NCUA proposes eased TDR reporting

January 26, 2012

NCUA proposes eased TDR reporting

The NCUA Board on Thursday proposed rule changes to ease troubled debt restructuring reporting and alleviate burdens for credit unions that have been manually tracking TDRs – action NAFCU has been urging since 2010.

The proposal, released during Thursday's open board meeting, would require federally insured credit unions to maintain written policies for managing loan workout arrangements and nonaccrual policies for loans that are consistent with requirements set by the Federal Financial Institutions Examination Council.

The rule would allow credit unions to report TDRs based on their original contract terms, removing the current requirement that TDRs are reported as delinquent for six months based on the original contract terms. In addition, credit unions will not need to maintain TDRs in nonaccrual status until they receive six consecutive payments. NAFCU has persistently sought for some time to mitigate the burden that each of these two current requirement posefor credit unions.

"We appreciate that the NCUA is removing the hardline requirement that credit unions report TDRs as delinquent on call reports after six months. This gives credit unions much-needed flexibility in this matter," NAFCU President and CEO Fred Becker said following Thursday's open board meeting.

Becker also mentioned the association's concerns regarding NCUA's proposal that credit unions have formal written policies regarding loan modifications. "We will be closely monitoring the burden of this aspect of the proposal with our members," he said.

NCUA Chairman Debbie Matz noted that the manual tracking of TDRs was an unintended consequence of the previous policy.

The proposed rule will soon appear in the Federal Register for a 30-day comment period. Matz said the agency wants to finalize the rule quickly.

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