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Does the CARES Act provide temporary relief from TDR reporting for loan modifications?
Yes. A financial institution may account for an eligible loan modification either under section 4013 of the CARES Act or in accordance with U.S. GAAP (ASC Subtopic 310-40.5). If a loan modification is not eligible under section 4013, or if the institution elects not to account for the loan modification under section 4013, the financial institution should evaluate whether the modified loan is a TDR.
To be an eligible loan under section 4013 of the CARES Act, a loan modification must be:
- related to COVID-19;
- executed on a loan that was not more than 30 days past due as of December 31, 2019; and
- executed between March 1, 2020, and the earlier of
- 60 days after the date of termination of the National Emergency or
- December 31, 2020 (applicable period).
Financial institutions accounting for eligible loans under section 4013 are not required to apply U.S.
GAAP to the section 4013 loans for the term of the loan modification. Financial institutions do not
have to report section 4013 loans as TDRs in regulatory reports. Institutions do not need to
determine impairment associated with certain loan concessions that would otherwise have been
required for TDRs (e.g., interest rate concessions, payment deferrals, or loan extensions).
However, consistent with section 4013, financial institutions should maintain records of the volume
of section 4013 loans.
Data about section 4013 loans is collected on a confidential basis for supervisory purposes.
Effective with the June 30, 2020 Call Report, institutions began reporting the number and amount
outstanding of Section 4013 loans on Schedule RC-C, Part I, Memorandum items 17.a and 17.b.
Refer to the Federal Financial Institutions Examination Council (FFIEC) instructions