NCUA Adopts New Rule on TDRs

The National Credit Union Administration (NCUA) adopted a final rule regarding troubled debt restructuring (TDR) at Thursday’s open board meeting that clarifies reporting, requires new policies and requires data collection on modified loans.

First, the good news: the rule will allow credit unions to modify loans without having to characterize them as delinquent (as long as they are performing) and will eliminate the manual tracking of all TDRs for six months. Delinquencies on TDR loans will be calculated consistent with the modified contract terms, not the original contract terms.

Of course, no regulation comes without some bad news. In this case, credit unions will need to adopt some new policies. Specifically, the rule amends the NCUA’s regulations requiring credit unions to maintain written policies to address loan workout arrangements, and nonaccrual standards that include the discontinuance of interest accrual on loans past due by 90 days or more and requirements for returning such loans, including member business loans, to accrual status.

The rule will be effective in three stages. First, credit unions can calculate past-due status consistent with the modified loan contract as of June 30, 2012. The credit union must then have its new loan workout and nonaccrual policies in place by Oct. 1, 2012. The effective date for the collection of nonaccrual status data is Dec. 21, 2012.


Questions? Contact the Compliance Hotline: 1.800.546.4465,

Posted in Compliance News, NCUA.