Commercial real estate is an ever-changing, dynamic sector where owners and financial institutions oftentimes face challenges, especially during economic downturns and times of financial stress. Borrowers may find themselves having troubles meeting their obligations, which leads to the need for loan accommodations and workouts. There are many different types of loan accommodations, some of which include: interest rate modifications, payment deferrals, term extensions and principal forbearance. Loan workouts include, but are not limited to: loan restructuring, debt settlement, and sometimes the sale of the property. Loan accommodations offer short-term relief and are a better option for those facing temporary difficulties. On the other hand, loan workouts afford more long-term solutions for properties navigating serious financial distress. Both loan accommodations and workouts, if properly utilized, can provide a sustainable answer for both financial institutions and borrowers facing financial difficulties. The strongest financial institutions and borrowers are those who have the ability to manage ever-changing economic conditions, labor issues and inflation. In an effort to help commercial real estate (CRE) borrowers navigate these difficulties, the regulators updated and expanded the 2009 Policy Statement. As luck would have it, the updated statement included a new section on loan accommodations. On Oct. 30, 2009, the Federal Financial Institutions Examination Council (FFIEC) agencies adopted the Policy Statement on Prudent 21 NEBRASKA BANKER
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