Regulators provide additional guidance on loan modifications

By Mike Lee
LSCU Director of Regulatory Advocacy

In a webinar on Friday, regulators delved further into the issue of loan modifications. They presented clarification to their April 7 inter-agency guidance, including providing some distinctions between the CARES Act provisions and accounting rules, either of which the credit union can follow. Most importantly, the agencies delved into many questions that financial institutions had regarding issues that had come up as they worked with borrowers affected by the shutdown and coronavirus.

The regulators explained that the primary distinctions between modifications under the CARES Act vs. the Interagency Guidance are 1) in the time the loan in question was last current (the end of 2019 vs. the date the modification program began) and 2) when the modification is executed, (between March 1 through 60 days after the National Emergency is lifted, vs. a short term, such as three months or six months). With these two modification regimes, the regulators continue to encourage credit unions to work with borrowers during the pandemic.

But the most important aspect of the webinar was in the Q&A portion. In one, it is explained that credit unions are free to use the guidance on modifications for one loan, a category of loans or to all the institutions loans. In another, credit unions are not required to verify that borrowers seeking a loan modification are suffering a hardship predominately due to COVID-19. To watch this webinar, including listening to the answers to the questions in the presentation slides, you can visit this site. If you have other questions on this issue, you can contact Mike Lee or the LSCU compliance team at

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The League of Southeastern Credit Unions & Affiliates represents 302 credit unions in Alabama, Florida and Georgia, with a combined total of $175 billion in assets and more than 11.6 million members. LSCU & Affiliates provides legislative and regulatory advocacy; education and training; cooperative initiatives (including financial education outreach); public messaging; information services; and business solutions.

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