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Capitalizing Interest on Loan Renewal

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Question: 
I need to know if there is a regulation that deals with capitalized interest on renewed loans.
Answer: 

To the best of my knowledge there is no federal regulation preventing it, but it will not sit well with your Safety & Soundness examiners. You should check your state law to see if they address the issue.

We have a strict loan policy that interest will not be capitalized. Any exception has to be approved by the SLO (as long as he's not the lender) and 2 members of the executive loan committee.

First published on BankersOnline.com 2/21/05

First published on 02/21/2005

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