SOURCE: Orlando Business Journal
Regulators issued new guidelines on December 6 that affect commercial lenders. The guidelines set ratios for which banks and commercial lenders will be monitored and under scrutiny if they exceed. There are two main ratios the new guidelines affect. Regulators will closely monitor lending institutions that fit the following definitions:
- Ratio of construction loans and land development equal to or more than 100% of their capital. Construction loans include loans for building, industrial and retail properties as well as condominiums, apartment complexes and single-family homes.
- All commercial loans held by an institution, including construction loans and current property loans that equals or exceeds 300% of the institutions capital.
Regulators could tell commercial lenders who are over the limits to change their underwriting practices, change their monitoring of commercial loans and even to curb their commercial lending. Regulators are concerned with the increase of commercial lending in recent years.
Alex Sanchez, CEO of the Florida Bankers Association, said: “There were no real surprises, noting that commercial banks will be subject to review that includes two new loans-to-capital ratios. “What they have in the final guidance are things they had in their proposals, and mostly had authority to do all along.”
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