Supervisory LTV Limit On Farmland

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Question:

Have a couple of questions regarding farmland.1. What is the supervisory LTV limit on farmland?2. Is farmland with ongoing farming operations considered to be improved property?

Answer:

1. 85% individually. In additon total loans for commercial, agricultural, multi-family or other non-1-4-family residential property should not exceed 30% of total capital.

2. Yes. Specifically in the Interagency Guidelines on Real Estate Lending Policies, in the definitions section it states:

Improved property loan means an extension of credit secured by one of the following types of real property:

(1) Farmland, ranchland or timberland committed to ongoing management and agricultural production.

First published on BankersOnline.com 4/22/13