Friday, October 30, 2009

New Federal Guidelines on Commercial Loan Modifications

The FDIC released new guidelines for banks to use when modifying commercial loans.

They are calling the new program "Mod in a Box." With apologies to Spalding Gray, the name is clever.

The central new issue here is the level of accounting risk afforded loans that are underwater. In the past, loans lacking full collateral would be classified as "high risk." Now, the process is not so fast.

The more I look at the details the more it all looks like a gimmick to me but it will keep a whole bunch of banks solvent and that right now is everyone's goal.

You can read the actual FDIC guidelines by going here.

Robert J. Abalos, Esq.