Accounting for Troubled Debt Restructuring

12/17/2009

Loan origination fees and costs are deferred and accounted for as an adjustment of loan yield over the life of the related loan. If a loan has a balloon repayment date which is only a repricing date, fees to refinance the loan are generally not charged and the original fees should be amortized over the estimated life of the loan. However, if the bank prepares new loan documentation, performs a new credit review, performs other functions typical of funding a new loan and charges fees on refinancing, the original loan fees and costs should be amortized to the balloon repayment date.