Moving Construction Lending Beyond Manual Workflows

Executive Summary: Modernizing the Construction Loan Lifecycle

For financial institutions, construction lending is a vital tool for community reinvestment and revenue growth. However, manual administration often creates “stress elements” like cost overruns and compliance gaps. Modernization solves these issues by creating a single source of truth for budgets, documents, inspections, and disbursements.

Key Benefits of Digital Construction Loan Management:

• National Scalability: How to expand from a regional footprint to a national lending platform using standardized digital workflows.
• Statutory Compliance: How automated lien waiver management and state-specific tracking mitigate legal risk.
• Risk Mitigation: Using real-time data to identify project challenges early, reducing build times and preventing non-performing loans.

Frequently Asked Questions (FAQ)

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Transcript

Rod:

Welcome everyone to today’s vital discussion on construction lending. Construction finance has been one of my main worries over the past 7, 8, 9 years. It is something that is complex and became even more complex with the passage of the trade rules, which added so much risk to this transaction. But here we have a success story, the partnership with Luminate Bank and Land Gorilla. So we’re here to talk to Sean Ferris, CEO of Land Gorilla, as well as Corey Beard, SVP of the construction division of Luminate Bank. Gentlemen, welcome to ABA and welcome to all of our viewers. Perhaps I’ll start asking from the perspective of the bank. What led you to go into construction lending? And more explicitly, how did the Land Gorilla platform impact your operations with construction lending?

Cory:

Construction lending is vital to a bank today, in my opinion. You know, it gives it a lot of different opportunities to drive customer relations, revenue streams for the bank. And if you’re running a mortgage division to, to offer products to the retail loan officers out here that need additional products to go out here and be successful in the industry today. And so I had an opportunity to join Illuminate Bank in February of this year. One of our focuses was taking a regional lending area of 4 states and expanding the construction opportunities into 46 states, which is what we did. And starting in March of 2025.

Rod:

And if I may stop you there, part of the success story here is that you went from 4 states to 46 states. Correct. Relying on the LandGorilla platform.

Cory:

Yeah, technology is key for us to scale. We had to have the right technology. And so Sean and I were able to connect and the LandGorilla platform is used nationwide by many IMBs and banks in the industry. And so the technology advances that he had in place you know, just really, one, helped standardize our processes, and that was key. So to grow and be in 46 different states, you have to have good processes and workflows in place. And then it also helps us maintain our risk and our compliance, which is, which is, you know, for the bank, you have to be compliant and you got to always watch your risk. It even painted a bigger picture for us with the platform that Landgrill offers and the reporting databases. You know, it just gave me a good purview of the day-in, day-out operations from a reporting standpoint to help manage the risk, help manage the compliance.

Cory:

We were able to then be very consistent for our retail loan officers in launching that and confidently step forward from 4 states to 46 states using the technology.

Rod:

Sean, I would love to hear what you can say about that. You are certainly the author and creator of quite a system.

Sean:

Yeah, well, we, we’ve been at this for, for quite some time. LandGuru is going on its 16th year right now. And helping, you know, people like Corey and Luminate Bank, you know, scale the way they wanted to is really important. And we help them physically, financially, you know, legally get through all the important milestones that they need to manage their platform successfully, you know, one of which includes the statutory compliance. So the resources and the information available at your fingertips of dispersers notice or what lien waivers to use in which state or what the timing that’s involved in all those or notice of commencements, notice of completions, all of that helps., you know, scale into that many states without having to make any mistakes.

Rod:

What are the stress elements you would say that, that affect banks the most?

Sean:

I would say the stress elements really haven’t changed too much over time. You know, you still have your traditional cost overruns and supply chain issues. You know, since we’ve seen the, the financial meltdown and all the regulation that came after that, and then we saw, you know, lower interest rate risks and COVID, and we haven’t had that nice long run of everything being stable. I’d say kind of the biggest change, you know, has been around technology. How do we switch from, you know, paper-based systems and siloed systems to, you know, a platform where one talks to the other, you know, where you have it all in one place, your inspections, your title, your statutory compliance, your forms, communication. And I think creating that efficiency, you know, helps people, you know, do more, become more efficient and overall have better outcomes at the end of the day.

