Federal Banking Bill Includes HVCRE Revisions
May 29, 2018
On May 24, President Donald Trump signed the Economic Growth, Regulatory Relief, and Consumer Protection Act into law. This reform legislation includes NAIOP-supported provisions that ensure there is adequate capital availability for commercial construction financing.
The bill requires banking regulators to revise elements of the current High Volatility Commercial Real Estate (HVCRE) designation that unfairly targeted commercial construction lending, including:
- Allowing commercial borrowers to use the appreciated value of contributed land, rather than the original cost as under the prior rule.
- Limiting the application of the HVCRE classification by clarifying that loans made to acquire existing property with rental income would not be subject to higher capital requirements.
- Allowing banks to remove the HVCRE designation prior to the end of the loan.
Revision of the HVCRE designation was an important element of NAIOP's 2018 agenda, and enactment of this important legislation is a major victory for NAIOP's members. We commend the bipartisan coalition of lawmakers who worked to deliver this measure.