Brady Aims to Create a Better Environment for Local CRE Lending and Investment
Washington, D.C. – October 6, 2010 – (RealEstateRama) — Concerned that federal bank regulators are making the challenges confronting America’s commercial real estate sector worse, U.S. Congressman Kevin Brady (R-Texas) has introduced legislation to stabilize commercial mortgage lending and strengthen private investment in the commercial real estate market.
“With $1.4 trillion of commercial real estate loans coming due over the next four years, Congress should examine whether current law and regulatory edicts from Washington provide a stable environment for the renewal of performing loans in our local communities,” said Brady, the top House Republican on the Joint Economic Committee.
“Right now federal bank regulators are overcorrecting, viewing every loan connected to commercial real estate as a problem loan. This inflexible, one-size-fits-all regulatory restriction creates harsh pressure on community and regional banks to deny loans to long-standing commercial real estate customers, including small businesses whose lines of credit are backed by CRE assets,” said Brady.
Brady adds, “This legislation is a first step toward addressing liquidity and restoring balance to commercial real estate lending.”
The measure, H.R. 6317, requires reports on the number of maturing commercial mortgage loans at banks that were current and had adequate cash flows for debt service, but that banks did not renew because of pressure from federal bank regulators. H.R.6317 changes current law to permit banks to build up loan loss reserves to better weather economic downturns.
To encourage private investment in real estate, H.R. 6317 reduces the tax depreciation schedule on commercial real estate from 39 years to 20 years and on residential rental real estate from 27½ years to 20 years. To allow businesses to use their losses to reduce their tax liabilities, H.R. 6317 also increases the carry back period for net operating losses from 5 years to 2 years, among other provisions.
