| Loans And Allowance For Loan Losses | LOANS AND ALLOWANCE FOR LOAN LOSSES Loans held for investment consist of the following: June 30, September 30, Real estate loans: Residential Core $ 10,985,732 $ 10,903,024 Residential Home Today 77,724 84,942 Home equity loans and lines of credit 2,284,152 2,174,961 Construction 54,345 52,332 Real estate loans 13,401,953 13,215,259 Other loans 2,720 3,166 Add (deduct): Deferred loan expenses, net 44,776 41,976 Loans in process (28,447) (25,743) Allowance for loan losses (45,564) (38,913) Loans held for investment, net $ 13,375,438 $ 13,195,745 At June 30, 2020 and September 30, 2019, respectively, $51,139 and $3,666 of loans were classified as mortgage loans held for sale. A large concentration of the Company’s lending is in Ohio and Florida. As of June 30, 2020 and September 30, 2019, the percentage of aggregate Residential Core, Home Today and Construction loans held in Ohio was 56% and 57%, respectively, and the percentage held in Florida was 16% as of both dates. As of June 30, 2020 and September 30, 2019, home equity loans and lines of credit were concentrated in Ohio (29% and 31%), Florida (19% as of both dates), and California (16% as of both dates). Home Today was an affordable housing program targeted to benefit low- and moderate-income home buyers and most loans under the program were originated prior to 2009. No new loans were originated under the Home Today program after September 30, 2016. Through this program the Company provided the majority of loans to borrowers who would not otherwise qualify for the Company’s loan products, generally because of low credit scores. Because the Company applied less stringent underwriting and credit standards to the majority of Home Today loans, loans originated under the program have greater credit risk than its traditional residential real estate mortgage loans in the Residential Core portfolio. Since loans are no longer originated under the Home Today program, the Home Today portfolio will continue to decline in balance, primarily due to contractual amortization. To supplant the Home Today product and to continue to meet the credit needs of customers and the communities served, since fiscal 2016 the Company has offered Fannie Mae eligible, Home Ready loans. These loans are originated in accordance with Fannie Mae's underwriting standards. While the Company retains the servicing to these loans, the loans, along with the credit risk associated therewith, are securitized/sold to Fannie Mae. The Company does not offer, and has not offered, loan products frequently considered to be designed to target sub-prime borrowers containing features such as higher fees or higher rates, negative amortization, a LTV ratio greater than 100%, or pay-option adjustable-rate mortgages. The Company currently offers home equity lines of credit that include monthly principal and interest payments throughout the entire term. Home equity lines of credit originated prior to June 2010 require interest only payments for ten years, with an option to extend the interest only and draw period another ten years. Once the draw period has expired the accounts are included in the home equity loan balance. The recorded investment in interest only loans comprised solely of equity lines of credit with balances of $486 and $8,231 at June 30, 2020 and September 30, 2019, respectively. Regulatory agencies have encouraged financial institutions to work prudently with borrowers who are or may be unable to meet their contractual payment obligations because of the effects of COVID-19, as set forth in the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (initially issued on March 22, 2020 and revised on April 7, 2020). FASB confirmed the foregoing regulatory agencies' view, that such short-term modifications (e.g., six months) made on a good-faith basis to borrowers who were current as of the implementation date of a relief program in response to COVID-19 are not TDRs. The regulatory agencies stated that performing loans granted payment deferrals due to COVID-19 in accordance with this interagency statement are not generally considered past due or non-accrual. The revised statement provides that eligible loan modifications related to COVID-19 may also be accounted for under section 4013 of the CARES Act or in accordance with ASC 310-40. The Company has elected to apply the temporary suspension of TDR requirements