Federal bank regulatory agencies issue final rule on treatment of high volatility commercial real estate

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Federal bank regulatory agencies issue final rule on treatment of high volatility commercial real estate

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The following press release was published by the Board of Governors of the Federal Reserve System on Nov. 19, 2019. It is reproduced in full below.

Three federal bank regulatory agencies finalized a rule to modify the treatment of high volatility commercial real estate (HVCRE) exposures as required by the Economic Growth, Regulatory Relief, and Consumer Protection Act.

The final rule clarifies certain terms contained in the HVCRE exposure definition, generally consistent with their usage in the Call Report instructions. The final rule also clarifies the treatment of credit facilities that finance one- to four-family residential properties and the development of land, which is substantially similar to the proposal issued in July.

Additionally, in response to the comments, the final rule provides banking organizations with the option to maintain their current capital treatment for acquisition, development, or construction loans originated between Jan. 1, 2015, and the effective date of the final rule, April 1, 2020.

Source: Board of Governors of the Federal Reserve System

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