severe grade changes or undesirable surroundings. JEMS has dealt with all of these circumstances on a repeated basis and has an understanding of the affect they may have on a development. It is important these contingencies are reflected in marketing and construction proformas.
Plan and Specification Review
JEMS requires all loan applicants to submit copies of plans and specifications for the homes they intend to build. JEMS reviews these plans and specifications to ensure they are consistent with the market in which they will be built as well as with the proposed end value of the property. The relationship between product and price is obviously integral to the success of a project. JEMS is able to draw on its current and past market experience to confirm that proposed projects adequately address this relationship.
Construction Budget Review
All loan applicants submit a detailed construction budget identifying by line item the cost of each component of the home they intend to build. JEMS reviews these budgets in detail to ensure the costs are reasonable based on the proposed plans, specifications and site characteristics. This construction budget will form the framework for loan disbursements as development progresses. If the format of the construction budget does not properly conform to the manner in which construction will proceed in the field, it becomes difficult to maintain the loan to value ratio. Through their knowledge of the construction progress, JEMS is able to ensure budgets are properly established.
Confirm All Necessary Permits and Applications
JEMS required a valid Building Permit before any construction disbursements will be made. In the event a borrower must purchase land prior to obtaining a Building Permit, JEMS reviews all applicable permits and approvals including septic designs and approved site plans. In the absence of a Building Permit, JEMS will often times require a letter from an attorney or engineer certifying that the subject land is buildable. JEMS has expertise in the permitting and approval process on the local, state and federal levels. JEMS is very careful that all necessary approvals are in place before closing a loan. Once a loan is in place, JEMS closely monitors construction. Borrowers submit disbursement requests as work is completed. JEMS performs on site inspections to confirm the work complete in the field is consistent with the disbursement request. JEMS is diligent in these inspections as it is crucial that the loan to value ratio is adequately maintained. If JEMS feels there are any inconsistencies between work complete and disbursement requests they resolve them directly with the borrower.

91 Main Street, Suite 103 • Marlborough, MA 01752 • 508-229-7827 • rlo@keystonedev.net