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Executive Conversations is a HousingWire web series that profiles powerful people in the financial industry, highlighting the operations and the people that make this sector tick. In the latest installment, we sit down with two executives from Land Gorilla — Shannon Faries, director of risk management, and Sean Faries, CEO — to talk about the growing popularity of construction-to-permanent loans.
Q. Why are more lenders interested in construction-to-permanent (CTP) loans in the current market environment?
A. The driving force behind the growth of Single Close Construction to Perm loans over the past few years has been the secondary mortgage market and the severe lack of housing inventory. Currently Fannie Mae, Freddie Mac, FHA, VA and USDA all offer a one-time close construction-to-perm loan product. This growth is leading to construction and renovation lending becoming more of a mainstream loan product and no longer the specialty loan product it was once thought of.
With interest rates slowly rising, refinance volume is falling as a percent of the total. This loss of loan volume will impact lenders across the board, and astute Lenders will be looking to add loan products that are not rate driven — this will include construction-to-perm and renovation loans. 
Pictured – Shannon Faries (Left), Sean Faries (Right)
Q. What is the potential for single-close CTP loans?
A. With the involvement of the secondary mortgage market, what was once considered to be a niche loan product has the potential to be a mainstream loan product that lenders of all types and sizes have the opportunity to offer the consumer.
Additionally, the single-close CTP product is more consumer-friendly than a two-time close product — the consumer only has to qualify once, pay closing costs once, etc. That’s a much more convenient borrower experience!
Q. How does Land Gorilla help lenders to mitigate their construction risk and increase their pipeline efficiency?
A. Construction lending has lacked consistency, controls, and best practices. Land Gorilla’s goal is to make construction lending safe for all stakeholders. The Construction Loan Manager (CLM) by Land Gorilla is a software solution (SAAS) that allows lenders to manage all aspects of the construction loan process. From pre-closing due diligence to post-closing administration and inspection services, the Construction Loan Manager has you covered. Used by many of the nation’s top lenders, the CLM allows lenders of all sizes to gain efficiency, scale and manage the inherent risk associated with construction lending.
Q. Where does Land Gorilla expect to see the most growth in 2017?
A. Land Gorilla is forecasting strong growth in our construction-related technology and service solutions. We are continuing to see strong growth in the construction and finance sectors coupled with the pent-up national housing shortage. In 2016 we helped consult and build many construction and renovation loan programs. Many of these programs are in their infancy or set to launch in 2017. These lenders are now well positioned to take advantage of the market conditions while growing their purchase money transactions and recruiting goals. We are confident that these loan products will become mainstream and accessible by all lenders in the next few years and look forward to providing the solutions that will make them successful.
