Answer:
by Randy Carey:
Any direct violation of law would be found at the State level. Capitalizing interest on a loan, unless you have a very good reason, is asking for trouble with the regulators. It hides the past due status of the loan.
Answer:
by Richard Insley:
Since no laws and regulations (that I'm aware of) require you to have loan numbers, then their use is entirely up to you. Whether or not you can capitalize interest may be addressed by your state law--a matter to be discussed with the bank's legal counsel. Regardless of the law, this practice is always subject to scrutiny by regulators (state and federal) during safety and soundness examinations and should be covered in their examination manuals.
Be careful using the term "renewal" to describe actions taken with regard to a matured loan. Once matured, the old loan has ended. Any continuation of credit is a new loan--subject to all the regulations governing loans of that type.
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