Rod:

But let me just add some— I’ve had banks attempt to do this manually, and I don’t think they’ve had high success.

Cory:

To truly step into the environment that you’re gonna be the best construction lender, you gotta modernize. You have to have the technology out. And the technology then drives your risk, your compliance. It gives you, uh, notices of projects that are behind time. It helps you stay in front of the project versus being reactionary.

Rod:

Yeah. Construction lending, again, it’s difficult because of the process itself. Second, it’s high touch. You’re dealing with the construction elements, you’re dealing with the finance elements, you’re dealing with the releases of the monies and the funds. Has the digitization and has Land Gorilla sort of given you a competitive edge, you would say?

Cory:

You know, the Land Gorilla software definitely has moved us forward in time. You know, for borrowers, it’s not easy to build a house. They got to pick out the everything involved. It’s a custom home that we’re typically working on, right? Customers today want visibility about their project. The builders want to understand how easy it is to, to move forward. So transparency and real-time access is probably one of the best things that Land Gorillas platform has provided to us. It’s real-time access using their application called OneSite. Our customers are able to view it from their phone digitally and see balances and draw requests and inspections and all of the different things that are moving through the construction administration process.

Cory:

And then by having that technology available, again, it always boils back to risk and compliance for us. Builders are happy and the borrowers are happy and have a great experience. That’s that concierge level service that we require for our construction team. And working together with Landorus technology, we’re able to provide that. The technology’s probably taken us from a 3 to 5 day turnaround to 24 to 48 hours and being able to advance draws for builders. So that, that creates a great experience, high touch, experience, very transparent, very visual for the clients.

Rod:

He said something very important about the risk to the bank and the process within the bank, the efficiency of the bank. But I think there’s another side here, right? The consumer, right? So there’s an ethics element here. Yes. Proper disclosure and a consumer that can see the transaction and is able to shop perhaps in this transaction. What I think you have paid a lot of attention to that.

Sean:

Yeah, you know, in the software world we call that the user experience. Yeah, right. And, you know, having transparency I think is extremely important and pretty fundamental. It’s an area that we started out with. And, you know, construction lending is very complicated. You know, by the time you start construction all the way through the end, you have 100 different versions of the budget alone. You know, how do you keep everybody on the same page, sharing and communicating information to make sure everybody’s working from one single source of truth? And that’s built into the user experience. So there’s a lot that the platform offers to provide that level of transparency.

Sean:

So I can log in, you know, a borrower can log in at 1:00 in the morning and look at their construction budget and they could even click one button and request a draw. So that information is available to them all the time. They don’t have to wait till tomorrow or after the weekend, have somebody email them back information or get on a phone call with them. It’s just readily available. And I think that level of transparency is extremely important, not just in construction lending, but in all banking and, you know, playing the side of the consumer and being a consumer, working with a lot of banks, you know, it’s, it’s so valuable and it creates a level of trust between the financial institution and the individual receiving that. And I think at the end of the day, you know, that’s what we’re all trying to strive for, is get these projects across the finish line and make sure that the consumer, the builder, everybody involved is having a great customer experience.

Rod:

And in that sense, I think you’ve heard from your consumers that it works. It was clear and it moved along nicely.

Cory:

Yeah, it does. You know, the process by leveraging the technology to our benefit, we’re seeing decreased build times. You know, in a bank’s biggest risk right now is a project with extended build times and cost overruns. You know, those have a tendency to not perform well. And so from a technology standpoint and scaling the way that we did, utilizing Land Gorilla’s technology to help us grow that way, and implement good workflow and procedures, we’re recognizing challenges upfront. And with addressing those upfront now from the risk management side, we’re able to continue to fund the project appropriately, which then reduces the build times.

Cory:

And the projects are completing on time or even sooner.

