Bank Regulator Guidance on Real Estate Loan Workouts
Posted 11-14-2009 at 06:51 PM by wiseman1
Joe Robson, chairman of the National Association of Home Builders (NAHB) and a home builder from Tulsa Okla., today issued the following statement on new guidance issued by federal bank regulators on prudent commercial real estate (CRE) loan workouts:
”NAHB strongly supports the aim of the new guidelines that have been issued by federal regulators to encourage banks to renew or restructure loans to creditworthy commercial real estate borrowers, even when the value of the loan collateral has declined.
”We support actions that will help avoid loan foreclosures and other adverse regulatory actions on loans to responsible and capable borrowers with viable projects. Unfortunately, under the workout criteria provided in this guidance, which is overly focused on income-producing commercial properties, it will be extremely difficult for banks to reconfigure residential land acquisition, development and construction (AD&C) loans.
“For this policy to be truly effective, regulators need to issue more flexible criteria that will allow and encourage banks to maintain funding for residential AD&C loans in good standing that fall below their underlying value. Failure to do so will lead to needless foreclosures and losses on outstanding loans. This, in turn, will further exacerbate the banking and credit crisis, lead to more foreclosures, place downward pressure on residential real estate values and act as a drag on housing and the economy.”
Source: www.nahb.org
www.DVWise.com
”NAHB strongly supports the aim of the new guidelines that have been issued by federal regulators to encourage banks to renew or restructure loans to creditworthy commercial real estate borrowers, even when the value of the loan collateral has declined.
”We support actions that will help avoid loan foreclosures and other adverse regulatory actions on loans to responsible and capable borrowers with viable projects. Unfortunately, under the workout criteria provided in this guidance, which is overly focused on income-producing commercial properties, it will be extremely difficult for banks to reconfigure residential land acquisition, development and construction (AD&C) loans.
“For this policy to be truly effective, regulators need to issue more flexible criteria that will allow and encourage banks to maintain funding for residential AD&C loans in good standing that fall below their underlying value. Failure to do so will lead to needless foreclosures and losses on outstanding loans. This, in turn, will further exacerbate the banking and credit crisis, lead to more foreclosures, place downward pressure on residential real estate values and act as a drag on housing and the economy.”
Source: www.nahb.org
www.DVWise.com
