Classified loans

(Write short note)

                                                                                                                                  Classified loans

Classified loans are loans that are in danger of not being paid back. When classifying loans, there are uniform classification standards, but lenders can be more conservative in the process. A loan doesn't have to be in default to be classified. Generally, if payment is more than 90 days late a loan should be classified, but there are exceptions if the loan is secured by sufficient collateral. Classified loans have three possible designations: substandard, doubtful, and loss.