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Agencies invite comment on commercial real estate loan workouts, accommodations

August 3, 2022

NCUA, along with the Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency are inviting public comment on a proposed policy statement for prudent commercial real estate (CRE) loan accommodations and workouts. Comments are due 60 days from date of publication in the Federal Register.

The proposed statement reaffirms the key principles from the Oct. 30, 2009 statement that serves as a useful resource for both agency staff and financial institutions in understanding risk management and accounting practices for CRE loan workouts.

The proposed statement addresses a financial institution’s handling of loan accommodations and workouts on matters like risk management, classification of loans, regulatory reporting, and accounting considerations. It includes updated references to supervisory guidance and updated loan workout examples.

The proposed statement additionally reflects changes in U.S. generally accepted accounting principles (GAAP) that have occurred since 2009. This includes eliminating the need for credit unions to identify and account for loan modifications as troubled debt restructurings (TDRs) after adopting the current expected credit losses (CECL) accounting methodology.

It also emphasizes that federally insured credit unions (FICUs) with less than $10 million in assets are not required to comply with GAAP, unless the credit union is state-chartered and GAAP compliance is mandated by state law.