performing nonperforming loan

performing nonperforming loan

A loan on which all payments are made on time but the collateral has decreased in value so that it is no longer sufficient to support the loan. FDIC regulations require the lender to classify the loan as nonperforming. In such a situation, the lender will require additional collateral or will demand payment in full.

References in periodicals archive ?
Current loans placed on nonaccrual status were commonly referred to as "performing nonperforming loans." Typically, such loans were suspect because collateral values had fallen significantly or because there was some indication that the borrower would be unable to make continued payments.