FDIC Clarifies Rules for Abandoned Foreclosures

The FDIC issued, on Wednesday, March 2, 2015, a Financial Institution Letter clarifying its supervisory expectations in existing guidance for the risk-management practices when banks make the decision to discontinue foreclosure proceedings.


“The FDIC continues to encourage institutions to avoid unnecessary foreclosures by working constructively with borrowers and considering prudent workout arrangements that increase the potential for financially stressed borrowers to keep their properties,” the letter said.  “When workout arrangements are unsuccessful or not economically feasible, existing supervisory guidance reminds institutions of the need to establish policies and procedures for acquiring other real estate that mitigate the impact the foreclosure process has on the value of surrounding properties.”