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CREFC Analysis: HVCRE ADC Final Rule
12/5/2019 · by CRE Finance Council · HVCRE/HVADC · Press Releases and Alerts
On November 19, 2019, the Federal Reserve, FDIC, and OCC (the Agencies) released the long-awaited revised final High Volatility Commercial Real Estate (HVCRE) rule (Final Rule) that aligns with the bank regulatory reform bill (S. 2155) passed in 2018. HVCRE, which has been in effect since 2015, continues to apply a 150%-risk weight for bank capital purposes to certain acquisition, development, and construction loans. As discussed further below, the Final Rule largely conformed to CREFC’s expectations, and the regulators specifically adopted many positions advocated by CREFC in its comment letter. The Final Rule is effective April 1, 2020, though banks have flexibility to apply the statutory rules to current and legacy loans and can implement the regulation earlier.