With FDIC vote, banking agencies jointly issue final rule on HVCRE

A final rule modifying the treatment of high volatility commercial real estate (HVCRE) exposures as required by last year’s regulatory relief legislation was issued Tuesday by the three federal banking regulators following a vote by the federal insurer of bank deposits.

The Federal Reserve, Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corp. (FDIC) jointly issued the rule following a final vote by the latter agency’s board Tuesday.

According to the Fed, the final rule clarifies certain terms contained in the HVCRE exposure definition, generally consistent with the terms’ usage in the call report instructions. The final rule also clarifies the treatment of credit facilities that finance one- to four-family residential properties and the development of land, which is substantially similar to the proposal issued in July, the Fed said.

The Fed also noted that the final rule provides banking organizations with the option to maintain their current capital treatment for acquisition, development, or construction loans originated between Jan. 1, 2015, and the effective date of the final rule, April 1, 2020.

The changes to the rule were mandated by the 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA, S.2155).

Federal bank regulatory agencies issue final rule on treatment of high volatility commercial real estate