Rod:

But we used to get a lot of questions about construction lending, how to do it, when do I do it, when do the disclosures go out, what are the calculations. I must tell you, we now have none. And so the systems you’re putting out there are working, and certainly our members have said that as well. Can you perhaps point us to hidden costs that you saw in implementing and in operating?

Cory:

I think one of the biggest hidden costs that you’ll see is just inefficiencies, where now you have multiple touches by your draw administrators, multiple phone calls., you’re always trying to fix a challenge, right? Versus being, like I mentioned before, being in front of the process, being very transparent, being very visible with your borrowers and your builders by leveraging the technology that’s available. I mean, it just makes sense. And so if you really want to focus on building a, a good leverage construction department that is out there to serve the borrowers and the builders, you got to modernize and you got to get away from the old legacy systems, in my opinion, because they are the biggest drag and expense.

Rod :

Land Gorilla can tell us what is the technology that went into the creation of the current system and then where are we going? If you would just take a look, I’m not even going to say 10 years down the road, 6 months down the road, what’s, what’s happening and how we incorporate it.

Sean:

Land Gorilla is a platform to manage, you know, all aspects of construction loan management, whether it’s inspection technology, whether it’s title technology, whether it’s just forms and documents, you know, all of it comes together to make one plays to become more efficient, right? But as we look out to the future, you can’t have the conversation without mentioning AI. And AI is changing everything that we do. And if Land Gorilla brought efficiency, AI will do that 10x. But one of the areas where I’m probably most excited about is the way hardware starts to come into play with software and the combination of AI, especially around inspection technology. You think about all the cool technology that goes into an iPhone or an Android device, and being able to leverage that for, you know, homeowners doing their own inspections, the property, and have reliance and trust built into that customer experience. So a lot of fun things that are, that are happening around the hardware software area as well as, you know, what we’re seeing with AI, which is just truly, truly amazing right now. It’s really functioning as a sidekick to help somebody find any mistakes or make them more efficient or help answer questions. But in the future, we see that really going a lot further.

Sean:

And you think about the, the tasks and the jobs that go into administering a construction loan and how that’s just going to make that a lot more.

Sean:

More efficient for the bank.

Rod:

So if I could ask you, in, um, in the bank’s experience, what is the biggest lesson in expanding, in going from 4 states to 46 states and the success that you’ve had in partnering with Langmorello.

Cory:

If you’re going to be a bank that’s in this space, modernizing is not optional any longer. You have to modernize. You have to use technology to be able to scale and to grow. Use the tools out there that are readily available for you, help you be the very, very best and manage your risk management, scale to where you want to grow to. And then provide the best programs out there for your borrowers and the builders. So it’s, it’s just not an optional.

Rod:

Yeah. I will underline the point that you’ve gone to almost, almost 50 states. I mean, 46 states. I mean, this takes a huge technology and a huge operation because this finance varies from state to state, right? There are differences, local differences and state differences.

Sean:

That’s something that Lendgorilla specializes in. Absolutely. And a lot of this doesn’t happen by, by itself. And we engage a lot of attorneys to do a lot of research, especially when it comes to the statutory compliance. Compliance and what makes Utah different than Colorado and Florida and Texas. You know, each one of them have their own little, little nuances. So there’s a huge, you know, power of people, you know, back there doing the research, doing the analysis. And what’s really interesting when you get in kind of the statutory compliance side of it is the laws and the statutes and, you know, how things are understood are not always from the perspective of construction lender.

Sean:

It’s like they’re not mentioned in that experience and it really references the owner or the contractor or the borrower a lot of these things. So the people coming together and, you know, our teams that we put together and lender advocates and people that are part of our advisory boards that review this information, they have to come up with, well, what’s the best practice going to be in this situation? You know, do we send this form out every time? Do we really need to have it notarized? That was a big one for years, was about lien waivers in Texas needing to be notarized. The statute said that,. But when you actually looked at the case law level, that signatures were just fine, especially e-signatures that documented it, right? So even though the statute said, yes, this document, this lien waiver needs to be notarized, and notarizing something is a pain in the butt, our customers had access to the case law that explained, hey, you didn’t need to have this notarized. It held up the way, and that saved days. That helped draws advance faster. So I think the people part of it, especially when we talk about the statutory compliance, is extremely important because these laws change year to year. You know, every year everything’s updated and sometimes they change in March, sometimes they change in June.

