CFSI Loan Management Celebrates 10 Years of Helping Lenders Complete Construction Projects
Industry leader in construction risk management is experiencing 40% annual growth rate with $15 billion projects currently in process
April 18, 2023 – GREENWOOD VILLAGE, Colorado – CFSI Loan Management, an end-to-end construction risk mitigation company, this month is celebrating its 10-year anniversary of helping lenders manage and complete construction projects. Since its founding, the company has completed more than 150,000 project inspections, 50,000 funding draws and 25,000 project feasibility reviews. Currently, more than $15 billion in construction projects are being managed through CFSI’s construction lending platform.
At most lending institutions, construction loans comprise less than 10% of originations. However, the challenges, complexities and cash management issues involved with construction loans can present significant risks since most institutions lack the bandwidth or the knowledge to prudently manage these transactions. And staffing up a construction lending team often results in layoffs when the market turns.
In addition, performing due diligence on contractors and managing them through the entire construction process is not necessarily a strong point for many banks, credit unions and independent mortgage bankers. Controlling disbursements is another area that presents challenges with monitoring whether work has been completed.
While there are lots of risks in construction lending, the rewards can be worth mitigating those risks. Using its proprietary technology, CFSI enables lenders to effectively manage all the moving parts of construction projects through completion while effectively controlling disbursements and maintaining oversight of the contractor and finished work. The company also helps lenders avoid fraud by ensuring that the correct property is being improved.
The idea behind CFSI came to founder and CEO Brian Mingham in 2010, while he was still in the mortgage banking business. Having seen the problems lenders were having with construction loans, he said “I saw the value of a company which provides a platform that enables lenders to easily manage the completion of new or unfinished construction projects.”
Mingham explained that he was drawn to the construction lending platform because that business was a hedge against the default business he was running at the time. “I was betting that the market would improve and defaults would subside,” he explained.
After hiring a seasoned construction management team, Mingham launched the construction lending platform in April 2013. Since then, the company has emerged as the industry leader in construction risk management, achieving an annual growth rate of roughly 40%.
Mingham noted that while market volatility can negatively impact many businesses, so far, the current turmoil in the banking sector is not impeding longer-term construction projects. One change that has happened over the past decade, however, is the institutionalization of private money – turning some mega-investment management firms into key players in the market. “It’s these folks who appreciate our platform the most,” Mingham said.
CFSI’s business is a mix of residential, commercial and apartment construction, including industrial. CFSI also helps lenders manage residential renovation projects, as many consumers are now permanently working from home and need to upgrade their homes. Renovation financing might require the bank to control disbursements, which CFSI can help with.
According to Mingham, the diversity of property types CFSI is able to manage has led to the company’s consistent growth. Even though the number of construction loans in process is down because of the economy, overall transaction volume continues to rise because clients are utilizing more of CFSI’s services on each transaction.
“We’ve become the largest national service provider in the construction lending space, and our business is growing,” Mingham added. “As B2C applications for high-net-worth borrowers increase, consumers overseeing their own renovations is potentially on the horizon. Given that the nation is still short of housing supply by 5 million units, we are well-positioned for further growth.”
About CFSI Loan Management
Founded in 2013, CFSI Loan Management is an end-to-end construction risk mitigation company that helps lenders complete single-family, multifamily and commercial construction projects. It utilizes proprietary technology to enable lenders to protect the performance and integrity of their construction lending portfolios. The company’s seasoned staff provides risk management solutions that make it possible to complete a project. Customers’ asset management teams are supported by its deep construction experience that improves the speed of delivery and gets projects completed. Read more about CFSI at www.thinkcfsi.com.