On August 20, the Office of the Comptroller of the Currency (OCC) issued the “Commercial Real Estate Lending“ booklet of the Comptroller’s Handbook to replace the OCC’s “Commercial Real Estate and Construction Lending” booklet issued in 1995. The booklet also replaces sections 210, “Income Property Lending,” and 213, “Construction Lending,” of the former Office of Thrift Supervision’s (OTS) Examination Handbook issued in 2009 and 1994, respectively. 

The booklet reflects guidance issued since the release of the 1995 booklet. Updated guidance includes: 

prudent loan workouts, management of concentrations, stress testing, updated interagency appraisal guidelines, and statutory and regulatory developments in environmental risk management. Discussions of statutes and regulations governing federal savings associations have also been incorporated. Guidance for acquisition, development, and construction (ADC) lending are expanded and issues unique to ADC and income-producing real estate lending are discussed in separate sections. Other topics that are new or expanded include supervisory loan-to-value, project feasibility, investor-owned residential real estate, amortization, debt yield, owner-occupied real estate, environmental risk management, and underwriting considerations for various property types.

The OCC also announced that the following documents are rescinded: 

• OCC Bulletin 2012-27, “Investor-Owned One- to Four-Family Residential Properties: Supervisory Guidance on Risk Management and Reporting Requirements” (September 17, 2012); and 

• OCC Advisory Letter 2003-7, “Guidelines for Real Estate Lending Policies” (August 8, 2003). 

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