provided by the revised interagency statement for eligible loan modifications. For loan modifications that are not eligible for the suspension offered by the revised interagency statement, the Company considers the CARES Act to evaluate loan modifications within its scope, or existing TDR evaluation policies if the modification does not fall within the scope of the CARES Act. As of June 30, 2020, certain of our borrowers have experienced unemployment or reduced income as a result of the COVID-19 global pandemic and have requested some type of loan payment forbearance. Short-term forbearance plans offered to borrowers affected by COVID-19 totaled $230,337 at June 30, 2020, of which $16,601 are classified as troubled debt restructurings due to either their classification as a TDR prior to the COVID-19 forbearance or not meeting the criteria to be exempt from TDR classification. Forbearance plans allow borrowers experiencing temporary financial hardship to defer a limited number of payments to a later point in time and are initially offered for a three-month period, which may be extended for borrowers that continue to be affected by COVID-19. The majority of COVID-19 forbearance plans have been extended to six months. Forbearance plans that are extended beyond six months will be evaluated for TDR classification in accordance with U.S. GAAP. The following table summarizes, as of June 30, 2020, for each portfolio, active forbearance plans by recorded investment and as a percent of total loans. Total Forbearance plans as % of Portfolio June 30, 2020 Real estate loans: Residential Core $ 195,744 1.78% Residential Home Today 6,827 8.82% Home equity loans and lines of credit 27,766 1.20% Total real estate loans $ 230,337 1.72% The following table summarizes, as of June 30, 2020, the recorded investment of active forbearance plans according to the month during which the payment deferrals are currently scheduled to end, subject to available forbearance plan term extensions. Month ending Total 7/31/2020 $ 5,217 8/31/2020 39,503 9/30/2020 87,717 10/31/2020 97,759 11/30/2020 141 Total active forbearance plans $ 230,337 A COVID-19 forbearance plan is generally resolved through payment in full at termination of the forbearance; through a non-TDR repayment plan, where a portion of the forbearance is paid in addition to the original contractual payment over 12 months or less; or through a non-TDR capitalization, where the total of forborne payments are added to the principal balance of the account, either with or without an extension of the maturity date. If additional concessions are required beyond resolving the short-term forbearance, the account will be considered for further modification in a troubled debt restructuring. At June 30, 2020, there were $1,575 of residential mortgages and $179 of equity loans and lines of credit in short term repayment plans and $2,619 of residential mortgages whose forbearance amounts were capitalized, subsequent to COVID-19 forbearance plans, that did not require TDR classification. Real estate loans in COVID-19 forbearance plans and those that are subsequently placed in non-TDR short-term repayment plans are reported as current and accruing when they are current in accordance with their revised contractual terms and were less than 30 days past due as of the implementation date of the relief program, March 13, 2020, per the revised interagency statement, or not more than 30 days past due as of December 31, 2019 per the CARES Act. Otherwise, the delinquency and resulting accrual status of these loans are determined by the lowest number of days the loan was past due on either the two aforementioned measurement dates (March 13, 2020 or December 31, 2019) or, considering the loan's revised contractual terms, the current reporting date. At June 30, 2020, the balance of accrued interest receivable includes $1,990 of unpaid interest on active COVID-19 forbearance plans. The uncertain and potentially tumultuous impact of COVID-19 on the economic and housing markets, as well as the risk profiles of accounts in COVID-19 forbearance plans granted by the Company, were thoroughly considered in the determination of the allowance for loan losses as of June 30, 2020, as described in the Allowance for Loan Losses section of the Critical Accounting Policies in Part I Item 2. An aging analysis of the recorded investment in loan receivables that are past due at June 30, 2020 and September 30, 2019 is summarized in the following tables. When a loan is more than one month past due on its scheduled payments, the loan is considered 30 days or more past due. Balances are adjusted for deferred loan fees, expenses and any applicable loans-in-process. 