Agencies Finalize Policy Statement on Commercial Real Estate Loan Accommodations and Workouts

Federal financial institution regulatory agencies today jointly issued a final policy statement 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.

The statement is substantially similar to a 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 statement includes 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.

The statement applies to all financial institutions supervised by the agencies.

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