OCC Issues Updated Guidance on Commercial Real Estate Lending

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The OCC issued a “Commercial Real Estate Lending” booklet (the “Booklet”) that is part of the Comptroller’s Handbook and that updates the OCC’s guidance for bank examiners and bankers and replaces its 1995 booklet entitled “Commercial Real Estate and Construction Lending.”  The Booklet’s updated guidance includes revised or new discussions concerning supervisory expectations and regulatory requirements for prudent loan workouts, management of concentrations, stress testing, interagency appraisal guidelines, and statutory and regulatory developments in environmental risk management.  The Booklet also provides expanded guidance for acquisition, development and construction lending.  The OCC stated that other new or expanded discussions contained in the Booklet address “supervisory loan-to-value, project feasibility, investor-owned residential real estate, amortization, debt yield, owner-occupied real estate, environmental risk management, and underwriting considerations for various property types.”  The Booklet provides an internal control questionnaire and verification procedures for bank examiners and an appendix with a useful list of OCC guidance on commercial real estate lending and related topics.

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this informational piece (including any attachments) is not intended or written to be used, and may not be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

 

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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