30-59 60-89 90 Days or Total Past Current Total June 30, 2020 Real estate loans: Residential Core $ 5,482 $ 2,523 $ 9,840 $ 17,845 $ 10,985,836 $ 11,003,681 Residential Home Today 1,488 858 2,495 4,841 72,534 77,375 Home equity loans and lines of credit 2,175 1,116 5,490 8,781 2,302,947 2,311,728 Construction — — — — 25,498 25,498 Total real estate loans 9,145 4,497 17,825 31,467 13,386,815 13,418,282 Other loans — — — — 2,720 2,720 Total $ 9,145 $ 4,497 $ 17,825 $ 31,467 $ 13,389,535 $ 13,421,002 30-59 60-89 90 Days or Total Past Current Total September 30, 2019 Real estate loans: Residential Core $ 6,824 $ 4,030 $ 7,674 $ 18,528 $ 10,900,173 $ 10,918,701 Residential Home Today 2,629 1,685 2,623 6,937 77,677 84,614 Home equity loans and lines of credit 3,029 1,158 5,797 9,984 2,191,998 2,201,982 Construction — — — — 26,195 26,195 Total real estate loans 12,482 6,873 16,094 35,449 13,196,043 13,231,492 Other loans — — — — 3,166 3,166 Total $ 12,482 $ 6,873 $ 16,094 $ 35,449 $ 13,199,209 $ 13,234,658 At June 30, 2020, reported delinquencies above include $1,025, $467 and $779 of active COVID-19 forbearance plans and subsequent short-term repayment plans in 30-59 days past due, 60-89 days past due, and 90 days or more past due, respectively. The remaining balance of active COVID-19 forbearance and subsequent short-term repayment plans are reported as current. At June 30, 2020 and September 30, 2019, real estate loans include $6,367 and $7,543, respectively, of loans that were in the process of foreclosure. Pursuant to the CARES Act, most foreclosure proceedings were delayed during the quarter. Loans are placed in non-accrual status when they are contractually 90 days or more past due. The number of days past due is determined by the number of scheduled payments that remain unpaid, assuming a period of 30 days between each scheduled payment. Loans with a partial charge-off are placed in non-accrual and will remain in non-accrual status until, at a minimum, the impairment is recovered. Loans restructured in TDRs that were in non-accrual status prior to the restructurings remain in non-accrual status for a minimum of six months after restructuring. Loans restructured in TDRs with a high debt-to-income ratio at the time of modification are placed in non-accrual status for a minimum of 12 months. Additionally, home equity loans and lines of credit where the customer has a severely delinquent first mortgage loan and loans in Chapter 7 bankruptcy status where all borrowers have filed, and not reaffirmed or been dismissed, are placed in non-accrual status. The recorded investment of loan receivables in non-accrual status is summarized in the following table. Balances are adjusted for deferred loan fees and expenses. June 30, September 30, Real estate loans: Residential Core $ 30,306 $ 37,052 Residential Home Today 10,615 12,442 Home equity loans and lines of credit 13,018 21,771 Total non-accrual loans $ 53,939 $ 71,265 At June 30, 2020 and September 30, 2019, respectively, the recorded investment in non-accrual loans includes $36,338 and $55,171 of loans which are performing according to the terms of their agreement, of which $21,533 and $25,895 are loans in Chapter 7 bankruptcy status, primarily where all borrowers have filed, and have not reaffirmed or been dismissed. The change in non-accrual loans from September 30, 2019 was partially impacted by the length of time TDRs with high debt-to-income ratios are retained in non-accrual status. TDRs with high debt-to-income ratios are placed in non-accrual status until they show sustained payment performance. Interest on loans in accrual status, including certain loans individually reviewed for impairment, is recognized in interest income as it accrues, on a daily basis. Accrued interest on loans in non-accrual status is reversed by a charge to interest income and income is subsequently recognized only to the extent cash payments are received. Cash payments on loans in non-accrual status are applied to the oldest scheduled, unpaid payment first. Cash payments on loans with a partial charge-off are applied fully to principal, then