As a part of our audit, I am reviewing the policy over construction lending. Throughout the sections on both commercial custom 1-4 family and residential 1-4 family, we talk about reviewing the adequacy of the contractor in terms of reputation, ability to complete the project, etc.

If there is a creditworthy owner/borrower that comes in with a less-than-competent contractor, how would that be expressed to the applicant?

There are many ways, one of may be: "The proposed contractor does not meet the bank's standards for participation in this project."

Thanks Savvy. Very well worded! I think I may chat with the CLO in the exit mtg and see what box he's thinking of checking on the adverse action notice.