Underwriting standards for qualifying commercial loans.

CFR · 2024-01-01 · US · Title 12

(a) (i) Verified and documented the financial condition of the borrower: (A) As of the end of the borrower's two most recently completed fiscal years; and (B) During the period, if any, since the end of its most recently completed fiscal year; (ii) Conducted an analysis of the borrower's ability to service its overall debt obligations during the next two years, based on reasonable projections; (iii) Determined that, based on the previous two years' actual performance, the borrower had: (A) A total liabilities ratio of 50 percent or less; (B) A leverage ratio of 3.0 or less; and (C) A DSC ratio of 1.5 or greater; (iv) Determined that, based on the two years of projections, which include the new debt obligation, following the closing date of the loan, the borrower will have: (A) A total liabilities ratio of 50 percent or less; (B) A leverage ratio of 3.0 or less; and (C) A DSC ratio of 1.5 or greater. (2) Prior to, upon or promptly following the inception of the loan, the originator: (i) If the loan is originated on a secured basis, obtains a perfected security interest (by filing, title notation or otherwise) or, in the case of real property, a recorded lien, on all of the property pledged to collateralize the loan; and (ii) If the loan documents indicate the purpose of the loan is to finance (3) The loan documentation for the commercial loan includes covenants that: (i) Require the borrower to provide to the servicer of the commercial loan the borrower's financial statements

official document · source cfr-2024 · id 12:§ 244.16