Entity Reviews: An Entity Review is the review of an entity borrower’s formation documents with the purpose of determining which sub-entities or individuals have the authority to bind that entity borrower to the terms, conditions, and obligations of the loan and to determine the proper signature block for the loan. Ensuring that the signature block is correct and that the correct individuals are signing for the borrower or guarantor is critical to the exercise of any future lender remedies such as acceleration or foreclosure.
Why is an Entity Review important? Courts have ruled that anytime a lender is lending to an entity, it has an obligation to inquire into the actual authority of the signers of that entity. If it does not, it proceeds at its own peril. If the lender has not done an entity review and it turns out the signer does not have actual authority to sign the loan documents or if the signer has exceeded their authority, the then Lender’s sole recourse is against that individual signer. The entity itself would not be bound by the terms or obligations of the loan.
Eagle Eye Review will help reduce the legal and business risk associated with lending to entity borrowers.
Title Reviews: A Title Review consists of verifying that: the title commitment is valid (i.e., effective as of a date no more than 90 days before the date of the loan); title is in the name of the borrower (or the seller, in a purchase loan transaction); there are no unusual or atypical exceptions to coverage; the nature and status of any liens of record on the collateral property; whether the legal description of the collateral property appears on its face to be complete; whether the legal description has been copied accurately to the deed of trust/mortgage and any other documents that requires it; and a recommendation as to the exceptions to be removed from title and the endorsements the lender should add to title coverage.
When conducting a title review, we treat the lender as an owner of the property. We assume that the lender may end up owning the property after a foreclosure and base our recommendations of which exceptions to remove and which endorsements to obtain on the protections it will need in that scenario. Eagle Eye Review also has the business savvy to understand that listing every single endorsement to protect the lender from every conceivable situation is not feasible as every endorsement costs the lender money. Eagle Eye Review uses its experience and business savvy to only recommend that key endorsements needed based on a review of the specific title report.