Federal Regulators Reported Close to Issuing Guidelines for Commercial Mortgage Modifications

On Wednesday, October 14, 2009, FDIC Chair Sheila Bair testified with others from the banking industry at a hearing of the Senate Banking Subcommittee on Financial Institutions. At the hearing, Bair stated that regulators are close to issuing new guidance for banks to use in modifying troubled commercial real estate (CRE) loans. Workouts for these loans, said Bair, are often in the best interest of all parties involved during tough economic periods. The forthcoming guidance will reflect this, and is intended to give banks the necessary resources to restructure weak credit relationships and manage real estate holdings in an organized way. At the hearing, Bair, along with several other witnesses, expressed concern over the state of the CRE market. Indeed, Bair cited CRE loans as "the most prominent area of risk for rising credit losses at FDIC-insured institutions during the next several quarters."
Read the testimony

Jeff Lischer 202-383-1117, Daniel Blair 202-383-1089