Final policy statement urges banks, credit unions to work with all creditworthy borrowers on commercial RE loan workouts, accommodations

A final policy statement on commercial real estate loan accommodations and workouts, designed to reinforce and build on existing supervisory guidance, was released June 29 by federal banking and credit union regulators.

The policy statement, according to the Federal Reserve, Federal Deposit Insurance Corp. (FDIC), National Credit Union Administration (NCUA), and the Office of the Comptroller of the Currency (OCC), calls on the banks and credit unions to “work prudently and constructively with creditworthy borrowers during times of financial stress.” The statement applies to all institutions supervised by the agencies.

The statement, the agencies said in a joint statement, is substantially similar to the proposal issued last year and includes minor changes in response to comments. The statement updates and supersedes the previous guidance on commercial real estate loan workouts issued in 2009, the agencies said.

However, the statement does include a section on short-term loan accommodations that was not included in the previous guidance. “An accommodation includes an agreement to defer one or more payments, make a partial payment, or provide other assistance or relief to a borrower who is experiencing a financial challenge,” the agencies said.

Additionally, the statement addresses recent accounting changes for estimating loan losses and provides examples of how to classify and account for loans affected by workout activity.

Policy Statement on Prudent Commercial Real Estate Loan Accommodations and Workouts