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Financing HVCRE and Other Real Estate: Guidance for Lenders, Borrowers, and Investors

Recording of a 90-minute premium CLE video webinar with Q&A

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Wednesday, June 30, 2021

Recorded event now available

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This CLE course will provide a timely update regarding high-volatility commercial real estate (HVCRE) loans, as well as regulatory requirements relating to nonperforming real estate loans, and options for lenders, borrowers, and investors relating to nonperforming loans. Our panel will discuss regulatory requirements for HVCRE loans and the HVCRE exemption criteria. The program will also discuss (1) how lenders are currently revising covenants in loan documentation, (2) regulatory requirements for nonperforming loans, and (3) the current options for loans that do not comply with the regulatory requirements.


The 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act, and the final HVCRE rule issued by federal banking agencies in 2019, caused an increase in the cost of lending (and, consequently, borrowing) concerning certain loans financing real estate acquisition, development, and construction (ADC loans), as banks are required to retain more capital to address the risk weighting given to such investments.

To avoid higher risk weightings and capital retention requirements due to HVCRE classification, loans must fall into at least one of several exceptions to the general rule that all ADC loans constitute HVCRE loans.

Lenders and borrowers have attempted to negotiate best structuring practices and loan documentation to avoid inadvertent HVCRE treatment but continue to face uncertainties over issues such as the impact of mezzanine debt, preferred equity, and actual cash flow. Lenders and borrowers involved in nonperforming real estate loans must also deal with regulatory requirements relating to such loans.

Listen as our authoritative panel of real estate finance attorneys guides you through the regulatory requirements for HVCRE and other real estate loans. The panel will also address (1) the regulatory requirements for nonperforming real estate loans and (2) the current options of lenders and borrowers for loans that do not comply with applicable regulatory requirements.



  1. HVCRE loans
    1. Definition of an HVCRE loan
    2. Exceptions for real estate loans that are not HVCRE loans
  2. HVCRE regulatory issues
    1. Contributing additional capital to an existing HVCRE loan
    2. Cash provided by the second mortgage on a property
    3. "As-stabilized" value
    4. Land committed to a new development
    5. Soft costs as contributed capital
    6. Subsequent appraisal/valuation resulting in LTV no longer exceeding maximum LTV ratio
    7. Contributed capital remaining in the project
    8. Impact of mezzanine debt
  3. Current enhanced loan covenants addressing HVCRE rules
  4. Regulatory requirements relating to nonperforming real estate loans
  5. Borrower and lender options for loans that do not comply with regulatory requirements or related loan covenants


The panel will review these and other critical issues:

  • What is the current state of the real estate market?
  • How can appraisals be prepared, in accordance with legal requirements, at a time when market values for many properties are uncertain?
  • Can the borrower contribute additional capital to an existing HVCRE loan, after loan funds have been advanced, to exclude the loan from the definition of HVCRE?
  • Are soft costs part of the borrower's contributed capital as development expenses?
  • What is the impact of mezzanine debt and preferred equity?
  • What are a lender’s options, with respect to HVCRE loans, and other loans that do not comply with regulatory requirements, such as (1) selling such loans, (2) selling a subordinated portion of an existing loan and retaining a remaining portion that complies with the HVCRE and other regulatory rules, and (3) getting more capital in order to meet capital requirements?
  • What are the available borrower options, which may include (1) refinancing with non-bank lenders, (2) funding from new equity investors, (3) a capital call to existing investors, and (4) a long-term net lease of the mortgaged property to a third party that provides additional capital?


Boyd, Brook
Brook Boyd

Meister Seelig & Fein

Mr. Boyd has a broad range of experience in real estate, corporate and commercial transactions and related litigation....  |  Read More

Konikoff, Paula
Paula Konikoff, JD, MAI, AI-GRS


Ms. Konikoff provides expert testimony and rent resetting advice for negotiation and arbitration, serves as an...  |  Read More

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