TL;DR

• What it is: NCUA Supervisory Letter 13-02 sets the operational standard examiners still use to review a credit union’s loan workout and loss mitigation program.
• The core mechanic: The same letter also required troubled debt restructured (TDR) classification and reporting, a requirement FASB’s ASU 2022-02 eliminated for credit unions that have adopted CECL.
• Who performs it: Credit and collections teams run the workouts. Examiners test the policy, the tracking system and the documentation against SL 13-02’s operational requirements during every exam.
• One caveat: No named case study exists yet for this specific capability. This piece grounds it in NCUA’s own letter and the FASB update that changed part of it.

A credit union’s loss mitigation policy was likely written against a letter that is only half current. NCUA Supervisory Letter 13-02 still governs what examiners expect in a workout policy today. One piece of that same letter, the TDR classification and reporting requirement, has not applied as written since credit unions adopted CECL. This piece separates what still holds from what changed, and what a program built on the outdated half is missing.

What NCUA Supervisory Letter 13-02 Requires in a Workout Policy

NCUA Supervisory Letter 13-02 lays out five specific things an examiner checks in a loan workout program. The policy must define borrower eligibility and set limits on the number of times a credit union will modify an individual loan. It must establish sound controls so staff structure workout actions consistently. It must run on a system capable of identifying and tracking loans that are “re-aged, extended, deferred, renewed, or rewritten,” including how often and to what extent. It must document that the borrower has shown “a renewed willingness and ability to repay the debt.” And it must apply a nonaccrual policy that stops interest accrual on loans past due 90 days or more, with limited exceptions for well-secured loans already in collection.

None of these five requirements depends on how the loan is classified under GAAP. They test whether the workout program itself is disciplined, documented and consistently applied.

Why the Same Letter’s TDR Requirement No Longer Applies As Written

The sixth piece of SL 13-02, troubled debt restructured loan classification and regulatory reporting, ran on an accounting standard that no longer governs most credit unions. CECL became effective for credit unions with fiscal years beginning after December 15, 2022, for federally insured credit unions with more than $10 million in assets, which covers nearly every institution this letter applies to.

FASB’s ASU 2022-02 took effect on that same date for CECL adopters and eliminated TDR accounting entirely. A loan modification is no longer classified as a TDR and tracked separately. It is evaluated under the general loan modification guidance in ASC 310-20, and a credit union now discloses the financial effects of modifications made to borrowers experiencing financial difficulty, covering principal forgiveness, interest rate reductions, payment delays and term extensions, as part of its existing allowance disclosures.

What a Credit Union Still Tracking TDR Is Missing

A loss mitigation program built from SL 13-02’s original text in 2013 likely still asks staff to flag and report TDRs. Under current GAAP, that classification step produces a label the credit union’s own financial statements no longer use. The modification still needs to be tracked, but it needs disclosure under ASC 310-20 instead, covering the specific concession type and its financial effect.

A program still built around the old classification is doing extra work that does not map to what the credit union has to disclose. Meanwhile the five operational requirements SL 13-02 shares with every examiner review, eligibility, limits, tracking, verification and nonaccrual, stay exactly as demanding as they were in 2013.

What a Modification-Frequency Limit Requires in Practice

A written limit on how many times a loan can be modified only works if someone can answer the question for any individual loan, at any point, without pulling the file. That means tracking every re-age, extension, deferral, renewal and rewrite against the specific loan it happened to, continuously, as the book changes day to day, with the answer always current and never requiring a scramble through scattered servicing notes at exam time.

The same account-level discipline that makes core deposit classification possible applies here. A system that scores and tags every loan modification against SL 13-02’s criteria as it happens gives a credit union an answer it can produce on demand, with nothing left to assemble before the examiner arrives.

Where This Closes the Loop with NCUA’s 2026 Priorities

Loss mitigation programs are one of the four credit administration areas NCUA’s 2026 Supervisory Priorities letter names directly. Letter 26-CU-01 puts “loss mitigation programs (including loan modifications and workouts)” alongside loan underwriting, Allowance for Credit Loss reserves and methodologies, and charge-off practices as areas examiners will review given a decade-high delinquency rate.

SL 13-02 is the detailed standard behind that one line. We cover the broader 2026 letter in NCUA 2026 Supervisory Priorities: The Delinquency Line, which lays out what the full letter says about delinquency and what examiners are checking across all four areas this year.

See how this applies to your loss mitigation program

A conversation with our team walks through how continuous modification tracking applies to your own loan book, using your own numbers. Book a working session.

Sources

• NCUA Supervisory Letter 13-02 (transmitted via Letter to Credit Unions 13-CU-03), “Examiner Review of Loan Workouts, Nonaccruals, and Regulatory Reporting of Troubled Debt Restructured Loans,” March 2013. Confirmed by direct fetch of ncua.gov.
• FASB Accounting Standards Update 2022-02, eliminating TDR accounting for creditors that have adopted CECL, effective for fiscal years beginning after December 15, 2022.
• NCUA Examiner’s Guide, Allowance for Credit Losses and CECL Methodology, confirming CECL’s effective date for federally insured credit unions. Confirmed by direct fetch of publishedguides.ncua.gov.