The Dodd Frank Rollback: Easing the Rules for Commercial Real Estate (HVCRE) Lending
On August 2, 2018 Thompson Coburn hosted a program on “The Dodd Frank Rollback: Easing the Rules for Commercial Real Estate (HVCRE) Lending.
Regulatory Capital Interim Final Rule
This presentation provides a general overview of the Interim Final Rule on Regulatory Capital adopted by the FDIC on July 9, 2013, highlighting some aspects of ...
High Volatility Commercial Real Estate (HVCRE) Exposures4. 1. If a borrower contributes additional capital to an existing HVCRE loan to meet the ... exempted from the definition of HVCRE. Unless such loans meet the criteria for exemption provided in the definition of HVCRE, they must be treated as HVCRE loans. 3. If a borrower owns real estate ...
High Volatility Commercial Real Estate (HVCRE) Examiner Job Aid This job aid was created by the CSBS State Examiner Review Team to help state examiners understand important aspects of a new designation of commercial real estate loans, known as high-volatility commercial real estate (HVCRE).
Loans for permanent financing would not be considered HVCRE loans. These are loans where the underlying project is complete and no future advances will be made.
If the qualifying capital/assets are not timely contributed to the project, then the loan will be classified as an HVCRE loan for the life of the loan even if qualifying capital/assets are contributed to the project after proceeds have been advanced to the borrower.
Therefore, ADC loans made before the effective date of the regulatory capital rule are not automatically exempted from the definition of HVCRE. Unless such loans meet the criteria for exemption provided in the definition of HVCRE, they must be treated as HVCRE loans. 3.
HVCRE loans are subject to a 150% risk weight requirement – higher than the 100% requirement. ABA Position ABA strongly supports the legislation created in Section 214 of S.2155 which provided much-needed clarification of the risk-based capital treatment of High Volatility Commercial Real Estate (HVCRE) loans.
Well, to begin with, all loans made for the purpose of acquiring, developing or causing construction to be completed on real property from a commercial bank lender (as defined above) are considered to be HVCRE loans, unless the loan falls into an exception provided by the Regulations.
The term, "HVCRE loans" is short for a High Volatility Commercial Real Estate loans. The FDIC defines a HVCRE loan as follows: "With respect to commercial real estate... as a credit facility that, prior to conversion to permanent financing, finances or has financed the acquisition, development, or construction (ADC) of real property."
Historically, banks were required to set aside 8 percent of the value of those loans. Under the HVCRE rule, the required amount of capital increased to 12 percent or a 150 percent risk weighting.
These particular commercial real estate loans were designated by the regulators as "High Volatility Commercial Real Estate Loans," or "HVCRE." What is an HVCRE Loan?