Loan Origination Activities · 27% of the SAFE exammedium
Correct answer: A lender-appointed inspector must verify that the construction work for that stage has been completed
Before each draw (disbursement), a third-party inspector verifies that the construction work matches the draw request. This protects the lender — funds are only released when the collateral value has actually increased through completed work. Without inspection, a borrower or contractor could draw funds before work is done, leaving the lender under-secured. Draw inspections are a standard risk management tool in construction lending.
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