High Volatility Commercial Real Estate (HVCRE) Rule

MBA's 2019 Commercial/Multifamily Policy Priorities

Changes to the High Volatility Commercial Real Estate (HVCRE) Rule provide clarity and relief for bank ADC lending.

Overview: In July 2013, U.S. banking regulators issued the Basel III Regulatory Capital and Market Risk Rules. That issuance included a High Volatility Commercial Real Estate (HVCRE) rule, under which certain acquisition, development, and construction (ADC) loans are subject to a 150 percent risk weight. The rule became effective on January 1, 2015. 

A provision of the Economic Growth, Regulatory Relief, and Consumer Protection Act, S. 2155, amended the HVCRE rule to clarify it better align HVCRE capital treatment with factors affecting credit risk, effective May 24, 2018. The banking agencies issued a final HVCRE risk-based capital rule, which became effective on April 1, 2020, that appropriately conformed to the Act and was consistent with MBA's comments on the proposed regulation.

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