Option Glossary

For your benefit, the following environmental management tools are defined.

Customer Questionnaire

Borrowers hate to fill out forms. We have, therefore, developed a one-page questionnaire designed to protect the lender.

Banker Worksheet

When the lender’s loan policy does not call for an environmental professional to investigate the property, it is still critical that the site be visited. The banker worksheet is used to amplify the information provided by the customer and to gain a greater level of detail concerning the collateral property. Yeoman Group has developed a user-friendly form for the loan officer’s use. The banker worksheet also compiles useful information for the person who may conduct a subsequent ASTM Transaction Screen or Phase I ESA.

Government Environmental Database Search

This governmental database search is conducted by qualified personnel. The databases searched for environmental information concerning a site are those detailed by the American Society for Testing and Materials (ASTM) for a Transaction Screen. Some database companies providing this service include Environmental Data Resources, Inc., FirstSearch Corporation, as well as local resources.

Yeoman Group has found that these “off-the-shelf” database reports, by nature, are often unreliable. For this reason, we verify the information, supplement the information, crosscheck against our in-house databases and present conclusions and recommendations as to what the information means to the loan.

Environmental Lender Package

The Environmental Lender Package is a new product that consists of a government environmental database search as well as history of the property packaged. If the property is located in an urban area, Yeoman Group will look at historic fire insurance maps and historic city directories. If the property is in a rural area or the previous is not available, Yeoman Group will review historical aerial photographs. After review, a summary of findings and opinions will be included in the report.

ASTM (American Society for Testing & Materials) Transaction Screen

The ASTM Transaction Screen Report provides a measure of flexibility to its users, while supporting the innocent landowner defense to CERCLA liability. (It is not currently settled as to whether this tool will satisfy all requirements for the “innocent landowner defense”.) The transaction screen costs significantly less than a Phase I site assessment and may be performed by an environmental consultant or by any other person (if properly trained). The ASTM Transaction Screen Process consists of a questionnaire containing approximately two-dozen questions and more than fifty pages of explanatory material. The questionnaire is to be completed in conjunction with a site visit and uses responses from the property owner or operator as well as the inspector’s own observations. A government environmental records search and some basic historical research (generally fire insurance maps) are also part of the ASTM Transaction Screen standard.

Phase I Environmental Site Assessment (ESA)

The Phase I Environmental Site Assessment (ESA) consists of six major parts: a government records review, site reconnaissance, interviews with key personnel, detailed historic research, title search (or the equivalent) and the preparation of a narrative report including the professional opinion about recognized environmental conditions. The Phase I report does not include invasive testing.

Phase I Environmental Site Assessment Update

A Phase I ESA (or an ASTM Transaction Screen) performed within 180 days prior to the anticipated closing date may generally be accepted without modification or update. A Phase I ESA or Transaction Screen more than 180 days old may be merely updated, as appropriate, thereby saving substantial costs to the customer. Update of a Phase I ESA requires, at a minimum, an updated database search, a new site reconnaissance, new interviews with local officials, and new interviews with the owner and the operator.

Phase II Environmental Site Assessment

The Phase II Site Assessment is an investigation designed to confirm or deny the presence of contamination, identified as an item requiring further inquiry in the Phase I report or the Transaction Screen. Unlike the Phase I, the Phase II investigation includes invasive sampling of soils and/or groundwater.

Baseline Environmental Assessment – Michigan

A Baseline Environmental Assessment (BEA) is an evaluation of environmental conditions which exist at a facility located in Michigan at the time of purchase, occupancy or foreclosure that reasonably defines the existing conditions and circumstance at the facility, so that in the event of a subsequent release there is a means of distinguishing a new release from existing contamination. (A “facility” is defined as an area, place or property where the residential cleanup criteria have been exceeded.)

Phase III

This is a commonly used term to describe the actual cleanup or remediation of a site until such time as analytical testing indicates that no further action is required under appropriate regulations.

Environmental Compliance Audit

In those situations where hazardous chemicals are handled in significant quantities on-site, a hazardous materials handling audit is advised. The environmental compliance audit is advised in conjunction with periodic reevaluation of properties on which hazardous material is being handled.

Final Evaluation

The above mentioned environmental information must be judiciously combined with and weighed in conjunction with other information such as:

The possible legal instruments that may protect the Lender against environmental risk (indemnity, escrowed monies, insurance, etc.).

  • The solvency of the borrower.
  • The loan to value ratio.
  • The market value of the property.

While the environmental risk cannot ever be exactly calculated in dollars, a close approximation can be reached to assist in the decision as to whether to proceed with the loan or to walk away.