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Underwriting

Upon the acceptance of a proposed term sheet or proposal letter, the Lender will complete its due diligence and underwriting process. The Lender should obtain an agreement by the Borrower to pay all costs and expenses of the Lender in conjunction with the underwriting process even if closing of the proposed transaction never occurs. A provision to obligate the Borrower to pay such costs and expenses can be included in the term sheet or proposal letter or by separate letter agreement with the Borrower.

Once due diligence and the underwriting process is complete, the Lender will determine the final structure of the proposed credit facility which, in some cases, may vary in some respects from the term sheet or proposal letter. The Lender will obtain internal credit approval of the final structure and anyone preparing documentation to evidence the credit facility must be careful to document the credit facility in accordance with the final approved structure. For outside counsel preparing such documentation, a copy of the final credit approval memo signed-off on by all required parties should be obtained from the Lender.

Upon internal credit approval of the final structure, the Lender will issue a commitment letter based on the approved structure. In some cases, timing is such that the Lender will proceed directly to documentation of the credit facility.

The underwriting process involves the review of all due diligence materials relating to the Borrower, the sponsor and/or any guarantors and the real property or other collateral securing the credit facility. The final credit facility structure will be based on that review.

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