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Construction Lending Practices

Generally, there are four sectors of greatest importance in effective construction loan decision-making: appropriate analysis, underwriting, and judgments concerning the 1) customer, 2) the project, and 3) the market; and, subsequently, 4) effective loan administration.

From time to time Mr. Levy serves as a consultant on construction loan issues and problems.

As a Managing Director of Chemical and Chase Manhattan Banks, predecessors to JP Morgan Chase Bank, he has been a leader and manager of commercial bank lending and support units that have made construction and real estate loans in every region of the United States. He also has extensive experience in restructuring and/or working out construction loans that have experienced various difficulties.

As a lender and senior officer Mr. Levy served as a senior credit committee member where he approved or denied and made other key decisions about billions of dollars of proposed or existing construction loans.

Before his career as a real estate and construction lender, Mr. Levy was a senior vice president of Merritt & Harris, Inc., then the premier and largest construction loan consulting firm in the United States where he was employed for ten years. The firm provided a wide range of services related to construction lending such as reviews of plans and specifications, cost reviews, monthly inspections and reports of construction-in-place, market value appraisals, and other real estate related consulting services. While at this firm Mr. Levy appraised a high volume of proposed and existing income-producing properties throughout the United States and also performed market and feasibility studies.

Mr. Levy is the author of Construction Lending: Issues and Documents; Risks and Benefits. Many copies of this writing have been distributed to lenders in a wide range of lending institutions and it provides a description of the construction lending process and guidelines for appropriate underwriting and administration of construction loans. An excerpt from this writing appears in Michael T. Madison and Robert M. Zinman, Modern Real Estate Financing: A Transactional Approach published by Little, Brown & Co. He is also the author of Appraising for the Construction Lender published by the American Society of Appraisers.

He has served variously as Adjunct Professor and Clinical Associate Professor at the NYU Schack Institute of Real Estate at New York University where he has taught real estate credit and risk management, real estate finance, and negotiation and dispute resolution.

Mr. Levy has also led construction loan seminars whose objective was to train construction lenders and has designed executive education seminars and made presentations on construction lending at Chemical Bank, the Real Estate Board of New York and at Fitch Ratings and also led construction lending educational sessions in MBA courses at a number of graduate business schools including, Yale University School of Management, the Wharton School at the University of Pennsylvania, Columbia University Business School, Amos Tuck Business School at Dartmouth College, and Colgate Darden Business School at the University of Virginia.