Thanks for the responses! I did read what Califgirl cited and came to the same conclusion after reading it. However, I came across this yesterday from the TFR Q&A. I take this to mean that as long as the bank keeps accepting payments under the terms of the matured note, the loan can be excluded from being classified as past due. While this pertains to a construction loan, I would assume this would extend to a non-construction balloon note maturity also. Am I reading this correctly?
http://www.ots.treas.gov/docs/8/87000.html#q179Q&A No. 179
SUBJECT: Loans Past Maturity
LINE(S): Schedule PD
DATE: September 5, 2002
Question: We have a portfolio of construction loans that require interest-only payments due monthly with the principal due at maturity. Some of these loans are past their maturity date. The borrowers have continued to pay the contractual monthly interest payments. Should these loans be excluded from Schedule PD?
Answer: If management has restructured or extended a loan -formally or informally, then the loan would not be past due. An informal extension (not the same as a restructuring) is when the bank has agreed to accept interest payments until the property is rented or sold. The extension should be for a limited and reasonable length of time and the bank should get the extension in writing. From the borrower's perspective, if he is doing what the bank has told him, the loan is not in default and does not have to be reported in Schedule PD.