NCUA proposes to allow capitalization of interest

The NCUA Board issued a proposal Thursday allowing credit unions to capitalize interest in connection with loan modifications. CUNA has strongly pushed the agency for this change in recent months, including in three letters to NCUA Chairman Rodney Hood.

“We thank NCUA for issuing this proposal which gives credit unions a more member-friendly option to make a loan modification. CUNA strongly supports this option as the pandemic effects will be felt for months and years to come,” said CUNA President/CEO Jim Nussle. “We hope that NCUA will quickly finalize this proposed rule so that needed pandemic relief is not further delayed.”

Specifically, the rule would establish documentation requirements to help ensure that the addition of unpaid interest to the principal balance of a mortgage loan does not hinder the borrower’s ability to become current on the loan.

The proposed change would apply to workouts of all types of member loans, including commercial and business loans.


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