Agencies finalize CRE guidance update

Banking regulators finalized updates to agency guidance on commercial real estate loan accommodations for borrowers.

Agency Guidance: The agencies updated a 2009 policy statement on working with creditworthy borrowers during times of financial stress. It incorporates:

• Recent policy guidance on short-term loan accommodations.

• Revisions to reflect accounting developments for estimating loan losses.

• Revised and additional examples of CRE loan workouts and accommodations.

ICBA View: In a comment letter last year, ICBA expressed support for the agency effort to provide clearer guidance while offering recommendations to improve their proposed update. The final policy statement addresses ICBA concerns by:

• Specifically including state and local conditions in its definition of the “market conditions” driving examiner analyses.

• Affirming that examiners are not to perform a separate, independent valuation for collateral adjustments.

• Clarifying when examiners may adjust the estimated value of collateral.