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Board of Governors of the Federal Reserve System
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Board of Governors of the Federal Reserve System

Supervisory Policy and Guidance Topics

Real Estate

Real estate lending represents one of the major components of credit risk at many banks. The composition of a bank's real estate portfolio will vary based on differences in lending experience, market competition, and asset size. The Federal Reserve Board's real estate lending standards are found in 12 CFR 208, subpart E.Leaving the Board The "Interagency Guidelines for Real Estate Lending Policies" are located in Regulation H, subpart I, 12 CFR 208, appendix C.Leaving the Board

Commercial Real Estate
One of the most prevalent pieces of commercial real estate (CRE) guidance is, "Concentrations in CRE Lending, Sound Risk-Management Practices (PDF)," which was issued on December 6, 2006. This interagency supervisory guidance was developed to reinforce sound risk-management practices for institutions with high and increasing concentrations of commercial real estate loans on their balance sheets.

Residential Real Estate and Mortgages
In addition to providing supervisory guidance regarding residential real estate lending, this subsection also contains guidance on subprime lending. Subprime lending involves extending credit to borrowers who exhibit characteristics that indicate a significantly higher risk of default than traditional bank lending customers.

The Federal Reserve Board’s real estate appraisal standards are found in Regulation H, subpart E, 12 CFR 208.50–51Leaving the Board for state member banks. For BHCs, the appraisal standards can be found in Regulation Y, subpart G, 12 CFR 225.61-67.Leaving the Board The standards primarily focus on the responsibilities of the bank's board of directors for developing and issuing lending policies.

Consumer Compliance
The Federal Reserve Board's Division of Consumer and Community Affairs issues Consumer Affairs (CA) letters addressing policy and procedural matters of continuing relevance to the Fed’s consumer compliance supervisory responsibilities.

Sections on this page:  

Policy Letters


SR 16-15
Exception to Appraisal Regulation Requirements in Areas Affected by Flooding in Louisiana
SR 16-5
Interagency Advisory on the Use of Evaluations in Real Estate-Related Financial Transactions
SR 13-19 / CA 13-21
Guidance on Managing Outsourcing Risk
SR 10-16
Interagency Appraisal and Evaluation Guidelines
SR 05-5
Interagency FAQs on the Agencies' Appraisal Regulations and Interagency Statement on Independence of Appraisal and Evaluation Functions
SR 95-27 (SUP)
Interagency Statement on Appraisals for Affordable Housing Loans
SR 95-16 (SUP)
Real Estate Appraisal Requirements for Other Real Estate Owned (OREO)

Commercial Real Estate

SR 15-17
Interagency Statement on Prudent Risk Management for Commercial Real Estate Lending
SR 09-7
Prudent Commercial Real Estate Loan Workouts
SR 07-1
Interagency Guidance on Concentrations in Commercial Real Estate
SR 05-14
Interagency FAQs on Residential Tract Development Lending
SR 93-33 (FIS)
Clarification on Real Estate Lending Standards
SR 93-11 (FIS)
Real Estate Lending Standards

Residential Real Estate / Mortgages

SR 12-5/CA 12-3
Policy Statement on Rental of Residential Other Real Estate Owned (OREO) Properties
SR 14-5 / CA 14-4
Interagency Guidance on Home Equity Lines of Credit Nearing Their End-of-Draw Periods
SR 13-20 / CA 13-23
Interagency Statement on Supervisory Approach for Qualified and Non-Qualified Mortgage Loans
SR 13-9 / CA 13-6
Minimum Standards for Prioritization and Handling Borrower Files with Imminent Scheduled Foreclosure Sale
SR 12-11 / CA 12-10
Guidance on a Lender’s Decision to Discontinue Foreclosure Proceedings
SR 12-10 / CA 12-9
Questions and Answers for Federal Reserve-Regulated Institutions Related to the Management of Other Real Estate Owned (OREO)
SR 07-16
Statement on Loss Mitigation Strategies for Servicers of Residential Mortgages
SR 07-12
Statement on Subprime Mortgage Lending
SR 07-6
Working with Mortgage Borrowers
SR 06-15
Interagency Guidance on Nontraditional Mortgage Product Risks
SR 05-11
Interagency Credit Risk Management Guidance for Home Equity Lending
SR 05-10
Accounting and Reporting for Commitments to Originate and Sell Mortgage Loans
SR 03-4
Risk Management and Valuation of Mortgage Servicing Assets Arising from Mortgage Banking Activities
SR 01-4 (GEN)
Guidance on Supervision of Subprime Lending
SR 99-26 (SUP)
Interagency Guidance on High Loan-To-Value Residential Real Estate Lending
SR 99-6 (GEN)
Subprime Lending
SR 91-20
Environmental Liability

Additional Resources


Manual References

  • Bank Holding Company Supervision Manual
    • Section 2231.0, "Real Estate Appraisals and Evaluations"
    • Section 3270.0, "Section 4(c)(8) of the BHC Act (Real Estate and Personal Property Appraising)"
    • Section 3070.0, "Section 4(c)(8) of the BHC Act (Mortgage Banking)"
    • Section 2128.08, "Subprime Lending (Risk Management and Internal Controls)"
  • Commercial Bank Examination Manual
    • Section 2090.1, "Real Estate Loans"
    • Section 2080.1, "Commercial and Industrial Loans"
    • Section 2100, "Real Estate Construction Loans"
    • Section 2103.1, "Concentrations in Commercial Real Estate Lending, Sound Risk–Management Practices"
    • Section 2040.1, "Loan Portfolio Management" (Mortgage Banking Subsection)
    • Section 2043.1, "Nontraditional Mortgages–Associated Risks"
    • Section A.2040.3, "Loan Portfolio Management: Comprehensive Mortgage Banking Examination Procedures"
    • Section 2133.1, "Subprime Lending"
    • Section 2135.1, "Subprime Mortgage Lending"
    • Section 2200.1, "Other Real Estate Owned"
    • Section 4140.1, "Real Estate Appraisals and Evaluations"
Last update: October 28, 2016