Regulators Discuss Potential HVCRE, Appraisal Changes

Regulatory staff from the OCC, FDIC and the Federal Reserve Board discussed a number of regulatory issues pertaining to commercial real estate during the American Bankers Association’s Real Estate Lending Conference last week in Orlando, Fla.

Regulators indicated that revisions to the high-volatility CRE capital rules — which currently assign a 150 percent risk weighting to acquisition, development and construction loans, subject to certain criteria — may be proposed this summer. The potential changes could include a revised, simpler definition of what constitutes HVCRE. The proposal would likely be included in a notice of proposed rulemaking, along with other capital simplification efforts for public comment, they said.

The regulators also addressed efforts to provide relief with respect to appraisal requirements. Per the final Economic Growth and Regulatory Paperwork Reduction Act report to Congress, the regulators indicated that they are developing a proposal to increase the threshold for required appraisals on CRE loans from $250,000 to $400,000. Similarly, the agencies indicated intent to issue a statement regarding the availability of both temporary waivers and temporary practice permits to address appraiser shortages in rural areas. These proposals would be open to public comment. For more information, contact ABA’s Sharon Whitaker.

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