2
Accordingly, if all payments are current in accordance with the revised terms of the loan, the
loan would not be reported as past due.
For loans subject to a payment deferral program on which payments were past due prior to the
borrower being affected by COVID-19, it is the FDIC’s position that the delinquency status
of the loan may be adjusted back to the status that existed at the date of the borrower became
affected, essentially being frozen for the duration of the payment deferral period For example,
if a consumer loan subject to a payment deferral program was 60 days past due on the date of
the borrower became affected by COVID-19, an institution would continue to report the loan
in its regulatory reports as 60 days past due during the deferral period (unless the loan is
reported in nonaccrual status or charged off).
4. [As of 4/14/2020] Troubled Debt Restructurings (TDRs). When does a payment
accommodation become a TDR?
Modifications of loan terms do not automatically result in TDRs, and, as described below,
institutions generally do not need to categorize COVID-19-related modifications as TDRs.
According to U.S. generally accepted accounting principles (GAAP), a restructuring of a debt
constitutes a TDR if the creditor, for economic or legal reasons related to the debtor’s financial
difficulties, grants a concession to the debtor that it would not otherwise consider.
1
Under Section 4013 of the CARES Act, banks may elect not to categorize loan modifications
as TDRs if they are (1) related to COVID-19; (2) executed on a loan that was not more than 30
days past due as of December 31, 2019; and (3) executed between March 1, 2020, and the
earlier of (A) 60 days after the date of termination of the National Emergency or (B) December
31, 2020. For all other loan modifications, the agencies have confirmed with staff of the
Financial Accounting Standards Board (FASB) that short-term modifications made on a good
faith basis in response to COVID-19 to borrowers who were current prior to any relief, are not
TDRs. This includes short-term (e.g., six months) modifications such as payment deferrals, fee
waivers, extensions of repayment terms, or other delays in payment that are insignificant.
2
Borrowers considered current are those that are less than 30 days past due on their contractual
payments at the time a modification program is implemented.
Examiners will exercise judgment in reviewing loan modifications, and will not automatically
adversely risk rate credits that are affected by COVID-19. Regardless of whether
modifications result in loans that are considered TDRs or are adversely classified, agency
1
The TDR designation is an accounting categorization, as promulgated by the FASB and codified in Accounting
Standards Codification (ASC) Subtopic 310-40, Receivables – Troubled Debt Restructurings by Creditors (ASC 310-
40).
2
According to ASC 310-40, factors to be considered in making this determination, which could be qualitative, are
whether the amount of delayed restructured payments is insignificant relative to the unpaid principal or collateral value
of the debt, thereby resulting in an insignificant shortfall in the contractual amount due from the borrower, and
whether the delay in timing of the restructured payment period is insignificant relative to the frequency of payments
due under the debt, the debt’s original contractual maturity, or the debt’s original expected duration.