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Compliance Companion®
Standard Procedures Manuals (SPM)

Commercial Real Estate Lending February 2023

This Manual covers the important issues a financial institution should consider when making a commercial real estate loan or when taking commercial real estate as collateral. The text of this Manual is 744 pages, plus 41 pages of appendixes. The Manual includes discussions of the following topics.

  • Part One reviews due diligence requirements, including customer identification, the beneficial ownership rule and customer due diligence, verifying the identity of borrowers and guarantors, and evaluating real estate collateral.
  • Part Two covers regulatory considerations, such as the standards for safety and soundness, real estate lending standards, concentrations in commercial real estate lending, credit union member business loan requirements, regulatory lending limits, appraisal regulations, flood insurance regulations, environmental due diligence, Equal Credit Opportunity Act and Regulation B (including adverse action notice requirements, signature rules and appraisal availability notices), and the current expected credit losses (CECL) methodology for accounting treatment.
  • Part Three discusses structuring and documentation issues, including basic loan terms, creating a lien on real property, limitations of the one-action rule and the anti-deficiency rules that govern real property-secured loans, mixed collateral issues, bankruptcy issues affecting loan structuring, and loan modifications and renewals.
  • Part Four addresses loan documentation, including term sheets and commitment letters, loan agreements, promissory notes and deeds of trust, as well as arbitration provisions.
  • Part Five discusses guaranties, such as the types of guaranties, basic principles of guaranties, defenses to the enforcement of guaranties and how to structure waivers of those defenses, letters of credit as credit enhancements, lender liability issues, and title insurance and other forms of insurance that should be required.


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Compliance Companion® is a one-stop regulatory compliance resource for financial institutions. This online compilation of 19 industry-leading compliance manuals, including this SPM #19, Commercial Real Estate Lending, takes the legalese out of federal and California laws and regulations, making it easier to understand and keep up with ongoing compliance developments.

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SPM 19
* Janet Bonnefin is retired from the practice of law with the firm.
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