April 28, 2016
From Law360

by Andrew McIntyre

Faced with steep additional capital requirements for real estate loans the FDIC deems high-volatility, banks are exercising caution to avoid entering such transactions, but lawyers say there is a great deal of ambiguity regarding ways to ensure a loan remains outside that box for its duration.

High-volatility commercial real estate, or HVCRE, loans are defined in the Basel III international banking standard, which says banks must offset the increased risk such loans pose by keeping on hand 50 percent more capital than the amount required for loans that don't have that classification. 

Polsinelli Shareholder Brooks Clark was interviewed by Law360 about three HVCRE loan questions lawyers say are the source of much confusion:
  • How Does Additional Debt Affect the Initial Loan’s Status?
  • Can Triggered Loans Revert to Former Status?
  • How Are Distributions Treated?

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