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Increased Risk Weight for "High Volatility Commercial Real Estate"

Gain valuable insights on risk weighted assets and learn how the increased risk weight for High Volatility Commercial Real Estate (HVCRE) will affect lenders and borrowers.

This topic will provide an in depth discussion of risk weighted assets in general, and the risk weight for High Volatility Real Estate (HVCRE) in particular. The content will address how the increased risk weight for HVCRE affects lenders and borrowers, the extent to which the HVCRE risk weight has altered the appetite of lenders for commercial acquisition, development or construction loans or the pricing of loans which are HVCRE exposures. The topic will also discuss the exclusions from HVCRE and how HVCRE exposure is avoided as well as answers to 'frequently asked questions' posed by a community bank.

Runtime: 90 minutes
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Over 31 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Agenda

HVCRE Background and Rationale

  • HVCRE Loans Are a Subset of Acquisition, Development or Construction Loans (ADC)
  • Regulatory Rationale for HVCRE Classification
  • Market Effect of HVCRE

Risk Weighting

  • Risk-Weighted Assets
  • Higher Risk Assets Assigned Higher Risk Weights
  • What the 150% HVCRE Risk Weight Means for Lenders and Borrowers

Avoiding the 150% Risk Weight

  • ADC Loans That Are Not HVCRE Exposures

- One-To-Four Family Residential Real Estate

- Certain Community Development and Small Business Loans

- Certain Agricultural Loans

- Commercial Real Estate ADC Loans

  • Supervisory LTV
  • Borrower Contributed Capital

- Purpose of Borrower's Equity

- Hard Equity

- What Does and Does Not Qualify as Borrower Contributed Equity

  • 15% of the "as Completed" Appraised Value and the Law of Unintended Consequences
  • Ensuring That Borrower's Equity Is Invested Before Loan Proceeds Are Disbursed
  • What Payments or Distributions May Be Made During the Life of the Loan?

Lender FAQs

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Why Lorman?

Over 31 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Credits

OnDemand Webinar

This program does NOT qualify, nor meet the National Standard for NASBA accreditation.

Audio & Reference Manual

This program does NOT qualify, nor meet the National Standard for NASBA accreditation.

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More Program Information

Why Lorman?

Over 31 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Faculty

Steven M. Regan

Steven M. Regan

Frost Brown Todd

  • Member and partner of Frost Brown Todd resident in its Pittsburgh, PA office
  • Real estate and finance lawyer with 18 years of experience representing clients in various real estate and finance transactions including acquisition, development and construction loans and projects
  • Wrote "High Volatility Uncertainty – Basel III HVCRE Regulations Create Uncertainty" published in the International Journal of Banking Law and Regulation in August, 2016
  • Frequent speaker on the topic of HVCRE both for lender clients and continuing education seminars providing guidance as to how to structure loans and revise loan documents to ensure an ADC loan is and remains excluded from HVCRE exposure
  • Represented lenders and borrowers in numerous acquisition, development and construction loans including a $166 million construction loan for a hotel and condominium project in Brooklyn, NY, a $41.7 million construction loan for a 300-unit apartment complex in suburban Pittsburgh, PA and a $91 million bridge loan for a condominium project in Miami, FL
  • Acted for lender clients in loan workouts and restructures including restructuring a $49.6 million acquisition and construction loan secured by a 714 hotel in Pittsburgh, PA in the context of the borrower’s Chapter 11 plan, restructuring an $8 million multi-use development loan, and negotiating a loan restructure for eight development and construction loans to related entities
  • Advised real estate investors in structuring and forming real estate investment vehicles and in connection with negotiating and closing the acquisition and financing of investment real estate
  • Can be contacted at 412-513-4330 or [email protected]
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Why Lorman?

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Product ID: 399629
Published 2016
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