Commercial Real Estate Loan Accommodations and Workouts

Dear Boards of Directors and Chief Executive Officers:

The National Credit Union Administration (NCUA), along with the Office of the Comptroller of the Currency (OCC), Board of Governers of the Federal Reserve System (Board), and Federal Deposit Insurance Corporation (FDIC) (collectively “the agencies”), in consultation with state bank and credit union regulators, are issuing the enclosed interagency Policy Statement on Prudent Commercial Real Estate Loan Accommodations and Workouts (Statement).

The Statement is a principles-based resource for credit unions to consider when engaging with commercial real estate borrowers experiencing financial difficulties. The Statement replaces the Policy Statement on Prudent Commercial Real Estate Loan Workouts (2009 Statement) that was adopted by the agencies, the Federal Financial Institutions Examination Council State Liaison Committee, and the former Office of Thrift Supervision.

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.

Please contact your NCUA regional office or state supervisory authority if you have any questions about this topic.