nonaccrual


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nonaccrual

The actions of a lender making a change in how a loan is accounted on its books. Normally, the lender will treat itself as receiving income as interest comes due—accrues—on the loan.Under normal circumstances,the lender can expect to actually receive the cash in a very short period of time afterward.When a borrower defaults and does not pay its interest, and the default continues for several months,the lender will reach the point where it begins to doubt if it will ever receive the cash for the interest that is accruing.At that point,it does not make business sense and, in fact,might be against federal regulations,to keep acting as if the lender were receiving income.As a result,the lender places the loan on nonaccrual,and stops posting income from the loan.This is a bookkeeping and accounting action only. It does not mean the lender will not attempt to collect every nickel of money due to it.

References in periodicals archive ?
9 million at September 30, 2014, while total nonaccrual loans decreased by $21.
standards to all credit unions, and new rules for troubled debt restructuring that will require written loan workout and nonaccrual policies.
The dreaded nonaccrual status is given to loans where principal and interest have gone unpaid for at least 90 days and collateral is inadequate to cover the loan.
The nonaccrual rate has led much of the rise in total delinquency during this cycle, and it is the main factor behind the current increase, as it rose from 14.
There were no new nonaccrual loans and no charge-offs during the quarter, and our allowance grew to 1.
In Notice 2003-12, the IRS provided interim guidance to taxpayers seeking to change to, or from, the nonaccrual experience (NAE) method of accounting under Sec.
9, 2002, this nonaccrual accounting method applies only to services in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts or consulting--if the taxpayer does not charge interest or a penalty for failure to timely pay the amount charged.
The problem loans are those classified as risk-management loans, which are nonaccrual delinquent loans and loans to customers in bankruptcy, combined with loans past due for at least three months and restructured loans.
At September 30, 2011, nonaccrual loans totaled $63.
Non-performing assets, which includes nonaccrual loans and other real estate owned (OREO), totaled $3.
3: Once a loan is modified as a TDR, it should be removed from nonaccrual status.