At what point do you move "problem" real estate loans from loan service to a special assets or workout department? (Commercial or residential.)

That is a bank by bank decision. Sometimes they are moved when it becomes very time consuming and takes a regular loan officer away from business development.

Other times it is because a situation is not straight forward, is going to take intensive negotiation, bankruptcy or foreclosure is a real possibility, etc.

My opinion: if it looks like a simple modification will resolve the issue - leave it. Otherwise, get it to the experts so that the bank's interests are protected.

Many banks have adopted the attitude that a dedicated collector will resolve a problem faster and will call a real problem, a real problem faster than the lender trying to save face. (Especially as year end bonuses are being calculated.) And as a result, they set a standard 30 or 60 day time as to when it goes to the collector or workout dept. But it is bank by bank as KB noted. There is no set requirement. It is what works for the bank.

There are many milestones celebrated in the growth of a bank ($500 million, $1 billion, 50 employees, 100 employees, etc.)

When a bank is big enough to have enough Troubled Assets to justify the hiring of a Special Assets Officer, that might a day recognized as a millstone (sic).

Al