OTS Discusses Restructuring of Troubled Mortgages

This story appeared in Bank Digest.

The Office of Thrift Supervision has issued guidance, including a set of questions and answers, on the regulatory and accounting issues that arise from modifying or restructuring troubled mortgages on one- to four-family properties. The guidance notes that although not all loan modifications are troubled debt restructurings (TDRs), a modification during a period of market deterioration should be presumed to be a TDR unless the presumption can be overcome by a preponderance of the evidence. For each loan, that evidence must include new underwriting documentation—updated property value, credit report and income analysis—showing that the modification reflects market rates and terms for a new loan with comparable risk.

CEO Ltr 315 at http://files.ots.treas.gov/25315.pdf

TB 85 at http://files.ots.treas.gov/84303.pdf