Week ending November 10, 2017
H.R.2148 – Clarifying Commercial Real Estate Loans
HR 2148 amends the Federal Deposit Insurance Act to clarify capital requirements for certain acquisition, development, or construction loans.
The appropriate Federal banking agencies may only subject a depository institution to higher capital standards with respect to a high volatility commercial real estate (HVCRE) exposure (as defined under section 324.2 of title 12, Code of Federal Regulations, as in effect on the day before the date of the enactment of this section) if such exposure is an HVCRE ADC loan.
HVCRE ADC loan means a credit facility secured by land or improved real property that, prior to being reclassified by the depository institution as a Non-HVCRE ADC loan finances or has financed the acquisition, development, or construction of real property; has the purpose of providing financing to acquire, develop, or improve such real property into income-producing real property; and is dependent upon future income or sales proceeds from, or refinancing of, such real property for the repayment of such credit facility.
HVCRE ASC does not include a credit facility financing does not include a credit facility financing the acquisition, development, or construction of properties that are one- to four-family residential properties; real property that would qualify as an investment in community development; or agricultural land;
Nor does it include commercial real property projects in which the loan-to-value ratio is less than or equal to the applicable maximum supervisory loan-to-value ratio as determined by the appropriate Federal banking agency; and the borrower has contributed capital of at least 15 percent of the real property’s appraised, ‘as completed’ value to the project in the form of cash; unencumbered readily marketable assets; paid development expenses out-of-pocket; or contributed real property or improvements; and the borrower contributed the minimum amount of capital described under clause (ii) before the depository institution advances funds under the credit facility, and such minimum amount of capital contributed by the borrower is contractually required to remain in the project until the credit facility has been reclassified by the depository institution as a Non-HVCRE ADC loan.
(Full text of H.R. 2148 congress.gov)
Sponsor: Rep. Pittenger, Robert [R-NC-9] (Introduced 04/26/2017)
Status: Passed House /
VOTES and FLOOR ACTION
On Passage: On motion to suspend the rules and pass the bill, as amended Agreed to by voice vote
Motion to recommit:
Text of the motion:
COST AND IMPACT
Cost to the taxpayers: Data not available
Pay-as-you-go requirements: Data not available
Regulatory and Other Impact: Data not available
Dynamic Scoring: Data not available
Tax Complexity: Not applicable to this bill.
Earmark Certification: Data not available
Duplication of programs: Data not available
Direct Rule-Making: Data not available
Advisory Committee Statement: Data not available
Budget Authority: Data not available
Constitutional Authority: Assumed.
More Bill Information:
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