U.S. banks are scrambling to persuade policymakers to extend the Dec. 31 expiry of an accounting waiver that has allowed lenders to give struggling borrowers more leeway on their loans, several bankers and lobbyists said, Reuters reported. If Congress fails to extend the relief as part of a new stimulus package being discussed by lawmakers, many lenders are likely to curtail loan modification programs, they said, making life much tougher for as many as 12 million Americans whose unemployment benefits are due to expire at around the same time. “This provision has given credit unions and banks some assurance that if they work with borrowers that are having financial difficulty as a result of the pandemic, that they can work with those borrowers and not have supervisory scrutiny,” said Ryan Donovan, Chief Advocacy Officer, Credit Union National Association. “That’s going to go away.” To soften COVID-19’s economic blow, Congress in March granted a federal moratorium on mortgage repayments. To make it possible for lenders to defer those mortgages and voluntarily grant repayment holidays on credit card, auto and other loans without adverse repercussions for the borrower or lender, Congress also waived an accounting rule that usually requires modified loans to be classified as “troubled debt restructurings.”