to recovery of the charged off amount prior to interest income being recognized, except cash payments may be applied to interest capitalized in a restructuring when collection of remaining amounts due is considered probable. A non-accrual loan is generally returned to accrual status when contractual payments are less than 90 days past due. However, a loan may remain in non-accrual status when collectability is uncertain, such as a TDR that has not met minimum payment requirements, a loan with a partial charge-off, an equity loan or line of credit with a delinquent first mortgage greater than 90 days past due, or a loan in Chapter 7 bankruptcy status where all borrowers have filed, and have not reaffirmed or been dismissed. The recorded investment in loan receivables at June 30, 2020 and September 30, 2019 is summarized in the following table. The table provides details of the recorded balances according to the method of evaluation used for determining the allowance for loan losses, distinguishing between determinations made by evaluating individual loans and determinations made by evaluating groups of loans not individually evaluated. Balances of recorded investments are adjusted for deferred loan fees, expenses and any applicable loans-in-process. June 30, 2020 September 30, 2019 Individually Collectively Total Individually Collectively Total Real estate loans: Residential Core $ 78,574 $ 10,925,107 $ 11,003,681 $ 87,069 $ 10,831,632 $ 10,918,701 Residential Home Today 35,056 42,319 77,375 36,959 47,655 84,614 Home equity loans and lines of credit 42,784 2,268,944 2,311,728 46,445 2,155,537 2,201,982 Construction — 25,498 25,498 — 26,195 26,195 Total real estate loans 156,414 13,261,868 13,418,282 170,473 13,061,019 13,231,492 Other loans — 2,720 2,720 — 3,166 3,166 Total $ 156,414 $ 13,264,588 $ 13,421,002 $ 170,473 $ 13,064,185 $ 13,234,658 An analysis of the allowance for loan losses at June 30, 2020 and September 30, 2019 is summarized in the following table. The analysis provides details of the allowance for loan losses according to the method of evaluation, distinguishing between allowances for loan losses determined by evaluating individual loans and allowances for loan losses determined by evaluating groups of loans collectively. June 30, 2020 September 30, 2019 Individually Collectively Total Individually Collectively Total Real estate loans: Residential Core $ 6,784 $ 12,841 $ 19,625 $ 7,080 $ 12,673 $ 19,753 Residential Home Today 2,286 3,232 5,518 2,422 1,787 4,209 Home equity loans and lines of credit 3,820 16,596 20,416 4,003 10,943 14,946 Construction — 5 5 — 5 5 Total real estate loans $ 12,890 $ 32,674 $ 45,564 $ 13,505 $ 25,408 $ 38,913 At June 30, 2020 and September 30, 2019, individually evaluated loans that required an allowance were comprised only of loans evaluated for impairment based on the present value of cash flows, such as performing TDRs, and loans with an indication of further deterioration in the fair value of the property not yet supported by a full review and collateral evaluation. All other individually evaluated loans received a charge-off, if applicable. Because many variables are considered in determining the appropriate level of general valuation allowances, directional changes in individual considerations do not always align with the directional change in the balance of a particular component of the general valuation allowance. At June 30, 2020 and September 30, 2019, respectively, allowances on individually reviewed loans evaluated for impairment (IVAs) included those based on the present value of cash flows, such as performing TDRs, were $12,890 and $13,399, and allowances on loans with further deterioration in the fair value of the property not yet supported by a full review were $0 and $106. Residential Core mortgage loans represent the largest portion of the residential real estate portfolio. While the Company believes overall credit risk is low based on the nature, composition, collateral, products, lien position and performance of the portfolio, it could be affected by the duration and depth of the impact from COVID-19. The portfolio does not include loan types or structures that have experienced severe performance problems at other financial institutions (sub-prime, no documentation or pay-option adjustable-rate mortgages). The portfolio contains adjustable-rate mortgage loans whereby the interest rate