WASHINGTON – In an era of extreme partisanship, Congressman Robert Pittenger (NC-09) this week built a strong bipartisan coalition to secure near-unanimous approval of complex financial reform legislation.
On Thursday, the House Financial Services Committee voted 59-1 to approve Congressman Pittenger’s Clarifying Commercial Real Estate Loans (H.R. 2148). This bipartisan legislation clarifies and improves Obama-era regulations which have created confusion in commercial real estate lending, leading to fewer jobs and slower economic growth.
H.R. 2148 has always been bipartisan, with Congressman David Scott (D-GA) serving as the original co-sponsor. This week, Congressman Pittenger secured additional bipartisan support from Ranking Member Maxine Waters (D-CA), Carolyn Maloney (D-NY), Financial Institutions and Consumer Credit Subcommittee Chairman Blaine Luetkemeyer (R-MO) and House Financial Services Chairman Jeb Hensarling (R-TX).
“This is a highly-technical bill, but it directly impacts the local economy by creating the necessary stability to spur investment, create jobs, and promote economic growth” said Congressman Pittenger. “This is also a big win for many of America’s economically-depressed urban areas. Our bipartisan legislation clarifies the rules to help facilitate real estate financing in high-volatility markets.”
In January 2015, the Federal Reserve and Office of the Comptroller of the Currency adopted regulatory capital rules related to “high volatility commercial real estate” (HVCRE). Despite repeated requests from community banks, other financial institutions, and real estate developers, federal regulators failed to clearly define the types of loans and projects to which the rules are meant to apply. As a result, many banks pulled back from commercial real estate lending, leading to fewer jobs and slower economic growth.
Congressman Pittenger and Congressman Scott’s bipartisan legislation (H.R. 2148) better defines which types of loans must comply with the HVCRE regulations.
· Provides a specific, legal definition for “high value commercial real estate acquisition, development, or construction loan” (HVCRE ADC loan), correcting an overly broad definition which currently forces many stable loans to remain in the HVCRE category and unnecessarily increases costs.
· Restores common sense standards for the amount and type of equity required to include the appraised value of the land and not just the purchase price.
· Broadens the types of equity a developer may place toward the heightened risk requirements of an HVCRE project.
· Clarifies when the loan on a completed development may exit the HVCRE requirements.
· Adds an exemption from HVCRE requirements for refinancing or acquiring an existing, income-producing development.
H.R. 2148 is supported by more than one dozen trade associations, including the Mortgage Bankers Association, The Real Estate Roundtable, and the Commercial Real Estate Finance Council.
H.R. 2148 was approved Thursday by the House Financial Services Committee and will now advance to the full House of Representatives for consideration.
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