In early June, the Federal Reserve and other banking agencies issued three notices of proposed rulemaking that would, in large measure, implement new international banking standards known as “Basel III.” The new standards are anticipated to be adopted and would become effective in 2015.
At least one of the proposed rules will affect real estate finance markets. The regulatory agencies are specifically focused on construction lending and will impose greater balance-sheet scrutiny on construction loans by imposing a higher risk weighting on construction loans than other loans. The higher capital ratios will apply with respect to so-called “high volatility commercial real estate exposures.” HVCREs are loans that finance or financed the acquisition, development or construction of real property.
Read more...Basel III's Impact on Construction Lending | Commercial Property Executive:
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