Lender Due Diligence Requirements Not Easing Yet

EDR Insight was featured in a recent article in Commercial Property Executive by Jenny Redlin, Principal at Partner Engineering & Science. Despite an overall easing in commercial and industrial lending standards, among domestic banks, Redlin observes that due diligence standards for managing environmental and engineering risks in commercial real estate lending are not quite following suit. There is also a trend with more community banks beginning to adopt their first-ever policies on managing environmental/physical risks of lending on commercial and multifamily properties, as well as other institutions revising their policies to account for new risks, like vapor.

As noted in the article, Redlin’s observations dovetail with EDR Insight’s 1Q13 Quarterly Benchmarking Survey of Financial Institutions. The latest results reflect a continued trend of high risk aversion and more stringent environmental due diligence standards, even as new loan originations are on the rise. Organizations like Fannie Mae and Freddie Mac have ramped up scrutiny of mortgages and have placed more focus on engineering and environmental risk assessments.

Continue reading what Jenny has to say about the due diligence requirements.