On March 22, 2020, the FRB, FDIC, NCUA, OCC, and CFPB issued an interagency statement providing information to institutions working with borrowers affected by Coronavirus/COVID-19. In general, the statement encouraged lenders to make good faith efforts to proactively work with borrowers who are in good standing (those who are less than 30 days past due) whose loans are affected by COVID-19. Additionally, the statement indicated that modification of loan terms do not automatically result in a TDR (Troubled Debt Restructuring), and that short-term modifications such as payment deferrals, fee waivers, or extensions of repayment terms are “insignificant.” The statement also provides that “efforts to work with borrowers of one-to-four family residential mortgages… where the loans are prudently underwritten, and not past due or carried in nonaccrual status, will not result in loans being considered restructured or modified for purposes of their respective risk-based pricing rules.”
In the coming days, Compliance Systems will publish additional information in its Community Lounge related to the processes through which lenders may permissibly modify borrowers/transactions affected by COVID-19.