U.S. Will Set Guidelines to Modify Real-Estate Loans

From Bloomberg.com:

U.S. bank regulators, saying losses on souring commercial real-estate loans pose the biggest risk to lenders, will issue guidelines to help the institutions modify the agreements.

Reduced demand for space has led to falling rental rates, adding to losses on the loans, leaders of the Federal Deposit Insurance Corp., Office of the Comptroller of the Currency and Office of Thrift Supervision told the Senate subcommittee on financial institutions today.

“The most prominent area of risk for rising credit losses at FDIC-insured institutions during the next several quarters is in CRE lending,” FDIC Chairman Sheila Bair said, referring to commercial real estate. “Prudent loan workouts are often in the best interest of financial institutions and borrowers.”

Large concentrations of commercial property loans are behind many of the 123 banks that failed in the past two years, draining the FDIC’s deposit insurance fund. Commercial real- estate loans totaled almost $1.1 trillion as of June, representing 14 percent of all loans and leases, Bair said.

Federal bank regulators will soon issue guidelines on commercial real-estate loan workouts, Bair said without providing specifics.

“The guidance we are working on is intended to promote supervisory consistency, enhance the transparency of CRE workout transactions, and ensure that regulatory policies and actions do not inadvertently curtail the availability of credit to sound borrowers,” said Timothy Ward, the OTS’s deputy director of examinations, supervision and consumer protection.

Questions for the Tax Lady: August 17th, 2009

Check out the following new Questions for the Tax Lady answers and feel free to ask me questions through one of the links below. You can send me an email, direct message or @ reply, and I will do my best to get an answer for you!

Question #1: My fiancé and I are buying a house. The loan is in my name only but we are using her $30,000 inheritance. Will a gift tax apply?

It depends. Technically any transfer of property valued at over $12,000 (where full reimbursement is not received) will be subject to the gift tax. However, gifts between spouses are excluded. Therefore if you and your fiancé got married before the end of the calendar year then you might be exempt.