“Troubled Debt Restructuring,” as defined in GAAP, means a restructuring in which a CU, for economic or legal reasons related to a member borrower’s financial difficulties, grants a concession to the borrower that it would not otherwise consider. It may include, but is not necessarily limited to:
- The transfer from the borrower to the CU of real estate, receivables from third parties, other assets, or an equity interest in the borrower in full or partial satisfaction of the loan,
- a modification of the loan terms, such as a reduction of the stated interest rate, principal, or accrued interest or an extension of the maturity date at a stated interest rate lower than the current market rate for new debt with similar risk, or
- a combination of the above.
A loan extended or renewed at a stated interest rate equal to the current market interest rate for new debt with similar risk is not to be reported as a restructured troubled loan.