NCUA will review the way it asks credit unions to track modifiedmortgages after some credit unions complained the current policyalmost makes foreclosing the troubled loans the more practicaloption.

“NCUA supports credit union efforts to find creative solutionsfor members who need loan modifications to stay in their homes,”said NCUA Board Chairman Debbie Matz. “As part of our efforts, theNCUA Board will be reviewing our current policy on Troubled DebtRestructuring in the near future. NCUA is seeking solutions thatwould better assist credit unions which are working diligently toprovide members with alternatives to foreclosure. Of course, anysolutions must be consistent with Generally Accepted AccountingPrinciples and NCUA's mission to protect credit union safety andsoundness.”

The agency has been requiring credit unions to track modifiedmortgages as delinquent loans for six months even if borrowers hadbeen making their payments on time and keeping the modified loanscurrent.

Credit unions have pointed out this both disadvantages theborrower with credit reporting agencies and makes the credit unionappear as though it has more delinquent loans than it does.Further, since the modified loans forced to be carried as“delinquent” almost always have to be tracked manually, they takemore staff time and resources than others which can be tracked withautomated systems.

Credit unions have acknowledged that modified loans need to betracked but have expressed hope the agency could find a morepractical approach to the effort.