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High Volatility Commercial Real Estate – Regulators Clarify the Ground Rules

The OCC, FDIC and Federal Reserve have issued clarification of questions surrounding the implementation of the new HVCRE rules requiring greater capital reserves on certain acquisition, development and construction loans.

By Bill Tryon | Updated on April 09, 2015

High Volatility Commercial Real Estate (HVCRE) rules that were collectively issued by the OCC, FDIC and Federal Reserve Board require regulated lenders to assign a risk weighting of 150% when determining reserve requirements for certain acquisition, development and construction loans (known as “high-volatility commercial real estate exposures”). The reserve requirements apply throughout the life of the loan, even after construction has been completed.

According to the rule, increased reserve requirements do not apply to:

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