The federal banking agencies’ June proposal to clarify the regulatory capital treatment of land development loans for single-family homes does not conform with the intent of the S. 2155 regulatory reform law, the American Bankers Association said in a comment letter yesterday. ABA said the proposal—which addressed questions related to an earlier-issued proposal on high-volatility commercial real estate acquisition, development or construction, or HVCRE ADC, loans—would discourage ADC lending.
The association instead urged regulators to determine that land loans not meeting the three-prong HVCRE ADC test in S. 2155 be excluded from the definition; to exclude horizontal construction, such as pipe-laying, as part of the treatment for one-to-four-family homes; and, in keeping with the goals of S. 2155, to set the risk weight for HVCRE ADC lending at the general 100% level. Read the letter. For more information, contact ABA’s Sharon Whitaker.
