HVCRE Exposure for Interim Lender and Third Party Lender Loans
Summary
SBA Information Notice, Control No. 5000-20002, effective March 3, 2020, to all SBA employees and SBA lenders, on High Volatility Commercial Real Estate (HVCRE) exposure for interim lender and third party lender loans. It notes that on December 13, 2019 the Office of the Comptroller of the Currency, the Federal Reserve Board and the Federal Deposit Insurance Corporation published a Final Rule on Regulatory Capital Treatment for HVCRE Exposures [84 FR 68019]. The notice provides information on how that rule applies to interim lender and third-party lender loans.
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Full text
SBA Information Notice
TO: All SBA Employees and SBA Lenders CONTROL NO.: 5000-20002
SUBJECT: HVCRE Exposure for Interim Lender EFFECTIVE: March 3, 2020
and Third Party Lender Loans
The purpose of this Notice is to provide information regarding High Volatility Commercial Real
Estate (HVCRE) Exposure for Interim Lender and Third-Party Lender Loans. On December 13,
2019, the Office of the Comptroller of the Currency, the Federal Reserve Board and the Federal
Deposit Insurance Corporation (collectively, the “Agencies”) published a Final Rule regarding
Regulatory Capital Treatment for High Volatility Commercial Real Estate (HVCRE) Exposures
[84 FR 68019]. The Final Rule is effective April 1, 2020.
In the preamble to the Final Rule, the Agencies noted that some Interim Lender Loans and Third
Party Lender Loans, made in connection with the SBA 504 Loan Program, may be considered in
certain instances to be bridge loans, and thus fit within the definition of an HVCRE Exposure
and be subject to a higher risk weight. However, the Agencies clarified that if an Interim Lender
Loan or Third Party Lender Loan made in connection with the SBA 504 Loan Program meets the
criteria for community development under the Agencies’ Community Reinvestment Act (CRA)
regulations, the loan could be excluded from the HVCRE Exposure definition.
Questions concerning this Notice should be directed to Linda Reilly, Chief 504 Loan Division, at
(202) 205-9949 or linda.reilly@sba.gov.
Dianna L. Seaborn
Director
Office of Financial Assistance
PAGE 1 of 1 EXPIRES: 3-01-2021
SBA Form 1353.3 (4-93) MS Word Edition; previous editions obsolete
Must be accompanied by SBA Form 58
Federal Recycling Program Printed on Recycled Paper
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