IIB 
115TH CONGRESS 
1ST SESSION H. R. 2148 
IN THE SENATE OF THE UNITED STATES 
NOVEMBER 8, 2017 
Received; read twice and referred to the Committee on Banking, Housing, and 
Urban Affairs 
AN ACT 
To amend the Federal Deposit Insurance Act to clarify cap-
ital requirements for certain acquisition, development, 
or construction loans. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
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SECTION 1. SHORT TITLE. 
This Act may be cited as ‘‘Clarifying Commercial 
Real Estate Loans’’. 
SEC. 2. CAPITAL REQUIREMENTS FOR CERTAIN ACQUISI-
TION, DEVELOPMENT, OR CONSTRUCTION 
LOANS. 
The Federal Deposit Insurance Act is amended by 
adding at the end the following new section: 
‘‘SEC. 51. CAPITAL REQUIREMENTS FOR CERTAIN ACQUISI-
TION, DEVELOPMENT, OR CONSTRUCTION 
LOANS. 
‘‘(a) IN GENERAL.—The appropriate Federal bank-
ing agencies may only subject a depository institution to 
higher capital standards with respect to a high volatility 
commercial real estate (HVCRE) exposure (as such term 
is defined under section 324.2 of title 12, Code of Federal 
Regulations, as of October 11, 2017, or if a successor reg-
ulation is in effect as of the date of the enactment of this 
section, such term or any successor term contained in such 
successor regulation) if such exposure is an HVCRE ADC 
loan. 
‘‘(b) HVCRE ADC LOAN DEFINED.—For purposes 
of this section and with respect to a depository institution, 
the term ‘HVCRE ADC loan’— 
‘‘(1) means a credit facility secured by land or 
improved real property that, prior to being reclassi-
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fied by the depository institution as a Non-HVCRE 
ADC loan pursuant to subsection (d)— 
‘‘(A) primarily finances, has financed, or 
refinances the acquisition, development, or con-
struction of real property; 
‘‘(B) has the purpose of providing financ-
ing to acquire, develop, or improve such real 
property into income-producing real property; 
and 
‘‘(C) is dependent upon future income or 
sales proceeds from, or refinancing of, such real 
property for the repayment of such credit facil-
ity; 
‘‘(2) does not include a credit facility financ-
ing— 
‘‘(A) the acquisition, development, or con-
struction of properties that are— 
‘‘(i) one- to four-family residential 
properties; 
‘‘(ii) real property that would qualify 
as an investment in community develop-
ment; or 
‘‘(iii) agricultural land; 
‘‘(B) the acquisition or refinance of exist-
ing income-producing real property secured by 
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a mortgage on such property, if the cash flow 
being generated by the real property is suffi-
cient to support the debt service and expenses 
of the real property, as determined by the de-
pository institution, in accordance with the in-
stitution’s applicable loan underwriting criteria 
for permanent financings; 
‘‘(C) improvements to existing income-pro-
ducing improved real property secured by a 
mortgage on such property, if the cash flow 
being generated by the real property is suffi-
cient to support the debt service and expenses 
of the real property, as determined by the de-
pository institution, in accordance with the in-
stitution’s applicable loan underwriting criteria 
for permanent financings; or 
‘‘(D) commercial real property projects in 
which— 
‘‘(i) the loan-to-value ratio is less than 
or equal to the applicable maximum super-
visory loan-to-value ratio as determined by 
the appropriate Federal banking agency; 
and 
‘‘(ii) the borrower has contributed 
capital of at least 15 percent of the real 
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property’s appraised, ‘as completed’ value 
to the project in the form of— 
‘‘(I) cash; 
‘‘(II) unencumbered readily mar-
ketable assets; 
‘‘(III) paid development expenses 
out-of-pocket; or 
‘‘(IV) contributed real property 
or improvements; and 
‘‘(iii) the borrower contributed the 
minimum amount of capital described 
under clause (ii) before the depository in-
stitution advances funds under the credit 
facility, and such minimum amount of cap-
ital contributed by the borrower is contrac-
tually required to remain in the project 
until the credit facility has been reclassi-
fied by the depository institution as a Non- 
HVCRE ADC loan under subsection (d); 
‘‘(3) does not include any loan made prior to 
January 1, 2015; and 
‘‘(4) does not include a credit facility reclassi-
fied as a Non-HVCRE ADC loan under subsection 
(d). 
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‘‘(c) VALUE OF CONTRIBUTED REAL PROPERTY.— 
For purposes of this section, the value of any real property 
contributed by a borrower as a capital contribution shall 
be the appraised value of the property as determined 
under standards prescribed pursuant to section 1110 of 
the Financial Institutions Reform, Recovery, and Enforce-
ment Act of 1989 (12 U.S.C. 3339), in connection with 
the extension of the credit facility or loan to such bor-
rower. 
‘‘(d) RECLASSIFICATION AS A NON-HVCRE ADC 
LOAN.—For purposes of this section and with respect to 
a credit facility and a depository institution, upon— 
‘‘(1) the completion of the development or con-
struction of the real property being financed by the 
credit facility; and 
‘‘(2) cash flow being generated by the real prop-
erty being sufficient to support the debt service and 
expenses of the real property, 
in either case to the satisfaction of the depository institu-
tion, in accordance with the institution’s applicable loan 
underwriting criteria for permanent financings, the credit 
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facility may be reclassified by the depository institution 
as a Non-HVCRE ADC loan.’’. 
Passed the House of Representatives November 7, 
2017. 
Attest: 
KAREN L. HAAS, 
Clerk. 
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