The standard loan-to-value ratio for an ADC loan
is for 75 percent of the appraised value, but MNB was relying on an appraisal of the property prepared for Signature's benefit that placed the value of Grand Valley at $12.5 million.
The significant loan was structured to qualify as an ADC loan
under the current guidance.
HVCRE typically would capture certain ADC loans
. The Senate bill seeks to narrow and more clearly define the scope and capital requirements for HVCRE lending, which could make it more attractive to banks.
First, the universe of ADC loans
subject to HVCRE classification was shrunk.
(14) High-volatility commercial real estate includes all acquisition, development, and construction (ADC) commercial real estate loans except one- to four-family residential ADC loans
and commercial real estate ADC loans
that meet regulatory requirements imposing a maximum loan-to-value ratio both at the outset and throughout the life of the loan.
12 that new loan risk weight requirements that impact commercial real estate are putting greater emphasis on the "as completed" value within appraisal reports prepared for acquisition, development and construction loans, known as ADC loans
David Loo, Hudson's managing director and co-founder, said the company will work to resolve the properties ADC loans
over the next several years.
Investment mortgages usually do not represent as high a credit risk as ADC loans
or REO, but may nevertheless expose the firm to interest-rate risk.
As receiver for First Bank of Beverly Hills, which failed in April 2009, the FDIC determined that the bank's former executives approved many ADC loans
and commercial real estate loans "in derogation of their duty to engage in 'safe and sound' banking practices." Accordingly, on April 20, 2012, the FDIC sued 10 former officers and directors of the bank for gross negligence and breaches of fiduciary duty, seeking at least $100.6 million in damages.
Since July 2010, The Cogsville Group's investment fund, Cogsville Capital Partners Fund I, L.P., has participated in the purchase of over $3 billion in commercial real estate and ADC loans
from five FDIC portfolios.
The First Federal lawsuit alleges that acquisition, development and construction lending (ADC loans
) were the thrift's undoing.
Within a few years, S&Ls were deeply involved with a acquisition, development and construction loans (ADC loans
), appreciation-dependent real estate loans, and a host of other speculative vehicles.