The House Financial Services Committee voted 59-1 last week to approve a bill that better defines which types of loans must comply with the high value commercial real estate acquisition, or HVCRE, regulations.
Clarifying Commercial Real Estate Loans (H.R. 2148), sponsored by Rep. Robert Pittenger (R-NC), provides a specific, legal definition for high value commercial real estate acquisition, development, or construction loan (HVCRE ADC loan). Pittenger said it corrects an overly broad definition which forces many stable loans to remain in the HVCRE category and increases costs.
Further, it broadens the types of equity a developer may place the heightened risk requirements of an HVCRE project and clarifies when the loan on a completed development may exit the HVCRE requirements. It also adds an exemption from HVCRE requirements for refinancing or acquiring an existing, income-producing development.
“This is a highly-technical bill, but it directly impacts the local economy by creating the necessary stability to spur investment, create jobs, and promote economic growth,” Pittenger said. “This is also a big win for many of America’s economically-depressed urban areas. Our bipartisan legislation clarifies the rules to help facilitate real estate financing in high-volatility markets.”
The bill is supported by more than one dozen trade associations, including the Mortgage Bankers Association, The Real Estate Roundtable, and the Commercial Real Estate Finance Council.
The measure now advances to the full House of Representatives for consideration.