As in the proposal, the definition being adopted generally aligns with the categories of commercial real estate transactions under the Call Report 31 and other agency guidance,32 with the exception that construction loans secured by a single 1-to-4 family property would not be considered a commercial real estate transaction for purposes of this rule.

Footnote 31: The following four categories of real-estate secured loans in the Consolidated Reports of Condition and Income (Call Report) (FFIEC 031; RCFD 1410) are largely captured in the definition of commercial real estate transaction in the rule: (1) For construction, land development, and other land loans; (2) secured by farmland; (3) secured by residential properties with five or more units; or (4) secured by nonfarm nonresidential properties. As discussed in the proposal, loans that provide construction funding and are secured by a single 1- to-4 family residential property are typically reported as ‘‘for construction, land development, and other land loans.’’ The definition applies to corresponding categories of real estate-secured loans in the FFIEC 041 and FFIEC 051 forms of the Call Report.

The agencies have included the term ‘‘single’’ in the definition to clarify that only transactions secured by one 1-to-4 family residential property are excluded from the definition of ‘‘commercial real estate transaction,’’ whether financing construction or for other purposes. This change addresses potential confusion about whether a loan for the construction of multiple residential properties would meet the definition of ‘‘commercial real estate transaction;’’ a loan that is secured by multiple 1-to-4 family residential properties (for example, a loan to construct multiple properties in a residential neighborhood) would meet the definition of commercial real estate transaction and thus be subject to the higher threshold.