NAIC Statutory Accounting Principles Working Group (SAPWG) had several meetings this year to develop guidance to assist carriers with reporting COVID-19 related items. Some adopted interpretations have already expired, so the next few posts will provide brief summaries of those that are still effective or are set to be reviewed later to determine if an extension is needed.
INT 20-03: Troubled Debt Restructuring Due to COVID-19 was adopted by the SAPWG in response to actions taken by the federal government through the March 27, 2020, passage of the Coronavirus Aid, Relief and Economic Security Act (CARES Act). Section 4013 of the Act creates temporary relief from troubled debt restructurings.
This interpretation clarifies that a modification of terms for a mortgage loan or bank loan in response to COVID-19 must follow the provisions detailed in the April 7, 2020, “Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus” and the provisions of the CARES Act in determining whether the modification is to be reported as a troubled debt restructuring. In addition, under INT 20-03, to be eligible, borrowers must be current, meaning the rules will not apply to loans that were greater than 30 days past due as of December 31, 2019.
Interprets the following SSAP:
SSAP No. 36—Troubled Debt Restructuring
March 1, 2020, and ending on the earlier of December 31, 2020, or 60 days after the end of the national emergency for the COVID-19 outbreak. During November 15, 2020 call, NAIC staff determined that the extension of this INT is not needed at this time since the national emergency has not ended and INT is effective through the end of 2020.
Deeper dive on this topic:
Click here to read more about this INT promulgation.