New Fed policy urges commercial loan workouts

A 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