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#987139 - 07/02/08 09:32 PM Payment Extensions/Consumer Simple Interest Loans
swiggles Offline
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swiggles
Joined: Aug 2001
Posts: 7,333
Are there any regulatory concerns regarding the extension of a payment on a consumer purpose simple interest loan such as the number of extensions, the frequency of extensions or any other aspect?

This question arises as a result of a lender who grants frequent payment extensions for his customers. Typically, when a payment is extended, the interest is required to paid to the extension date and the maturity is also extended to avoid a large payment at maturity.
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Lending Compliance
#987171 - 07/02/08 10:14 PM Re: Payment Extensions/Consumer Simple Interest Lo swiggles
Richard Insley Offline
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Richard Insley
Joined: Oct 2000
Posts: 9,995
Toano, VA
Your regulator may view this as a way to conceal under-performing loans--especially if the borrowers initiate the extension requests or the lender only solicits accounts that are past due.
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#987252 - 07/03/08 02:25 AM Re: Payment Extensions/Consumer Simple Interest Lo Richard Insley
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 77,216
Galveston, TX
FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL
Uniform Retail Credit Classification and Account Management Policy

No loan should be re-aged, extended, deferred, renewed, or rewritten more than once within any twelve-month period that is, at least twelve months must have elapsed since a prior reaging. In addition, no loan should be re-aged, extended, deferred, renewed, or rewritten more than two times within any five-year period.
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