“(a) In general.—The appropriate Federal banking agencies may only subject a depository institution to higher capital standards with respect to a high volatility commercial real estate (HVCRE) exposure (as defined under section 324.2 of title 12, Code of Federal Regulations, as in effect on the day before the date of the enactment of this section) if such exposure is an HVCRE ADC loan.

“(b) HVCRE ADC loan defined.—For purposes of this section and with respect to a depository institution, the term ‘HVCRE ADC loan’—

“(1) means a credit facility secured by land or improved real property that, prior to being reclassified by the depository institution as a Non-HVCRE ADC loan pursuant to subsection (d)—

“(A) finances or has financed the acquisition, development, or construction of real property;

“(B) has the purpose of providing financing to acquire, develop, or improve such real property into income-producing real property; and

“(C) is dependent upon future income or sales proceeds from, or refinancing of, such real property for the repayment of such credit facility;

“(2) does not include a credit facility financing—

“(A) the acquisition, development, or construction of properties that are—

“(i) one- to four-family residential properties;

“(ii) real property that would qualify as an investment in community development; or

“(iii) agricultural land;

“(B) the acquisition or refinance of existing income-producing real property secured by a mortgage on such property;

“(C) improvements to existing income-producing improved real property secured by a mortgage on such property, if the cash flow being generated by the real property is sufficient to support the debt service and expenses of the real property, as determined by the depository institution, in accordance with the institution’s applicable loan underwriting criteria for permanent financings; or

“(D) commercial real property projects in which—

“(i) the loan-to-value ratio is less than or equal to the applicable maximum supervisory loan-to-value ratio as determined by the appropriate Federal banking agency; and

“(ii) the borrower has contributed capital of at least 15 percent of the real property’s appraised, ‘as completed’ value to the project in the form of—

“(I) cash;

“(II) unencumbered readily marketable assets;

“(III) paid development expenses out-of-pocket; or

“(IV) contributed real property or improvements; and

“(iii) the borrower contributed the minimum amount of capital described under clause (ii) before the depository institution advances funds under the credit facility, and such minimum amount of capital contributed by the borrower is contractually required to remain in the project until the credit facility has been reclassified by the depository institution as a Non-HVCRE ADC loan under subsection (d);

“(3) does not include any loan made prior to January 1, 2015; and

“(4) does not include a credit facility reclassified as a Non-HVCRE ADC loan under subsection (d).

“(c) Value of contributed real property.—For purposes of this section, the value of any real property contributed by a borrower as a capital contribution shall be the appraised value of the property as determined under standards prescribed pursuant to section 1110 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3339), in connection with the extension of the credit facility or loan to such borrower.

“(d) Reclassification as a Non-HVCRE ADC loan.—For purposes of this section and with respect to a credit facility and a depository institution, upon—

“(1) the completion of the development or construction of the real property being financed by the credit facility; and

“(2) cash flow being generated by the real property being sufficient to support the debt service and expenses of the real property,

in either case to the satisfaction of the depository institution, in accordance with the institution’s applicable loan underwriting criteria for permanent financings, the credit facility may be reclassified by the depository institution as a Non-HVCRE ADC loan.”.