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Board of Governors of the Federal Reserve System
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Board of Governors of the Federal Reserve System

International Training & Assistance (ITA)
for Bank Supervisors

Real Estate Lending Seminar, Session 2Federal Reserve System Courses

Type of Participant Targeted

Real Estate Lending (REL) is a seminar designed for participants whose typical job assignments involve the credit-quality evaluation of loan portfolios. The typical participant will have some exposure to real estate credits, along with three to five years of regulatory experience.

Prerequisites

Participants should have completed the Credit Risk Analysis School and preferably be commissioned safety and soundness examiners or have equivalent experience with other regulatory agencies or banking departments. There is a required pre-course reading assignment and a suggested reading assignment that each requires approximately three hours to complete.

Course Overview

REL is designed to provide a systematic approach to analyzing real estate acquisition, development, and construction lending facilities. This course reviews various types of real estate projects and the unique risks associated with each. Topics to be addressed include real estate underwriting standards, developer cash flow analysis, appraisals and appraisal policy guidelines, financing different types of real estate, real estate-related accounting issues, problem real estate loan management, classification standards and issues, and local economic conditions affecting real estate lending. REL is an interactive seminar, where participants are encouraged to share relevant experiences and contribute to classroom discussions and case studies.

Course Objectives

Upon completion of this 4-day seminar, the participant will, at a minimum, be able to

  • Evaluate the most important risks inherent in common types of real estate projects
  • Determine critical due diligence requirements for various real estate loans, including environmental audits, project feasibility studies, plan and budget reviews, and other relevant documentation
  • Differentiate the valuation methods and analyze the key elements of a real estate valuation, as well as determine whether the appraisal reports meet applicable requirements
  • Analyze the likely adequacy of real estate loan repayment sources, including those related to the borrower, project, and guarantor
  • Assess real estate loan policies to determine if they comply with relevant policy statements and guidelines

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Last update: April 23, 2014