[Susan Smith]

I have 2 HVCRE questions. It is my understanding that HVCRE applies to commercial construction projects, for example a retail strip center. It does not apply to land or residential subdivision development, correct?

Also, if the loan request is for a major renovation, rather than ground up construction, does HVCRE apply at a certain threshold (for example, if renovation cost is significant, over 50% of total budget of the project?)

[rcooper]

Susan – We’ve received your question. I’ve passed it along to Jack Holzknecht. You should receive a response soon. Thanks for your patience.

[rcooper]

Follow-Up Question Received:
…Land loan, commercial land going to be divided into parcels and sold (no structure on the property) so my understanding HVCRE doesn’t apply

AND I have a loan to renovate a retail center. Customer purchased center 15 years ago. It is my understanding that his 15% required cash at this point would be as complete renovated value less as is value in the appraisal. In this case, the as is value is less than what the customer originally paid, but it is my understanding that this does not matter – his 15% cash towards total renovation is based on our new appraisal -difference of as complete and as is.

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