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CRE Loans Based on Which Value?

Answered by: 
Randy Carey

Question: 
Does using purchase price vs actual appraisal amount include commercial or land properties or is that only for consumer dwellings? Example: purchase price of CML bldg $85,000, appraisal amount $150,000 - based on the supervisory LTV limits, can I lend 85% of the $85k or $150K and not have an exception to the supervisory limits?
Answer: 

Interagency Guidelines for Real Estate Lending Policies

Value means an opinion or estimate, set forth in an appraisal or evaluation, whichever may be appropriate, of the market value of real property, prepared in accordance with the agency's appraisal regulations and guidance. For loans to purchase an existing property, the term ``value'' means the lesser of the actual acquisition cost or the estimate of value.

First published on 08/13/2023

Filed under: 
Lending
Filed under lending as: 
Appraisal

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