ALEXANDRIA, Va.-Effective June 30, NCUA's new TDR rules eliminate the need to maintain separate manual delinquency calculations on the past due status of loans.
The rest of the rule goes into effect Oct. 1, including:
* Codifying what has long been industry practice by requiring credit unions to stop accruing interest on all loans 90 days or more past due and specifying that each CU have its own standards for returning those loans, including member business loan work-outs, to accrual status.
* Specifying when a credit union must place a loan in nonaccrual status, including the reversal of previously accrued but uncollected interest; sets the conditions for restoration of a nonaccrual loan to accrual status; and discusses the criteria under Generally Accepted Accounting Principles for cash or cost recovery basis if income recognition.
* A loan may be returned to accrual status when its past due history is less than 90 days; when it becomes well-secured and in the process of collection; and the asset is a purchased impaired loan and it meets accounting criteria for accrual of income under the interest method.
The rules also address the treatment of cash interest payments received during periods of loan nonaccrual and prohibits the restoration of previously reversed or charged-off accrued, but uncollected, interest applicable to any loan placed in nonaccrual status.
