Answer:
Take a look here. Scroll down to Loans in Excess of the Supervisory Loan-to-Value Limits.
Editor's Note: The link above is for an FDIC regulated institution. It does denote that each institution should establish its own loan-to-value limits which do not exceed supervisory limits. Your own financial condition and regulatory agency may influence this answer. LoancategoryLoan-to-value limit (percent) Rawland65 Land development75Construction: Commercial, multifamily,1 and othernon residential80 1- to 4-familyresidential85 Improved property85Owner-occupied 1- to 4-family andhome equity2
1Multifamily construction includes condominiums andcooperatives.
2A loan-to-value limit has not been established for permanentmortgage or home equity loans on owner-occupied, 1- to 4-familyresidential property. However, for any such loan with a loan-to-valueratio that equals or exceeds 90 percent at origination, an institutionshould require appropriate credit enhancement in the form of eithermortgage insurance or readily marketable collateral.
The supervisory loan-to-value limits should be applied tothe underlying property that collateralizes the loan. For loans thatfund multiple phases of the same real estate project (e.g., a loan forboth land development and construction of an office building), theappropriate loan-to-value limit is the limit applicable to the finalphase of the project funded by the loan; however, loan disbursementsshould not exceed actual development or construction outlays. Insituations where a loan is fully cross-collateralized by two or moreproperties or is secured by a collateral pool of two or moreproperties, the appropriate maximum loan amount under supervisoryloan-to-value limits is the sum of the value of each property, lesssenior liens, multiplied by the appropriate loan-to-value limit foreach property. To ensure that collateral margins remain within thesupervisory limits, lenders should redetermine conformity whenevercollateral substitutions are made to the collateral pool.
In establishing internal loan-to-value limits, each lender isexpected to carefully consider the institution-specific and marketfactors listed under "Loan Portfolio Management Considerations,"as well as any other relevant factors, such as the particularsubcategory or type of loan. For any subcategory of loans that exhibitsgreater credit risk than the overall category, a lender should considerthe establishment of an internal loan-to-value limit for thatsubcategory that is lower than the limit for the overall category.
The loan-to-value ratio is only one of several pertinent creditfactors to be considered when underwriting a real estate loan. Othercredit factors to be taken into account are highlighted in the"Underwriting Standards" section above. Because of these otherfactors, the establishment of these supervisory limits should not beinterpreted to mean that loans at these levels will automatically beconsidered sound.
First published on BankersOnline.com 5/14/07
print
share