Q: Risk weighting multifamily loans. Can multifamily loans continue to receive a 50 percent risk weight after they are restructured or modified consistent with the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (Loan Modification Statement)?
A: Yes. The Loan Modification Statement states that financial institutions’ efforts to work with borrowers with prudently underwritten one-to-four family mortgages whose loans are not past due or carried in nonaccrual status will not be considered restructured or modified for the purposes of the agencies’ respective risk-based capital rules. This approach applies to multifamily loans of $1 million or less that qualify as residential mortgage exposures.10For other multifamily loans, the criteria to “not be restructured or modified” is not included within the requirements for a statutory multifamily mortgage to receive a 50 percent risk weight under the risk-based capital rules. However, a statutory multifamily loan will receive a 150 percent risk weight if it is 90 days past due or on nonaccrual status. Institutions should refer to the Interagency Statement for additional information on when a loan is considered past due or on nonaccrual status.
This Q&A was contained in the Frequently Asked Questions for Financial Institutions Affected by the Coronavirus Disease 2019 (Referred to as COVID-19) – As of March 3, 2021 (which may be updated from time to time). This may be found on the FDIC’s website here: https://www.fdic.gov/Coronavirus/faq-fi.pdf.