NCUA - Capitalization of Interest Rule to Assist Financially Distressed Borrowers

Capitalization of Interest Rule to
Assist Financially Distressed Borrowers

NCUA Board Approves CECL Phase-in Final Rule

ALEXANDRIA, Va. (June 24, 2021) – Through a live audio webcast, the National Credit Union Administration Board held its sixth open meeting of 2021 and unanimously approved three items:

• A final rule that removes the prohibition on the capitalization of interest in connection with loan workouts and modifications.
• A final rule that would phase-in the day-one adverse effects on regulatory capital that may result from the adoption of the current expected credit losses accounting methodology over a three-year period.
• An extension of the federal credit union loan interest rate ceiling until March 10, 2023.

Capitalization of Interest Final Rule to Aid Members in the Coming Months

The Board approved a final rule that removes the prohibition on the capitalization of interest in connection with loan workouts and modifications. This follows a 60-day public comment period that closed on February 2, 2021. Capitalization of Interest is the addition of accrued but unpaid interest to the principal balance of a loan. View the entire press release​