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Washington
NCUA to CUs Work constructively to resolve CRE issues
ALEXANDRIA, Va. (6/17/10)—The National Credit Union Administration (NCUA) has encouraged credit unions to “work constructively with member-borrowers to implement prudent member business loan workouts that are in the best interest of both the credit union and the member-borrower.” Wednesday the NCUA released guidance that centered on a recent Federal Financial Institutions Examination Council policy statement that aims to aid credit unions and other financial institutions that are working with commercial real estate borrowers experiencing diminished operating cash flows, depreciated collateral values, or prolonged delays in selling or renting commercial properties. The policy statement stressed that performing loans--including those that have been renewed or restructured on reasonable modified terms--made to creditworthy borrowers will not be adversely classified solely because the value of underlying collateral has declined. The NCUA in the release recommended that credit unions working with member-borrowers in financially stressed situations maintain risk management practices “appropriate for the complexity and nature of the lending activity, and consistent with safe and sound lending practices and regulatory requirements.” “Prudent loan workout arrangements should improve the prospects for repayment of principal and interest, and should be supported by a comprehensive analysis of the member-borrower’s willingness and ability to repay the loan, an evaluation of support provided by guarantors, and a current assessment of the underlying collateral,” the NCUA added. For the full NCUA release, use the resource link.
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