is locked initially for mainly three or five years then resets annually, subject to various re-lock options available to the borrower. Although the borrower is qualified for its loan at a higher rate than the initial one, the adjustable-rate feature may impact a borrower's ability to afford the higher payments upon rate reset during periods of rising interest rates while this repayment risk may be reduced in a declining or low rate environment. With limited historical loss experience compared to other types of loans in the portfolio, judgment is required by management in assessing the allowance required on adjustable-rate mortgage loans. The principal amount of adjustable-rate mortgage loans included in the Residential Core portfolio was $5,236,097 and $5,063,010 at June 30, 2020 and September 30, 2019, respectively. As described earlier in this footnote, Home Today loans have greater credit risk than traditional residential real estate mortgage loans. At June 30, 2020 and September 30, 2019, respectively, approximately 13% and 14% of Home Today loans include private mortgage insurance coverage. The majority of the coverage on these loans was provided by PMI Mortgage Insurance Co., which was seized by the Arizona Department of Insurance in 2011 and currently pays all claim payments at 76.5%. Appropriate adjustments have been made to the Company’s affected valuation allowances and charge-offs, and estimated loss severity factors were adjusted accordingly for loans evaluated collectively. The amount of loans in the Company's total owned residential portfolio covered by mortgage insurance provided by PMIC as of June 30, 2020 and September 30, 2019, respectively, was $21,957 and $26,191, of which $20,991 and $24,198 was current. The amount of loans in the Company's total owned residential portfolio covered by mortgage insurance provided by Mortgage Guaranty Insurance Corporation as of June 30, 2020 and September 30, 2019, respectively, was $13,798 and $17,345, of which $13,630 and $17,232 was current. As of June 30, 2020, MGIC's long-term debt rating, as published by the major credit rating agencies, did not meet the requirements to qualify as "high credit quality"; however, MGIC continues to make claim payments in accordance with its contractual obligations and the Company has not increased its estimated loss severity factors related to MGIC's claim paying ability. No other loans were covered by mortgage insurers that were deferring claim payments or which were assessed as being non-investment grade. Home equity loans and lines of credit, which are comprised primarily of home equity lines of credit, represent a significant portion of the residential real estate portfolio. On home equity lines of credit originated prior to 2012, subsequent deterioration in economic and housing market conditions may impact a borrower's ability to afford the higher payments required during the end of draw repayment period that follows the period of interest only payments, or the ability to secure alternative financing. Beginning in 2013, the terms on new home equity lines of credit included monthly principal and interest payments throughout the entire term to minimize the potential payment differential between the draw and after draw periods. The impact of COVID-19 on employment, the general economy and, potentially, housing prices may adversely affect credit performance within the home equity loans and lines of credit portfolio. The Company originates construction loans to individuals for the construction of their personal single-family residence by a qualified builder (construction/permanent loans). The Company’s construction/permanent loans generally provide for disbursements to the builder or sub-contractors during the construction phase as work progresses. During the construction phase, the borrower only pays interest on the drawn balance. Upon completion of construction, the loan converts to a permanent amortizing loan without the expense of a second closing. The Company offers construction/permanent loans with fixed or adjustable-rates, and a current maximum loan-to-completed-appraised value ratio of 70%. Prior to March 26, 2020 the maximum loan to completed-appraised value ratio was 85%. Other loans are comprised of loans secured by certificate of deposit accounts, which are fully recoverable in the event of non-payment, and forgivable down payment assistance loans, which