Federal regulators urged banks and other institutions today to work with borrowers affected by COVID-19, stating that loan modification programs "are positive actions that can mitigate adverse affects on borrowers due to COVID-19."
Short-term loan adjustments such as payment deferrals and fee waivers will not require banks to increase capital reserves and such loans do not need to be classified as a "troubled debt restructuring," according to the joint statement from the Federal Reserve, Consumer Financial Protection Bureau, Federal Deposit Insurance Corp., National Credit Union Administration, Office of the Comptroller of the Currency and Conference of State Bank Supervisors.
In the joint statement, the regulators said: "The agencies will not criticize financial institutions that mitigate credit risk through prudent actions consistent with safe and sound practices. The agencies consider such proactive actions to be in the best interest of institutions, their borrowers, and the economy."
The interagency statement is available here.
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