high volatility commercial real estate (HVCRE) standard

A new rule on banks which kicked in this past January requires banks to reserve more capital for loans on property defined as ‘high volatility commercial real estate’. One way to avoid this designation is if the borrower has contributed capital to a project with at least 15 percent of its appraised-as-completed value. As a result, banks are expected to make fewer construction loans. (The Registry, October 22, 2015)