Pre-closing due diligence for construction-loan financing is a crucial step in ascertaining the financial viability of any project. JMK thoroughly conducts a wide array of due diligence investigations to successfully identify risk and establish solutions to proper management of risk during fund control.

· Site Inspection,
· Preliminary review of project budget and description & all drawings/plans,
· Meet borrowers' project team including contractors, architects and engineers,
· Investigate background & capability of project team, insurance, bonds, workman's compensation, liability, construction schedule, contractor reputation, license status, litigation history,
· Verification of contractor & borrower experience, also track record of Contractor with regards to financial capability, including ability to carry project between disbursements,
· Review of documents such as permits, entitlements, construction schedule, title report, legal description, land survey,
· Engineering & architectural review of contract specification and construction details
· Review of easement, encroachments, land use restrictions,
· Verification of construction budget,
· Review of environmental conditions,
· Review of contract terms and conditions, T&M contracts, exclusions, payment procedures,

JMK verifies the progress of construction in accordance to the billing schedule. We also protect the borrowers and lenders from any potential liability including mechanics lien, construction or payment default, and even litigation.

a. Loan funds will be disbursed monthly or semi-monthly, by joint check issued to the borrower AND the contractor for contract work and monthly to borrower alone for non-contract costs.

b. If disbursement request packages are properly submitted and accurate in content, JMK will review and process the disbursement request, inspect the project site and submit our recommendation for payment to the lender.

c. Disbursement requests should be submitted to JMK via a Next-Day Delivery Service and must include the following:

· Disbursement reconciliation spreadsheet,
· Invoice from the General Contractor for the amount requested, net of retention,
· A mechanic's lien waiver from the General Contractor, Sub Contractor and Material Supplier,
· The signature of the borrower authorizing the requested disbursement of loan funds,
· Conditions of disbursement including retention, change orders, T&M charges, etc.

d. Funds for contractor's general conditions, profit, overhead, and similar indirect costs may be disbursed on a scheduled monthly rate.

e. Disbursement of funds for the cost of materials, supplies, equipment, fixtures, etc. will be approved only after permanent installation. Exceptions to this policy can be made for materials on site, with receipt for payment, stored in secured storage, fully insured and available for inspection.

f. No payments are to be made directly by borrower for any improvements on the lenders' collateral property unless such payment is an approved budgeted cost and the source of (or reimbursement of) such payment is drawn by the Lender in the form of a check.

g. Budget line items defined as "contingency" are not to be disbursed directly to the borrower or contractor but are to be used for increasing, decreasing or creating other, adequately identified budget line items only. The percentage of contingency funds that may be used for satisfying loan imbalance or shortages in other line items may not exceed the overall percentage upon completion of the project.

h. Copy of contractor's preliminary 20-day notices.

i. No construction-related costs will be disbursed without physical inspection by JMK.

j. Construction loans will continue to be monitored and the site physically inspected on a frequency of not less than every 30 days. This monthly monitoring is important to determine site activity or lack of activity and the effect of project progress on the interest reserve account.