The Federal Reserve Board of Governors, the Federal Deposit Insurance Corp., the National Credit Union Administration, and the Office of the Comptroller of the Currency released their finalized policy updates on commercial real estate loan accommodations and workouts.
The updates reinforce and build on existing supervisory guidance calling for financial institutions to work “prudently and constructively” with creditworthy borrowers during times of financial stress.
This updated policy statement supersedes the previous guidance on commercial real estate loan workouts issued in 2009.
According to the joint press release, the updated statement is substantially similar to the policy proposal issued last year and includes minor changes in response to comments from the public.
The statement included 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.
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.