ALEXANDRIA, Va. (10/8/14)--The National Credit Union Administration has issued a bulletin adopting a revised regulatory reporting policy for loans that have been modified in a troubled debt restructuring (TDR).
The bulletin also provides clarification about the circumstances in which a subsequent restructuring of a TDR loan need no longer be treated as a TDR.
The Credit Union National Association has consistently urged the NCUA to provide additional guidance on how to deal with the loans once they are restructured.
According to the agency, the bulletin is in response to frequent questions from credit unions about when a loan is no longer treated as a TDR. When a loan has previously been modified in a TDR, the lending institution and the borrower may subsequently enter into another restructuring agreement.
"The facts and circumstances of each subsequent restructuring of a TDR loan should be carefully evaluated to determine the appropriate accounting by the institution under U.S. generally accepted accounting principles," the bulletin reads.
Federal financial regulators will "not object to an institution no longer treating such a loan as a TDR" if:
According to the NCUA, credit unions may choose to apply this guidance to subsequently restructured loans that meet the above conditions. Credit unions also may choose to apply this guidance to loans outstanding as of Sept. 30 for which there has been a previous subsequent restructuring that met the conditions discussed above at the time of the subsequent restructuring.
However, prior call reports should not be amended, according to the bulletin.
CUNA's accounting subcommittee will be reviewing the guidance in detail and will revisit any lingering issues with the NCUA.