The NCUA achieved a rare feat this week when it released itsproposed rule on troubled debt restructuring: favorable reviewsfrom two of its most frequent critics.

Both CUNA and NAFCU said the proposed rule, which the NCUA Boardsent out on Thursday for a 30-day comment period, could makelife easier for credit unions. Those institutions have longcomplained about what they see as the agency's inflexibility on the issue.

The proposal has “the potential to ensure consistent guidancefrom the agency to its examiners – and help credit unions helptheir members in this time of need,'' CUNA President/CEO BillCheney said in a statement.

NAFCU President/CEO Fred Becker said his organization“appreciates that the NCUA is removing the hardline requirementthat credit unions report TDRs as delinquent on Call Reports aftersix months.''

But he criticized the part of the proposal requiring creditunions to have formal written policies regarding loan modificationsas potentially burdensome on NAFCU's members.

In addition to requiring federally insured credit unions to havewritten loan workout policies, the proposed rule would mandate thatthey calculate and report troubled debt restructuring loandelinquency based on restructured contract terms.

The rule would also require FICUs to keep member businessworkout loans in a nonaccrual status until it receives sixconsecutive payments under the modified terms of the loan.

At Thursday's meeting, NCUA Chairman Debbie Matz noted that thenew rule would provide regulatory relief for credit unions by nolonger requiring them to manually track the modified loans.

She said that when writing the rule the agency had to strike adelicate balance between allowing credit unions to help theirmembers while at the same time minimizing the risk to the creditunion. She pointed out that more than 16% of outstanding modifiedloans remain delinquent.