FDIC COVID Operational 18 – Risk-Weight for Balloon Payments. If a financial institution adds the option of including a deferred payment as a balloon payment at maturity, does that jeopardize it receiving a 50 percent risk weight?

Compliance > COVID & Pandemic-Related
Q:   Risk-Weight for Balloon Payments. If a financial institution adds the option of including a deferred payment as a balloon payment at maturity, does that jeopardize it receiving a 50 percent risk weight?
 
A:   The option to include the deferred payment as a balloon payment will not jeopardize the 50 percent risk weight if it is prior to the 30-year maturity (so that the loan would otherwise amortize to $0 by the end of 30 years.)
 
 
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.
 

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