Question: In some instances, when a depository institution borrower cannot make the promised principal and interest payment on a loan, the bank will extend another loan

  1. In some instances, when a depository institution borrower cannot make the promised principal and interest payment on a loan, the bank will extend another loan for the customer to make the payment.

    1. Is the first loan classified as a nonperforming loan?

    2. What is the rationale for this type of lending?

    3. What are the risks in this type of lending?

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