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OCC BULLETIN 2005-32
To: Chief Executive Officers of All National Banks and National Bank Operating Subsidiaries, Department and Division Heads, and All Examining Personnel

Description: Residential Tract Development Lending

The guidance attached to this bulletin continues to apply to federal savings associations.

The Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, and the National Credit Union Administration are jointly issuing the attached document to assist institutions in complying with the agencies’ appraisal and real estate lending requirements for financing residential tract developments. The following topics are addressed:

  • Appraisal requirements for transactions financing the construction of single family homes in a residential tract development.
  • Appraisal requirements for loans to finance raw land, residential lots, and condominium projects.
  • Appraisal requirements for residential construction loans structured with a borrowing base revolving line of credit.
  • Clarification on loan amount and collateral value for purposes of calculating the loan-to-value ratio for residential tract development loans.
  • Definition of a tract development, including clarification of pre-sold units.
  • Acceptable use of an appraisal of a model home.

For further information concerning the matters discussed in this bulletin or the attachment, please contact the Credit Risk Division at (202) 649-6670 or your supervisory office.

Barbara J. Grunkemeyer
Deputy Comptroller for Credit Risk

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