HVCRE Loans: What They Are and What You Should Know

In order to shield lenders from overly risky commercial real estate loans, in 2013 the Office of the Comptroller of the Currency, the Federal Reserve, and the Federal Deposit Insurance Corporation (the “Agencies”) instituted a regulatory capital rule requiring heightened capital reserves for “high volatility commercial real estate” (HVCRE) loans. This HVCRE classification has been subject to regulatory scrutiny and revision since its inception. Due to the severity of the consequence associated with HVCRE loans, which often include increased interest rates, it is important for both borrowers and lenders to follow the continuing development of the HVCRE regulatory framework.

This article first appeared on the New Jersey Law Journal web site. Click here to read the full article.