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. The "Interagency Guidelines for Real Estate Lending Policies" are located in Regulation H, subpart I, 12 CFR 208, appendix C.

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 208.50–51 for state member banks. For BHCs, the appraisal standards can be found in Regulation Y, subpart G, 12 CFR 225.61-67. 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.

Policy Letters


Frequently Asked Questions on the Appraisal Regulations and the Interagency Appraisal and Evaluation Guidelines

Interagency Advisory on the Availability of Appraisers

Interagency Advisory on the Use of Evaluations in Real Estate-Related Financial Transactions

Interagency Appraisal and Evaluation Guidelines

Interagency Statement on Appraisals for Affordable Housing Loans

Real Estate Appraisal Requirements for Other Real Estate Owned (OREO)

Commercial Real Estate

Prudent Commercial Real Estate Loan Accommodations and Workouts

Interagency Statement on Prudent Risk Management for Commercial Real Estate Lending

Interagency Guidance on Concentrations in Commercial Real Estate

Interagency FAQs on Residential Tract Development Lending

Clarification on Real Estate Lending Standards

Real Estate Lending Standards

Residential Real Estate / Mortgages

Interagency Guidance on Home Equity Lines of Credit Nearing Their End-of-Draw Periods

Interagency Statement on Supervisory Approach for Qualified and Non-Qualified Mortgage Loans

Minimum Standards for Prioritization and Handling Borrower Files with Imminent Scheduled Foreclosure Sale

Guidance on a Lender’s Decision to Discontinue Foreclosure Proceedings

Questions and Answers for Federal Reserve-Regulated Institutions Related to the Management of Other Real Estate Owned (OREO)

Policy Statement on Rental of Residential Other Real Estate Owned (OREO) Properties

Statement on Loss Mitigation Strategies for Servicers of Residential Mortgages

Statement on Subprime Mortgage Lending

Working with Mortgage Borrowers

Interagency Guidance on Nontraditional Mortgage Product Risks

Interagency Credit Risk Management Guidance for Home Equity Lending

Accounting and Reporting for Commitments to Originate and Sell Mortgage Loans

Risk Management and Valuation of Mortgage Servicing Assets Arising from Mortgage Banking Activities

Guidance on Supervision of Subprime Lending

Interagency Guidance on High Loan-To-Value Residential Real Estate Lending

Subprime Lending

Additional Resources

Manual References

  • Bank Holding Company Supervision Manual
    • Section 2128.08, "Subprime Lending (Risk Management and Internal Controls)"
    • Section 2231.0, "Real Estate Appraisals and Evaluations"
    • Section 3070.0, "Section 4(c)(8) of the BHC Act (Mortgage Banking)"
    • Section 3270.0, "Section 4(c)(8) of the BHC Act (Real Estate and Personal Property Appraising)"
  • Commercial Bank Examination Manual
    • Section 2080.1, "Commercial and Industrial Loans"
    • Section 2090.1, "Real Estate Loans"
    • Section 2100, "Real Estate Construction Loans"
    • Section 2102.1, "Real Estate Appraisals and Evaluations"
    • Section 2103.1, "Concentrations in Commercial Real Estate Lending, Sound Risk–Management Practices"
    • Section 2133.1, "Subprime Lending"
    • Section 2135.1, "Subprime Mortgage Lending"
    • Section 2136.1, "Nontraditional Mortgages–Associated Risks"
    • Section 2400.1, "Other Real Estate Owned"
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Last Update: December 15, 2023