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American Banker: Fed Proposes Permanent Extension Of Real Estate Debt Leniency

American Banker, September 28, 2022, Fed Proposes Permanent Extension Of Real Estate Debt Leniency

The Federal Reserve wants lenders to remain patient with commercial real estate borrowers that struggle to service their debts.

In a policy statement proposed this week, Fed staffers petitioned the Board of Governors to make a series of tweaks to its supervisory policies that would allow financial institutions to accommodate delinquent real estate borrowers and restructure troubled loans without being penalized. This leniency would be applied even when collateral values fall below loan balances — a phenomenon often referred to as being “underwater.” 

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Redlining and Neighborhood Health

Before the pandemic devastated minority communities, banks and government officials starved them of capital.

Lower-income and minority neighborhoods that were intentionally cut off from lending and investment decades ago today suffer not only from reduced wealth and greater poverty, but from lower life expectancy and higher prevalence of chronic diseases that are risk factors for poor outcomes from COVID-19, a new study shows.

The new study, from the National Community Reinvestment Coalition (NCRC) with researchers from the University of Wisconsin–Milwaukee Joseph J. Zilber School of Public Health and the University of Richmond’s Digital Scholarship Lab, compared 1930’s maps of government-sanctioned lending discrimination zones with current census and public health data.

Table of Content

  • Executive Summary
  • Introduction
  • Redlining, the HOLC Maps and Segregation
  • Segregation, Public Health and COVID-19
  • Methods
  • Results
  • Discussion
  • Conclusion and Policy Recommendations
  • Citations
  • Appendix

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