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FDIC Seeks Comment On Proposed Amendments To Real Estate Lending Standards – Finance and Banking

By on June 22, 2021 0



United States:

FDIC Seeks Comment On Proposed Amendments To Real Estate Lending Standards


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The FDIC is seeking comment on a proposed
amendment to align the agency’s Guidelines for Real Estate
Lending Policies (“Real Estate Lending Standards”) with
the October 2020 revised community bank
leverage ratio (“CBLR”) rule. The CBLR does not require
that electing institutions calculate tier 2 capital or total
capital.

The proposed amendment would allow qualifying community banking
organizations and other insured financial institutions to calculate
the ratio of loans that exceed the supervisory loan-to-value limits
(“LTV Limits”) “using tier 1 capital plus the
appropriate allowance for credit losses in the denominator.”
Without increasing the regulatory burden for such institutions,
including those that decided to switch between the CBLR framework
and generally applicable capital rules, the proposed amendment
would estimate the historical methodology outlined in the Real
Estate Lending Standards for the calculation of loans in excess of
the supervisory LTV Limits.

Comments on the proposal must be received within 30 days of its
publication in the Federal Register.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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