Agencies Issue Statement on Prudent Risk Management for Commercial Real Estate Lending

Washington, DC – December 18, 2015 – (RealEstateRama) — The federal banking agencies today issued a statement to reinforce prudent risk-management practices related to commercial real estate (CRE) lending.

The agencies have observed substantial growth in many CRE asset and lending markets, increased competitive pressures, rising CRE concentrations in banks, and an easing of CRE underwriting standards. Financial institutions should maintain underwriting discipline and exercise prudent risk-management practices to identify, measure, monitor, and manage the risks arising from CRE lending. Financial institutions should have risk-management practices and maintain capital commensurate with the level and nature of their CRE concentration risk.

The statement reinforces existing guidance for CRE risk management and contains a table that lists interagency regulations and guidance related to CRE lending activities.

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