115TH CONGRESS 

1ST SESSION H. R. 2148 

AN ACT 

To amend the Federal Deposit Insurance Act to clarify capital requirements for certain acquisition, development, 

or construction loans. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 
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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as ‘‘Clarifying Commercial 

3 Real Estate Loans’’. 

4 SEC. 2. CAPITAL REQUIREMENTS FOR CERTAIN ACQUISI5 TION, DEVELOPMENT, OR CONSTRUCTION 

6 LOANS. 

7 The Federal Deposit Insurance Act is amended by 

8 adding at the end the following new section: 

9 ‘‘SEC. 51. CAPITAL REQUIREMENTS FOR CERTAIN ACQUISI10 TION, DEVELOPMENT, OR CONSTRUCTION 

11 LOANS. 

12 ‘‘(a) IN GENERAL.—The appropriate Federal bank13 ing agencies may only subject a depository institution to 

14 higher capital standards with respect to a high volatility 

15 commercial real estate (HVCRE) exposure (as such term 

16 is defined under section 324.2 of title 12, Code of Federal 

17 Regulations, as of October 11, 2017, or if a successor reg18 ulation is in effect as of the date of the enactment of this 

19 section, such term or any successor term contained in such 

20 successor regulation) if such exposure is an HVCRE ADC 

21 loan. 

22 ‘‘(b) HVCRE ADC LOAN DEFINED.—For purposes 

23 of this section and with respect to a depository institution, 

24 the term ‘HVCRE ADC loan’— 

25 ‘‘(1) means a credit facility secured by land or 

26 improved real property that, prior to being reclassi-
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1 fied by the depository institution as a Non-HVCRE 

2 ADC loan pursuant to subsection (d)— 

3 ‘‘(A) primarily finances, has financed, or 

4 refinances the acquisition, development, or con5 struction of real property; 

6 ‘‘(B) has the purpose of providing financ7 ing to acquire, develop, or improve such real 

8 property into income-producing real property; 

9 and 

10 ‘‘(C) is dependent upon future income or 

11 sales proceeds from, or refinancing of, such real 

12 property for the repayment of such credit facil13 ity; 

14 ‘‘(2) does not include a credit facility financ15 ing— 

16 ‘‘(A) the acquisition, development, or con17 struction of properties that are— 

18 ‘‘(i) one- to four-family residential 

19 properties; 

20 ‘‘(ii) real property that would qualify 

21 as an investment in community develop22 ment; or 

23 ‘‘(iii) agricultural land; 

24 ‘‘(B) the acquisition or refinance of exist25 ing income-producing real property secured by 
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1 a mortgage on such property, if the cash flow 

2 being generated by the real property is suffi3 cient to support the debt service and expenses 

4 of the real property, as determined by the de5 pository institution, in accordance with the in6 stitution’s applicable loan underwriting criteria 

7 for permanent financings; 

8 ‘‘(C) improvements to existing income-pro9 ducing improved real property secured by a 

10 mortgage on such property, if the cash flow 

11 being generated by the real property is suffi12 cient to support the debt service and expenses 

13 of the real property, as determined by the de14 pository institution, in accordance with the in15 stitution’s applicable loan underwriting criteria 

16 for permanent financings; or 

17 ‘‘(D) commercial real property projects in 

18 which— 

19 ‘‘(i) the loan-to-value ratio is less than 

20 or equal to the applicable maximum super21 visory loan-to-value ratio as determined by 

22 the appropriate Federal banking agency; 

23 and 

24 ‘‘(ii) the borrower has contributed 

25 capital of at least 15 percent of the real 
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1 property’s appraised, ‘as completed’ value 

2 to the project in the form of— 

3 ‘‘(I) cash; 

4 ‘‘(II) unencumbered readily mar5 ketable assets; 

6 ‘‘(III) paid development expenses 

7 out-of-pocket; or 

8 ‘‘(IV) contributed real property 

9 or improvements; and 

10 ‘‘(iii) the borrower contributed the 

11 minimum amount of capital described 

12 under clause (ii) before the depository in13 stitution advances funds under the credit 

14 facility, and such minimum amount of cap15 ital contributed by the borrower is contrac16 tually required to remain in the project 

17 until the credit facility has been reclassi18 fied by the depository institution as a Non19 HVCRE ADC loan under subsection (d); 

20 ‘‘(3) does not include any loan made prior to 

21 January 1, 2015; and 

22 ‘‘(4) does not include a credit facility reclassi23 fied as a Non-HVCRE ADC loan under subsection 

24 (d). 
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1 ‘‘(c) VALUE OF CONTRIBUTED REAL PROPERTY.— 

2 For purposes of this section, the value of any real property 

3 contributed by a borrower as a capital contribution shall 

4 be the appraised value of the property as determined 

5 under standards prescribed pursuant to section 1110 of 

6 the Financial Institutions Reform, Recovery, and Enforce7 ment Act of 1989 (12 U.S.C. 3339), in connection with 

8 the extension of the credit facility or loan to such bor9 rower. 

10 ‘‘(d) RECLASSIFICATION AS A NON-HVCRE ADC 

11 LOAN.—For purposes of this section and with respect to 

12 a credit facility and a depository institution, upon— 

13 ‘‘(1) the completion of the development or con14 struction of the real property being financed by the 

15 credit facility; and 

16 ‘‘(2) cash flow being generated by the real prop17 erty being sufficient to support the debt service and 

18 expenses of the real property, 

19 in either case to the satisfaction of the depository institu20 tion, in accordance with the institution’s applicable loan 

21 underwriting criteria for permanent financings, the credit 
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1 facility may be reclassified by the depository institution 

2 as a Non-HVCRE ADC loan.’’. 

Passed the House of Representatives November 7, 

2017. 

Attest: 

Clerk. 
115TH CONGRESS 

1ST SESSION H. R. 2148 

AN ACT 

To amend the Federal Deposit Insurance Act to 

tion, development, or construction loans. clarify capital requirements for certain acquisi-