Revised Interagency Guidance on Loan Modifications

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Today, the federal banking agencies, the National Credit Union Administration (NCUA), and the Conference of State Bank Supervisors (CSBS) released a revised Interagency Statement on loan modifications.  The revised statement clarifies the interaction between the March 22, 2020, Interagency Statement and the temporary relief provided by Section 4013 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was signed into law on March 27, 2020.  A copy of the press release is here.  The Interagency Statement can be accessed here.

The agencies encourage financial institutions to work with borrowers and will not criticize institutions for doing so in a safe and sound manner.  The agencies view prudent loan modification programs offered to financial institution customers affected by COVID-19 as positive and proactive actions that can manage or mitigate adverse impacts on borrowers, and lead to improved loan performance and reduced credit risk.

The agencies' examiners will exercise judgment in reviewing loan modifications, including TDRs, and will not automatically adversely risk rate credits that are affected by COVID-19, including those considered TDRs.  Regardless of whether modifications are considered TDRs or are adversely classified, agency examiners will not criticize prudent efforts to modify terms on existing loans for affected customers.

 

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