Looking for input on how other financial organizations, specifically community banks, handle construction loan inspections for draw requests. Do you allow the loan officer to complete the inspection or do you have a person independent of the loan process internally or an external company complete the inspection? Any input would be helpful as we are currently reviewing our procedures.
Thanks for your time.

Do you allow the loan officer...….

We did in the 90's at one bank I worked at until we ended up writing off millions when they were trying to cover for some of their builders that were in trouble. One even got barred from banking for life for lying on inspection reports. Might as well just give them the ability to directly write the draw checks too.

Then there was the time that I did a follow-up inspection on a loan officer and the builder had built the dang house on the wrong lot. As far as the loan officer was concerned - the house was 56% completed according to his reports.

When I was strictly the Loan Ops manager and we had about 4 projects at any one time, I did them.

As we've increased the number of projects we ended up using a couple of different vendors. One has a online platform and the other is strictly e-mail/phone.

We never allowed the Loan Officers to complete the inspections as we didn't want to end up in the situation rlcarey described.

The appraiser that prepared the appraisal report does our inspections.