Bank regulators encouraging commercial real estate workouts - Federal bank regulators are urging lenders to modify troubled commercial real estate loans, which are of growing concern to bankers and examiners and a mounting threat to the industry.  The FDIC, the Federal Reserve, the Office of Thrift Supervision and the Office of the Comptroller of the Currency issued guidance Friday stating that “prudent” workouts of commercial real estate loans are in the best interest of both banks and borrowers.  “The financial regulators recognize that financial institutions face significant challenges when working with commercial real estate (CRE) borrowers that are experiencing diminished operating cash flows, depreciated collateral values, or prolonged sales and rental absorption periods,” the policy statement said. “While CRE borrowers may experience deterioration in their financial condition, many continue to be creditworthy customers who have the willingness and capacity to repay their debts. In such cases, financial institutions and borrowers may find it mutually beneficial to work constructively together.”
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