[Congressional Record Volume 164, Number 40 (Wednesday, March 7, 2018)]
[Senate]
[Page S1495]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SA 2139. Mr. COTTON (for himself and Mr. Jones) submitted an
amendment intended to be proposed by him to the bill S. 2155, to
promote economic growth, provide tailored regulatory relief, and
enhance consumer protections, and for other purposes; which was ordered
to lie on the table; as follows:
At the appropriate place, insert the following:
SEC. ___. CAPITAL REQUIREMENTS FOR CERTAIN ACQUISITION,
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 ACQUISITION,
DEVELOPMENT, OR CONSTRUCTION LOANS.
``(a) In General.--The appropriate Federal banking agencies
may only require a depository institution to assign a
heightened risk weight 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 regulation is in effect
as of the date of the enactment of this section, such term or
any successor term contained in such successor regulation)
under any risk-based capital requirement 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 reclassified 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 construction of real property;
``(B) has the purpose of providing financing 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 facility;
``(2) does not include a credit facility financing--
``(A) the acquisition, development, or construction of
properties that are--
``(i) one- to four-family residential properties;
``(ii) real property that would qualify as an investment in
community development; or
``(iii) agricultural land;
``(B) the acquisition or refinance of existing income-
producing real property secured by a mortgage on such
property, if the cash flow being generated by the real
property is sufficient to support the debt service and
expenses of the real property, in accordance with the
institution's applicable loan underwriting criteria for
permanent financings;
``(C) improvements to existing income-producing improved
real property secured by a mortgage on such property, if the
cash flow being generated by the real property is sufficient
to support the debt service and expenses of the real
property, in accordance with the institution'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 supervisory 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 property's appraised, `as completed'
value to the project in the form of--
``(I) cash;
``(II) unencumbered readily marketable 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
institution advances funds under the credit facility, and
such minimum amount of capital contributed by the borrower is
contractually required to remain in the project until the
credit facility has been reclassified 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 reclassified as a
Non-HVCRE ADC loan under subsection (d).
``(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 Enforcement Act of 1989
(12 U.S.C. 3339), in connection with the extension of the
credit facility or loan to such borrower.
``(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 construction of
the real property being financed by the credit facility; and
``(2) cash flow being generated by the real property being
sufficient to support the debt service and expenses of the
real property,
in accordance with the institution's applicable loan
underwriting criteria for permanent financings, the credit
facility may be reclassified by the depository institution as
a Non-HVCRE ADC loan.
``(e) Existing Authorities.--Nothing in this section shall
limit the supervisory, regulatory, or enforcement authority
of an appropriate Federal banking agency to further the safe
and sound operation of an institution under the supervision
of the appropriate Federal banking agency.''.
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