A recent report in American Banker discusses the FDIC's recommendation for "acquirers of failed banks under loss-sharing agreements with the FDIC on certain assets consider six-month forbearance plans for unemployed or underemployed borrowers".

Acquirers Told to Cut Borrowers Slack 

The Federal Deposit Insurance Corp. urged institutions that split the costs of failed banks with the agency to cut some of their new borrowers a break.

The agency recommended that acquirers of failed banks under loss-sharing agreements with the FDIC on certain assets consider six-month forbearance plans for unemployed or underemployed borrowers. Under such a plan, an institution would lower a borrower's monthly payment to a level that "should allow for reasonable living expenses after payment of mortgage-related expenses," the FDIC said.

The agency, which consistently has pushed institutions to modify troubled loans to prevent foreclosures, said the reduction of monthly payments would not be viewed as losses under the loss-sharing agreement.

"This is a win-win for the borrower, who can remain in his or her home while looking for a new job, and the acquiring institution, which continues to receive payments on the loan," FDIC Chairman Sheila Bair said in a press release. "Ultimately, by reducing losses under our loss-share agreements, this approach helps reduce losses to the FDIC as well."

To view the online article, please click here.  

About Safeguard
Safeguard Properties is the largest privately held field services company in the country. Located in Cleveland, Ohio and founded in 1990 by Robert Klein, Safeguard has grown from a regional preservation company with a few employees and a handful of contractors performing services in the Midwest, to a national company with over 700 employees. Safeguard is supported by a nationwide network of subcontractors able to perform any requested superintendence, preservation, and maintenance functions, as well as numerous ancillary services in the U.S., the Virgin Islands, and Puerto Rico.