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FDIC Provides Guidance on Loan Modifications & Workout Options for Borrowers Affected by COVID-19

Client Alert

On March 22, 2020, the Federal Deposit Insurance Corp (FDIC) and other federal banking regulatory agencies, along with state banking regulators, the National Credit Union Administration Agency (NCUA), the regulator of credit unions, and the Consumer Financial Protection Bureau (CFPB) issued the Interagency Statement on Loan Modifications and Reporting by Financial Institutions Working with Customers Affected by the Coronavirus  to encourage financial institutions to work constructively with borrowers impacted by the disease and to provide additional information regarding loan modifications. In summary, the policies give lenders or bankers substantially more latitude to work with affected borrowers by softening the regulatory and accounting impact of having delinquent or restructured credit.

The Interagency Statement can be found here: https://www.fdic.gov/news/news/financial/2020/fil20022.html?mc_cid=c19ae173ad&mc_eid=fabbc3a33b

As described in the Interagency Statement, the FDIC:

  • Encourages financial institutions to work constructively with borrowers affected by COVID-19;
  • Will not criticize institutions for prudent loan modifications and will not direct supervised institutions to automatically categorize COVID-19-related loan modifications as troubled debt restructurings (TDRs);
  • Confirmed with staff of the Financial Accounting Standards Board (FASB) that short-term modifications made on a good faith basis for COVID-19 borrowers who were current prior to any COVID-19 relief are not TDRs;
  • Views that modification efforts described in the interagency statement for borrowers of one-to-four family residential mortgages where loans are prudently underwritten and not past due or carried in nonaccrual status do not result in loans being considered restructured or modified for the purpose of respective risk-based capital rules; and
  • Views prudent loan modification programs to financial institution customers affected by COVID-19 as positive actions that can effectively manage or mitigate adverse impacts on borrowers due to COVID-19, and lead to improved loan performance and reduced credit risk.

Borrowers, lenders, and other businesses should open early candid lines of communication with one another to negotiate forbearance agreements, extensions, refinancing, restructuring or other related relief. These arrangements must be documented and BMD attorneys can help you with this loan modification or workout process. 

For Ohio Businesses impacted by COVID-19, there are low-interest loans available to businesses in all Ohio counties. SBA low-interest federal disaster loans can provide up to $2 million of working capital to help Ohio business owners in overcoming temporary losses of revenue they are experiencing as a result of COVID 19. The assistance may be used to pay fixed debts, payroll, accounts payable and other bills that cannot be paid due to economic impacts. These loans are available to small businesses and private, non-profit organizations to help alleviate economic injury caused by the coronavirus.

The following are links to the SBA programs:

Additionally, you can talk to your banker. Be proactive. Let them know you are addressing the situation and/or applying for the SBA Loan and do so immediately. While many people may ordinarily avoid contacting their banker or creditors to talk about problems, under the Interagency Statement this is a safe time to do so because everyone is experiencing the same problems.

The state of Ohio has also provided unemployment benefits for Ohio individuals impacted by COVID-19. You can access information about these benefits with the following links: Coronavirus and Unemployment Benefits Questions and Answers at: http://jfs.ohio.gov/ouio/CoronavirusAndUI/ and/or the https://unemployment.ohio.gov/.

Please contact BMD Bankruptcy Member Michael Steel at masteel@bmdllc.com or 330.374.7471, or Bankruptcy Partner Duriya Dhinojwala at dd@bmdllc.com or 330.253.5790 for further information.


Corporate Transparency Act Overhauled: U.S. Entities No Longer Required to Report

The Department of Treasury has issued an interim final rule significantly altering the Corporate Transparency Act (CTA). As of March 21, 2025, all U.S.-created entities and their beneficial owners are exempt from reporting requirements. Only non-U.S. entities registered to do business in the U.S. must still report, but they are not required to disclose U.S. citizen owners. Business owners should stay informed on these changes and consult legal counsel for compliance guidance.

ODM to Implement Medicaid Work Requirements: What Providers and Medicaid Expansion Recipients Need to Know

The Ohio Department of Medicaid (ODM) has submitted a waiver to impose work requirements for Medicaid expansion recipients. If approved, the new eligibility criteria will take effect on January 1, 2026. A federal public comment period is open until April 7, 2025.

Ohio Appellate Court Rules in Favor of Gender-Affirming Care

On March 18, 2025, the 10th District Court of Appeals in Franklin County ruled that Ohio’s House Bill (HB) 68, which restricts puberty blockers and hormone therapy for minors seeking gender-affirming care, violates the Health Care Freedom Amendment and is therefore unenforceable. The court found that the law unlawfully interferes with parental rights and medical decision-making. The case, Moe v. Yost, has been remanded, and Ohio Attorney General Dave Yost intends to appeal.

HHS Revokes Public Comment Requirement on Certain Policy Changes

The U.S. Department of Health and Human Services (HHS) has revoked the Richardson Waiver, eliminating the requirement for public notice and comment on certain policy changes. This decision allows HHS to implement new policies more quickly, potentially affecting healthcare funding rules like Medicaid work requirements. While it speeds up policymaking, it also reduces opportunities for stakeholder input, raising concerns over transparency and unintended consequences for healthcare providers, states, and patients.

Don't Get Caught Dazed and Confused: Another Florida Court Weighs in on Employer Obligations to Accommodate Medical Marijuana Use

A Florida trial court ruled in Giambrone v. Hillsborough County that employers may need to accommodate off-duty medical marijuana use under the Florida Civil Rights Act (FCRA). This contrasts with prior rulings and raises new compliance challenges for employers. With the case on appeal, now is the time to review workplace drug policies.