Sean:

So most of them change at the end of the year. And all that information is extremely important because it’s not just about the platform or about a specific process you build into the platform. It’s about the people that have to interpret it and use it every day. You know, they’re the ones out there, you know, fighting the good fight and working with borrowers and working with homebuilders. So it’s for the entire ecosystem, you know, help to help the bank and help them understand what do I need to do in Florida when somebody requests a draw? What is the fine if I don’t do this? What are the implications if I do it this way instead of this way? And I think that’s such an important part of the recipe that, that makes Land Gorilla what it is. And, you know, hopefully this translates to make you guys really, really successful.

Rod:

So I’m excited for that. Again, the noise in terms of questions and regulatory issues, that noise that would come from our members has stopped. And I think we know that it’s largely due to a lot of this good work that you do. And thank you for bringing up that this does have a human side, right?

Rod:

That there are human beings working here figuring this out. Yeah. And that’s important. A lot of banks tell me that, yes, we do mortgage lending, we’re happy to do mortgage lending, but then they shy away from construction lending. Give your story maybe of how the bank said, we will engage, and not only will we engage, but we’re going to expand.

Cory:

Sure. I think banks want to serve their customers to the, you know, very best capabilities they can with products and offerings that they have. And especially today, affordable housing and financing for construction is is such a key factor. Our story was unique. I spent over 20 years in this business at a different organization. I was able to bring some of that institutional knowledge here to Luminate in February. And so when I met with the executive team and the owners of Luminate, you know, there was lots of discussions on how do we want to do this. I already have a construction department in place, just operating very well and was doing very good in 4 states.

Cory:

And, and so they saw the vision of wanting to go national.

Cory:

They want to support the mortgage division nationally and all the lenders that we have on a national basis to be able to use these programs. So the plan I put in place was that we were going to launch in 60 days at a sales rally. That means policies, procedures, workflows, all the different products, all the agency products that we have, the interim construction loans. That process can be a little bit overwhelming. You know, if you’re from a bank thinking about, okay, what’s the investment that this is going to take to do that? And really it boils down to a few things. Number one, you just got to have the right people in the right seats. You have to have people that know and understand construction lending, the risk involved with it. You have to have the right administrators, uh, to be able to do that.

Cory:

You have to have the programs that are supported by the bank in all the different states that you feel comfortable in lending in. And then you have to have a vision, number one, right? And so what does that vision look like? For us, it was fast and furious. We wanted to implement be ready to launch for our retail at a sales rally in April. And to do that, technology was key. You have to have the right technology. And what it did is it sped us up by a couple of years. Most banks focus on building out a construction division a little at a time. They’ll start with 1 or 2 or 3 people.

Cory:

They’ll use some type of legacy system to manage their construction administration, and then it can grow as much as it would allow it to grow with our team painting that picture, making the investment, and then saying, here’s where we want to be by the end of 2026 or 2025, my apologies. And then by the end of 2026 and 2027, where do we want to be and what kind of construction lender do we want to be? All those pieces had to come together. And if you don’t have the right people in the right seats, the right vision and the support at the bank and the right technology, I don’t know that you could put all that together on the timeline that we we made that happen. That was our vision. And we partnered with, with Lendrilla to.

Sean:

Help us get to that, to that point. You know, Corey is a really big success story. You know, I wish construction lending was right for every bank and every mortgage banker out there. It’s, it’s, it’s not, you know, and you have to have, you know, the passion, you know, and I listening to Corey speak here today is, is that passion, you know, exemplified, right? If you don’t have that level of passion and you don’t have the support of the board and the bank and everybody else around you, construction lending may not be right for your bank, right? But if you’re willing to put into the time and all the ships are aligning and, you know, the board’s supportive and, you know, you’re serving your community and you get somebody like Corey that’s passionate, you know, that’s a great recipe for success. So, you know, really excited that what, what Luminate Bank put together and, you.

