New Fed policy urges commercial loan workouts
November 02, 2009 10:30AMA new Federal Reserve policy aimed at staving off a wave of defaults in the commercial real estate sector urges prudent loan workouts for borrowers who are short on cash or who are having trouble selling or renting their commercial properties. Workouts, the Fed said in a statement Friday, are in the best interest of both lenders and borrowers, and the financial regulators have signed on in support, noting that financial institutions won't be punished for workouts of weak performing loans. Loans made to creditworthy borrowers won't be downgraded solely because the underlying collateral has declined in value, the statement said. TRD
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Comments
Anonymous
This will not restore profitability to the real estate marketplace since it utterly ignores the leverage issue. The properties on average are yielding 6% or less cash on cash caps. Without cataclysmic inflation, these properties will not once again be profitable for years. Figures the Fed finds the "Japanese" preserve the status quo at all costs to the detriment of meaningful economic growth solution. I guess this works if you want your engine of growth to be the federal government.
Comment #1 Posted By: Anonymous 11/02/09