NCUA Addresses Troubled Debt Restructuring

June 1, 2013

The NCUA’s Letter to Credit Unions No. 13-CU-03 provides credit unions with the same troubled debt restructuring (TDR) guidance that the agency shared with its examiners— Supervisory Letter 13-02.

The guidance describes in detail how examiners will apply the regulatory changes that the NCUA Board approved last year.

In May 2012, the NCUA Board revised Part 741 of the NCUA Rules and Regulations and added an Appendix C: Interpretive Ruling and Policy Statement on Loan Workouts and Nonaccrual Policy, and Regulatory Reporting of Troubled Debt Restructured Loans.

Supervisory Letter 13-02, issued to NCUA examiners, provides additional clarification on the agency’s review of loan workout programs in credit unions.

The letter focuses on specific components of a sound workout program including:

  • Revised regulatory reporting requirements for loan workouts;
  • Items to address in your policy including controls and decision support systems consistent with the size and scope of your program;
  • Key components of a sound information system for loan workouts and TDRs; and
  • Appropriate nonaccrual policies and procedures for loan workouts and TDRs.