Official Washington Takes Aim At Simplifying HVCRE Rule

November 13, 2017

Official Washington Takes Aim At Simplifying HVCRE Rule

November 13, 2017 | Erika Morphy | GlobeSt.com

Washington DC is trying to give banks and their commercial real estate borrowers some relief from the High Volatility Commercial Real Estate Loans, or HVCRE, rule.

This rule, promulgated by Basel III, went into effect in 2016. It established a new risk-weight category requiring banks to hold more capital — 150% or one and half times as much — for such loans.

The result was a pull back on construction lending among other types of bank finance.

Now official Washington is taking a two-tiered approach to providing some relief and much-needed clarity as well: Last week the House of Representatives passed the Clarifying Commercial Real Estate Loans Act and on the regulatory level the Federal Reserve, the Federal Deposit of Insurance Corp. and the Office of the Comptroller of the Currency have proposed a rule to simplify HVCRE. Comments for that are due on Dec. 26, 2017.

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