THE GOVERNMENT HAS been busy. Last fall, the IRS announced a new rule allowing CMBS loans to be modified without massive tax implications. Then, the FDIC clarified a rule that would allow banks to extend loans without requiring higher capital reserves. On the surface, the changes provide cover for assaulted owners, but finance experts say the impact of these rules is still unknown.

Both policies apply to performing loans that are hurt by either a weak local market or the lack of liquidity on the market. “It was definitely a sigh of relief for the lending community,” says Dan Fasulo, managing director of New York-based Real Capital Analytics. “Just about every asset purchased over the last few years has broken loan-to-value covenants, but it's just a function of valuations falling.”

To some, the policy may prevent banks from originating more new loans. Like all lenders, banks recycle their cash: When loans get paid off, new loans are made with that capital. This FDIC policy, however, allows banks to tie up more of their capital into existing loans. “The previous deals aren't coming through the system, so banks don't have the money to re-lend back into the system,” says Mike Kelly, president and co-founder of Greenwood Village, Colo.-based Caldera Asset Management.

The IRS' new rule, meanwhile, allows servicers to modify and restructure securitized loans before they slip into default, all without incurring tax penalties. The rule doesn't change how master servicers determine which loans can be modified, however. The contracts that exist between the servicer, issuer, and investor spell out what triggers a workout, and those contracts trump all. “The servicing documents still rule,” says Brian Hanson, managing director of Washington, D.C.-based CWCapital Asset Management. “So it's not an automatic wave into special servicing when [there are] issues.”