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. Effective May 24, 2018, a provision of the Economic Growth, Regulatory Relief, and Consumer Protection Act S. 2155 effectively amended the HVCRE rule to clarify it better align HVCRE capital treatment with factors affecting credit risk. We urge federal banking regulators to finalize proposed rules implementing that legislation to provide the clarity and relief Congress intended. 

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