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Two Regulators, Two Utterly Different Takes on CRE Lending

WASHINGTON, DC--The Federal Reserve SLO survey shows that underwriting for CRE lending tightened in the fourth quarter. The OCC thinks differently.

By Erika Morphy | erikamorphy | Updated on February 07, 2017

The Federal Reserve Bank in Washington DC The Federal Reserve Bank in Washington DC

WASHINGTON, DC–The Federal Reserve and the US Office of the Comptroller of the Currency are both US regulatory authorities and both provide oversight for banks, including those that make commercial real estate loans. That said, they might as well be operating in separate solar systems given their utterly divergent views on underwriting for CRE loans.

The Federal Reserve just released its January 2017 Senior Loan Officer Opinion Survey on Bank Lending Practices, which found that underwriting standards tightened on commercial real estate loans in the fourth quarter — a trend that had been manifesting for some time, according to this regular survey of domestic and foreign banks. At the same time, banks also reported weaker demand for construction and land development loans and loans secured by multifamily residential properties.

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