The Federal Financial Institutions Examination Council (FFIEC) issued an Interagency Statement for borrowers who have been impacted by COVID-19 (the Coronavirus).
The Statement provides further clarity on:
- The treatment of accrual of interest;
- That deferrals of payments granted based on COVID-19 should not be classified as past due during the deferral period;
- That banking agencies will not criticize institutions for working with borrowers and such modifications related to COVID-19 will not automatically cause loans to be treated as troubled debt restructurings.
In summary, the Statement encourages banks to work with borrowers through these unique and challenging times and clarifies that prudent efforts to modify the terms on existing loans will not be criticized by banking agencies. This will allow financial institutions more flexibility in providing relief to its customers through allowing deferral of payments on outstanding debt during this current pandemic. To read the Statement in full, please click on the link below.
