Federal and state banking regulators said Sunday that they will not direct supervised institutions to automatically categorize coronavirus-related loan modifications as troubled debt restructurings.
In an interagency statement supplementing recent guidance encouraging financial institutions to work constructively with borrowers, the agencies said short-term modifications made on good faith in response to COVID-19 to borrowers who were current prior to any relief are not TDRs.
This includes short-term modifications—for example, six months—such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant. Read more.
This guidance follows a March 13 interagency statement and the FDIC's March 19 release of frequently asked questions on loan modifications and other topics. ICBA has been urging the agencies to provide maximum flexibility for loan modifications, including not considering COVID-19 modifications to be TDRs.
