As the number of occupancy rates continues to decline in commercial properties, several bank regulators are working together to come up with guidelines for loan workouts.
The FDIC, the Office of the Comptroller of the Currency and the Office of Thrift Supervision recently told a Senate banking committee that rental rates have dropped as a result of a reduction in occupancy levels in commercial real estate properties. As a result, the three banking regulators said they are keeping a keen eye on the structure of commercial and construction loans. Bank regulatory examinations are also set to look at the way the loans are organized.
At an Oct. 13 Senate hearing, FDIC Chairman Sheila Bair said loan workouts in both consumer and commercial real estate instances are "in the best interest of financial institutions and borrowers." According to the FDIC, commercial real estate loans represented 14% of all loans and leases for a total of $1.1 trillion as of June 2009.
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