The NCUA has released an “Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus”.

In the statement, the agencies are encouraging financial institutions to work with borrowers affected by COVID-19 and provide additional information regarding loan modifications.

Agencies are encouraging financial institutions to offer prudent loan modification programs to their members affected by COVID-19 that are unable to meet their contractual payment obligations and reminds institutions that not all modifications of loan terms result in a troubled debt restructuring (TDR).  Short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief are not TDRs.  This includes short-term modifications such as payment deferrals, fee waivers, and extension of payment terms.

The agencies’ examiners will exercise judgment in reviewing loan modifications, including TDRs, and will not automatically adversely risk rate credits that are affected, including those considered TDRs.  Regardless of whether modifications are considered TDRs or are adversely classified, agencies will not criticize financial institutions that mitigate credit risk through prudent actions consistent with safe and sound practices.

For additional details, please review the Interagency Statement.