NEWS: The NCUA and other federal banking regulators this week updated their policy statement on accommodations and workouts for commercial real estate (CRE) loans where borrowers are experiencing financial difficulty.
Among other things, the new statement – which supersedes a 2009 statement – recognizes the recent elimination of accounting for troubled debt restructurings.
The statement also builds on existing supervisory guidance calling for financial institutions to work prudently and constructively with borrowers during times of financial stress, updates interagency supervisor guidance on CRE loan workouts and adds a section on short-term loan accommodations.
In a Letter to Credit Unions about the new statement, the NCUA said:
The NCUA recognizes that prudent commercial real estate loan accommodations and workouts are often in the best interest of both the credit union and the borrower. The Statement addresses sound principles and supervisory expectations with respect to a credit union’s handling of loan accommodations and workouts, including risk management, the classification of loans, regulatory reporting, and accounting considerations.
The Statement reaffirms key principles from the 2009 Statement, but also includes a new section on short-term loan accommodations, updated information on changes in accounting principles since 2009, and revisions and additions to the examples of commercial real estate loan workouts that are located in Appendix 1 of the Statement.
Regulators reaffirmed two key safety & soundness principles from the 2009 statement.
- Credit unions and other financial institutions will not be subject to criticism if they implement prudent CRE loan accommodations and workout arrangements after a comprehensive review of a borrower’s financial condition, even if these arrangements result in modified loans with weaknesses that result in adverse classification.
- Modified loans to borrowers who have the ability to repay their debts according to reasonable terms will not be subject to adverse classification solely because the value of the underlying collateral has declined to less than the outstanding loan balance.
League Legal Affairs Attorney’s Conference
Jul 25, 2023 9:00 AM – 3:00 PM, Madison WI – Information and Registration.
The League Legal Affairs Attorney’s Conference brings together attorneys from Wisconsin’s Credit Unions for a day of discussion around Compliance and Legal matters of importance to our members. Please invite your credit union attorney to attend!
- 9:00 am – 9:30 am
Welcome and Coffee
- 9:30 am – 10:15 am
Paul Guttormsson, Senior Vice President & General Counsel | The League
The New Reg. B Small Business Lending Rule
- 10:15 am – 10:30 am
Break
- 10:30 am – 12:00 pm
Tom Theune, Director | Office of Credit Unions, DFI
- 12:00 pm – 12:30 pm
Lunch
- 12:30 pm – 1:00 pm
John Engel, Director of Legal Affairs | The League
HELOC Compliance Tensions
- 1:00 pm – 2:00 pm
Melissa Caulum Williams | Senior Counsel | Husch Blackwell
HR Compliance Issues
- 2:00 pm – 2:30 pm
Kim Hoppe, Compliance Resource Analyst | The League
Remote Online Notarization
- 2:30 pm – 3:00 pm
Roundtable Discussion Adjourn