Commercial lending

The case involved a customer who was charged $100,000 in legal fees when he tried to pay off a commercial mortgage early. After the borrower waged a nearly decadelong legal fight, a Florida court ordered the bank to reimburse a portion of the fees.

Some of the biggest lenders to U.S. offices are weighing sales of loans on the properties as regulators heighten scrutiny on commercial real estate debt portfolios. 

Major efforts are underway to eliminate discriminatory practices in property valuations.

In a policy proposal published Tuesday, Fed staffers called for supervisory changes to accommodate banks with commercial real estate loans still reeling from COVID.

Banks including Wells Fargo, Bank of America and JPMorgan Chase have pulled back on financing for offices and other commercial real estate following a record burst of lending in the first half of this year. 

A new group called MoreThanFair aims to establish the lines between fair and unfair lending, to set best practices for the use of AI in lending and to lessen the stigma of fintech lenders.

BofA has launched two programs, one focused on increasing homeownership for Black and Hispanic Americans, and the other on small businesses owned by women and minorities that buy commercial real estate in federal opportunity zones.

Bank lending activity grew at a strong clip in the second quarter and continues to expand. Yet rising interest rates and recession concerns could hamper future growth.

The agency acknowledged that loan performance in the sector has been strong, but cited several reasons to think that might change, including rising interest rates, the effects of inflation and uncertainty about the future of work and commerce.

Most banks’ interest income will rise following the Fed policy shift. But the rate increase also boosts the likelihood of a recession that could hurt borrowers and drive up loan losses.