Rod:

Know, really proud to, to be helping them. We’re very proud to have banks that enter the community and serve the needs. That’s why we’re here and that’s what we do, right? So, Sean, you see the industry on a much broader perspective than any one bank sitting in any one state. What opportunities do you see in the next 2 to 3, maybe 5 years?

Sean:

What’s, what, what’s coming? I think that’s a, that’s a great question, you know, and when we think about, you know, large financial institutions, regional banks, community banks, I think there’s a huge opportunity for banks to get out there and fill the void that’s been missing since the Great Recession. You know, providing more ownership opportunities, providing more inventory for that community, you know, forming those partnerships with homebuilders or companies like, like LandGuru is extremely important and it provides such value back to the community. It’s such a win-win experience for the bank, for the consumers, for the homebuilder. A construction loan is, is not like a traditional mortgage. You know, there’s so much economic activity that happens with a construction loan, you know, whether it’s the fees that you’re paying to the local government or the lumber or the designer or the contractor or the drywall subcontractor. It creates all of this, this amazing economic activity. And, you know, sometimes we ignore all that or we can’t really see that. We really just focus on the construction lending opportunity.

Sean:

But the economic activity is such a huge, huge opportunity and a huge impact to those communities. So, you know, go out there, you know, do your research, find somebody that’s passionate like, like Corey to help drive it. And you’re going to see amazing things happen.

Rod:

And I’ve often heard you say that they are not servicers, they are partners.

Cory:

Can you describe that relationship to me? With Lenderilla. We rely on them heavily, um, and, and they, they involve us in their workflows and their development and some of the beta testing that they do. So they ask for feedback too from us as a lender, you know, and that’s really, really important. And so we do partner with them, and I’ll, and I’ll share a story with you in decision-making that it was for us at the bank level. You know, traditionally, if you think about most banks in construction lending, you know, they want, uh, 20% down payment. They want a high FICO score customer, right, that, that they feel comfortable in lending to. And so by using the right technology, because that’s going to help us define, like I shared, what type of construction lender you want to be. And so, you know, for us, scaling from 4 states to 46 states was a big move.

Cory:

Our focus was affordable housing though. What it did is it was giving us the opportunity to grow our construction lending opportunities By moving out of a traditional 12-month construction loan at an 80% loan-to-value with a high FICO score borrower, which is perfectly fine, right? Risk management. To moving into an FHA or a VA or conventional one-time close construction program. And where that’s so super important is the fact that those programs require less down payment and provide a higher LTV for a borrower that doesn’t have 20% down. To get into a home, right? And so home affordability is huge in today’s market, whether you’re building a site-built home or you’re doing a factory-built home. That gave us the confidence to move into those programs and scale to a national lender by one, managing our risk, understanding what kind of lender we’re going to be, the right people in the right seats and the right technology. And so that moves our mission forward in supporting that home affordability for the borrowers because Again, it’s expensive to build a house, as Sean shared, and there’s a lot of moving parts that come along with that. And being very transparent and giving a comfort level to the client to understand that, hey, we’re here with you.

Cory:

We’re partnering all the way through this with you from the day you originate your loan to the day that we start doing construction administration with you, to the day that your house is completely finished and you get to move in with your new keys. That was a big decision for us to help us go into higher LTVs and lower FICO score. Requirements.

Rod:

So that’s amazing. You’re actually doing something about to solve the problem rather than engaging in gimmicks. That’s an amazing thing, especially when we’re here in Washington. Sean and Cory, I want to thank you both for spending this time with us, for informing our membership. It’ll be very valuable. We are very proud to represent banks like yours because I think that you bring solutions to our communities, and I think that’s That’s what we do as bankers. And I want to thank you for your partnership with ABA. I think you’re going to make us better.

Rod:

You have resolved our problems, many of the problems that we’ve had on this type of financing.

Sean]:

So we appreciate your partnership.

Cory:

Thank you for having me.

Sean:

Today. Thanks for having us.