There is a projected $400 billion of commercial real estate (CRE) mortgage loans per year maturing over the next three years in the United States, a majority of which is held by banks. Moreover, according to estimates, greater than $500 billion of bank CRE loans maturing between now and 2014 are underwater. These figures, coupled with a general lack of available financing for CRE borrowers, foretell very large numbers of CRE borrowers that will be unable to meet loan repayment terms. Given these conditions, loan workout policies, practices and controls of banks have become, and are expected to remain, an important area of supervisory focus.

Read the full memo, “U.S. Federal Banking Agencies Issue a Policy Statement on Commercial Real Estate Loan Workouts.”