The spread of COVID-19 has created a new reality for the hospitality industry. As of March 25, the CDC reported 54,453 confirmed cases in the U.S., and the number is expected to grow exponentially. In the hopes of slashing infection rates, governments have implemented international travel bans, shelter-in-place orders and other restrictive measures. The second-most popular tourist destination in the world, Spain, has ordered all its hotels and other tourist accommodations to be closed.
Continue Reading Beds without Heads: Hotels in the Era of the Coronavirus

The Federal Reserve, OCC and FDIC have (finally) issued the Final HVCRE Rule (for background, our analysis of the 2018 Notice of Proposed Rulemaking and 2019 Notice of Proposed Rulemaking are here and here), regarding High Volatility Commercial Real Estate (HVCRE) regulations that affect acquisition, development or construction (ADC) loans made by banking organizations that are subject to the capital rule, including bank holding companies, savings and loan holding companies and U.S. intermediate holding companies of foreign banking organizations. The Final HVCRE rule becomes effective April 1, 2020. Here are the Top 10 takeaways from the Final HVCRE Rule:
Continue Reading Top 10 Things to Know About the Final HVCRE Rule

Just when you thought the regulators had forgotten about HVCRE ADC, they issued a new notice of proposed rulemaking like they were Beyoncé surprise-dropping a new album. And then…they disappeared again! We were waiting for more news before alerting our readers but nothing has come to date. To bring those not in the HVCRE ADC-hive up to speed, the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA) reformed the capital rule for acquisition, development and construction loans (HVCRE ADC exposures or loans) back in May 2018, but the regulations have yet to be conformed to the statutory regime.

Under the current statutory framework, an HVCRE ADC loan is a credit facility secured by land or improved real property which (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. Among other exceptions, the current statutory regime includes an exemption for loans that finance the acquisition, development, or construction of one- to four-family residential properties (the paragraph 2(i)(A) exemption).

On July 12, 2019, the Federal Reserve, FDIC and OCC released a Notice of Proposed Rulemaking (2019 NPR), in response to comments submitted to their September 2018 Notice of Proposed Rulemaking (2018 NPR). The 2018 NPR was meant to conform the regulatory capital rule to the updates brought about in EGRRCPA and the 2019 NPR supplements the previous proposal to narrow the paragraph 2(i)(A) exemption.
Continue Reading HVCRE ADC Update: Regulators Propose Eliminating Exemption for Land Development Loans

On September 18, 2018, the Federal Reserve, FDIC and OCC released a Notice of Proposed Rulemaking (NPR) regarding HVCRE. The good news is that the stated intent is not to alter any of the improvements made by EGRRCPA, instead the agencies describe the proposed rulemaking as conforming the regulatory capital rule to the new

When House Speaker Paul Ryan announced earlier this month that the House would vote on S.2155, I wasn’t holding my breath (you know you’re on your last lame duck leg when a “senior GOP lawmaker” says you’ve “run out of juice”).

Miracles do happen AND sometimes I love to be wrong (but – shh…don’t tell my husband): In the spirit of deal making, the House just passed S. 2155 (the Economic Growth, Regulatory Relief, and Consumer Protection Act) with bipartisan support (Yup – the Dems and the Republicans did this in both the House and the Senate…maybe there is more to come!). The President still needs to sign the bill before it becomes law, which everyone expects will happen soon.
Continue Reading “Pop the Champagne but Don’t Get Too Drunk”: HVCRE Reform Passes the House

It’s day 2 of Mark Zuckerberg’s Congressional debut and I still have yet to catch a glimpse of him or his entourage. But – I have had the opportunity, with some fellow industry players, CREFC staff and members of the CREFC-HVCRE Working Group, to meet and speak with members of the House Financial Services Committee (Andy Barr and Trey Hollingsworth), Senate Banking Committee staff and regulators from the FDIC, OCC and the Fed. The topic on hand: not Facebook or Russia, but HVCRE and HVADC.
Continue Reading The Day I (Almost) Met Mark Zuckerberg