The US Government is reacting to the recent sharp rise in commercial real estate delinquencies. While the Federal Reserve is starting to research commercial real estate loans at smaller banks the IRS has issued rules designed to make it easier to refinance loans. From USA Today…

Delinquency rates on commercial loans have doubled the past year to 7% as more companies downsize and retailers close, the Fed has said. Small and regional banks face the greatest risk of severe losses from commercial real-estate loans, which are contributing to a rising number of bank failures.

The Fed review is focused on roughly 800 regional and community banks, the official said. The Fed’s “stress” tests earlier this year on the 19 biggest banks in the country already examined their commercial real-estate loans.

Unlike the “stress” tests, results of the Fed’s examinations of smaller banks are not expected to be made public. The extra scrutiny of commercial real estate loans is being done through the normal supervisory process, the official said.

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