FFIEC Guidance states that for an account to be eligible for re-aging, "The borrower should make at least three minimum consecutive monthly payments or the equivalent lump sum payment before an account is re-aged. Funds may not be advanced by the institution for this purpose."

When I first read this, I took it to mean "three consecutive monthly payments or the equivalent RIGHT BEFORE an account is re-aged."

Now that I'm trying to work it into our Change-in-Terms form to make sure the loan officer verifies it happens before re-aging, I'm thinking they may interpret it another way. I could see (at least a couple of our loan officers) saying that the customer made three consecutive payments six months ago, so it's ok to do the CIT now.

Does anyone have any experience with how the examiners interpret this? How do you guys interpret it?

What does re-aging from a past due perspective have to do with an agreement with the customer?

What agreement are you referring to?

This one: I'm trying to work it into our Change-in-Terms form to make sure the loan officer verifies it happens before re-aging

That's my fault. I should've been more clear - the Change in Terms form I'm referring to is a preliminary write-up/approval form, approving the Change in Terms, not the actual Change in Terms agreement.

It has a few credit items for informational purposes and some questions about why we are doing the CIT, if they've had a deferral in the past, etc.

So, you have a customer that is 90 days past due. You enter into a workout agreement with the customer that defers a couple of payments and extends the term, re-amortizes the payments, etc. Once the customer makes three payments under the new agreement, you could re-age the account and no longer treat the loan as delinquent and remove it from your loan loss calculations (if appropriate), if you believe the customer has the ability to continue to meet the new obligation.

Is that what you are asking?

I took the FFIEC guidance to mean we cannot defer the payments and/or extend the term UNTIL the customer has made three consecutive payments. I thought this seemed reasonable, as the FFIEC would want us to avoid deferring the payments just to get the customer off the past-due list, and once they've made three consecutive payments they've demonstrated the ability to repay. These are typically consumer loans.

In the scenario you describe, it sounds like we should defer the loan (through a Change in Terms), but continue to treat the account as delinquent until the customer has made three consecutive payments?

You need to separate out what you do with the customer as far as any changes to the legal obligation that you might enter into with the customer then how you report the loan to the credit bureaus from how you classify the loan for internal call reporting and loan loss provisions and charge off.

These are mostly retail (non 1-4 RE) credits, so we are basing classification solely on past due status (90 days PD = substandard). A higher volume will result in a slightly higher reserve calculation on our ALLL calculation. I'm not involved with preparing the call report, so I can't speak for how they handle that portion.

So should we make sure we've received 3 consecutive payments immediately before we allow the Change in Terms (legal obligation)?