US regulators ask lenders to work with stressed commercial real estate firms
US BANKING regulators are asking lenders to work with creditworthy borrowers who are facing stress in the commercial real estate market.
Financial institutions should work “prudently and constructively” with good borrowers during times of financial stress, the agencies said in a statement.
The statement from the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corp, the National Credit Union Administration and the Office of the Comptroller of the Currency updates and supersedes the previous guidance on commercial real estate loan workouts issued in 2009.
Office loans have posed concerns for some US lenders as property values decline and more borrowers default on their loans.
Federal Reserve Chair Jerome Powell earlier in the month said that US commercial real estate lending remains under pressure but appears unlikely to threaten the broader financial system.
The new guidance contains short-term loan accommodations that includes an agreement to defer one or more payments, make a partial payment, or provide other assistance or relief to a borrower.
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Banks represent 54 per cent of the overall US$5.7 trillion commercial real estate market, with small lenders holding 70 per cent of the loans in that market, according to Citigroup analysts.
More than US$1.4 trillion in US commercial real estate loans will mature by 2027, with some US$270 billion coming due this year, according to real estate data provider Trepp. REUTERS
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