Thread Options
#469755 - 12/13/05 09:52 PM Non-accrual status for a loan
Kari Offline
100 Club
Kari
Joined: Sep 2002
Posts: 131
PA
How long can a loan stay on non-accrual status? It has been on there for one year and the loan committee wants to extend it another year.

Return to Top
Lending Compliance
#469756 - 12/14/05 12:54 AM Re: Non-accrual status for a loan
Kathleen O. Blanchard Offline

10K Club
Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,277
A non-accrual loan is a problem loan, or a loan that is returning from problem status and will be placed back on accrual status after demonstrating performance. I assume you mean the loan committee wants to extend the term of the loan for another year?

There should be a defined strategy for this loan, with well defined measurable steps. what is the customer doing to improve? What will the bank do if they do not meet the agreed upon goals? Why does it make sense for the bank to keep this non-accrual loan on its books?

Has it been measured for impairment under FAS 114?

You don't just extend non-accrual loans in a vacuum. There needs to be a plan to either return the borrower to health or to get paid off (refinance elsewhere) or charge the loan off.
_________________________
Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

Return to Top
#469757 - 12/14/05 09:28 PM Re: Non-accrual status for a loan
Kari Offline
100 Club
Kari
Joined: Sep 2002
Posts: 131
PA
Thank you. I need to look into this more with my loan people.

Return to Top

Moderator:  Andy_Z