This document was updated to reflect developments as a result of informal discussions with staff members of the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency (the “Agency staff”) in connection with the April 24, 2020, webcast, “Ask the Regulators: Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working With Customers Affected by the Coronavirus” (the “Agencies’ webcast”). Modified text has been marked with a boldface italic date in brackets throughout the document. Note that additional updates to this publication may be issued in the future, as warranted.
FASB Accounting Standards Codification (ASC) Subtopic 310-40, Receivables: Troubled Debt Restructurings by Creditors.
The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, the Consumer Financial Protection Bureau, and the State Banking Regulators.
FASB Accounting Standards Codification Subtopic 470-60, Debt: Troubled Debt Restructurings by Debtors, addresses the borrower’s determination of whether a modification represents a TDR. We generally believe that borrowers may reasonably conclude that modifications are not TDRs when they are made in accordance with a modification program established by lenders that broadly applies regardless of a specific evaluation of the borrower’s financial circumstances. [Footnote amended May 1, 2020]
FASB Accounting Standards Update (ASU) No. 2016-13, Measurement of Credit Losses on Financial Instruments.
This question is intended to address situations in which a modification was made to the loan only in response to the COVID-19 pandemic (e.g., this question does not address modifications that include other revisions such as a change from a LIBOR rate to another variable interest).
FASB Accounting Standards Codification Subtopic 310-20, Receivables: Nonrefundable Fees and Other Costs.
These events may also result in the need to write off a modified loan.
Note that the six-month limitation is applied on a cumulative basis. For example, an entity that modifies a loan to defer payments for three months could subsequently provide for another modification to defer payments for up to another three months.