The FDIC, the Federal Reserve and the Office of Thrift Supervision released new rules this past week. The main point was that it would be wise to be "prudent" in modifying homes for the benefit of both the bank and the borrower that is creditworthy.
For those creditworthy individuals who have restructured their commercial loans they will not be considered "high-risk" just because the value of the property has dropped below what the original purchase price was. For banks that follow the correct procedures they will be safe from scrutiny. These agencies claim that they will take a "balanced approach" when looking at the risk management practices of the bank they are looking into.
This past week we saw 106 bank failures and we haven't seen that many since 1992. The real estate loans that have gone bad as well as the recession are what is being blamed for this number.
So far this year the FDIC has paid $25 billion for failed banks. It is estimated that over the next four years the cost will be $100 billion. The FDIC plans to charge the banks that they insure in advance for the upcoming costs.
If you have questions about loan remodification or relocating to a specific area please contact us!