are unsecured loans used as down payment assistance to borrowers qualified through partner housing agencies. The Company records a liability for the loans which are forgiven in equal increments over a pre-determined term, subject to residency requirements. For all classes of loans, a loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal and interest according to the contractual terms of the loan agreement. Factors considered in determining that a loan is impaired may include the deteriorating financial condition of the borrower indicated by missed or delinquent payments, a pending legal action, such as bankruptcy or foreclosure, or the absence of adequate security for the loan. The recorded investment and the unpaid principal balance of impaired loans, including those reported as TDRs, as of June 30, 2020 and September 30, 2019, are summarized as follows. Balances of recorded investments are adjusted for deferred loan fees and expenses. June 30, 2020 September 30, 2019 Recorded Unpaid Related Recorded Unpaid Related With no related IVA recorded: Residential Core $ 41,444 $ 56,606 $ — $ 44,122 $ 59,538 $ — Residential Home Today 12,167 34,999 — 12,764 31,958 — Home equity loans and lines of credit 14,916 19,865 — 18,528 23,935 — Total $ 68,527 $ 111,470 $ — $ 75,414 $ 115,431 $ — With an IVA recorded: Residential Core $ 37,130 $ 37,198 $ 6,784 $ 42,947 $ 43,042 $ 7,080 Residential Home Today 22,889 22,861 2,286 24,195 24,178 2,422 Home equity loans and lines of credit 27,868 27,858 3,820 27,917 27,924 4,003 Total $ 87,887 $ 87,917 $ 12,890 $ 95,059 $ 95,144 $ 13,505 Total impaired loans: Residential Core $ 78,574 $ 93,804 $ 6,784 $ 87,069 $ 102,580 $ 7,080 Residential Home Today 35,056 57,860 2,286 36,959 56,136 2,422 Home equity loans and lines of credit 42,784 47,723 3,820 46,445 51,859 4,003 Total $ 156,414 $ 199,387 $ 12,890 $ 170,473 $ 210,575 $ 13,505 At June 30, 2020 and September 30, 2019, respectively, the recorded investment in impaired loans includes $143,178 and $157,408 of loans restructured in TDRs of which $8,287 and $8,435 are 90 days or more past due. The average recorded investment in impaired loans and the amount of interest income recognized during the period that the loans were impaired are summarized below. For the Three Months Ended June 30, 2020 2019 Average Interest Average Interest With no related IVA recorded: Residential Core $ 41,270 $ 322 $ 49,397 $ 430 Residential Home Today 12,083 51 14,487 50 Home equity loans and lines of credit 15,317 75 21,060 118 Total $ 68,670 $ 448 $ 84,944 $ 598 With an IVA recorded: Residential Core $ 38,158 $ 290 $ 41,861 $ 306 Residential Home Today 23,278 270 24,378 295 Home equity loans and lines of credit 28,123 165 27,583 168 Total $ 89,559 $ 725 $ 93,822 $ 769 Total impaired loans: Residential Core $ 79,428 $ 612 $ 91,258 $ 736 Residential Home Today 35,361 321 38,865 345 Home equity loans and lines of credit 43,440 240 48,643 286 Total $ 158,229 $ 1,173 $ 178,766 $ 1,367 For the Nine Months Ended June 30, 2020 2019 Average Interest Average Interest With no related IVA recorded: Residential Core $ 42,783 $ 1,062 $ 52,196 $ 1,231 Residential Home Today 12,466 151 14,962 174 Home equity loans and lines of credit 16,722 256 21,395 342 Total $ 71,971 $ 1,469 $ 88,553 $ 1,747 With an IVA recorded: Residential Core $ 40,039 $ 891 $ 38,058 $ 1,008 Residential Home Today 23,542 828 24,907 888 Home equity loans and lines of credit 27,893 502 26,632 499 Total $ 91,474 $ 2,221 $ 89,597 $ 2,395 Total impaired loans: Residential Core $ 82,822 $ 1,953 $ 90,254 $ 2,239 Residential Home Today 36,008 979 39,869 1,062 Home equity loans and lines of credit 44,615 758 48,027 841 Total $ 163,445 $ 3,690 $ 178,150 $ 4,142 Interest on loans in non-accrual status is recognized on a cash basis. The amount of interest income on impaired loans recognized using a cash basis method was $220 and $793 for the three and nine months ended June 30, 2020 and $343 and $1,082 for the three and nine months ended June 30, 2019, respectively. Cash payments on loans with a partial charge-off are applied fully to principal, then to recovery of the charged off amount prior to interest income being recognized, except cash payments may be applied to interest capitalized in a restructuring when collection of remaining amounts due is considered probable. Interest income on the remaining impaired loans is recognized on an accrual basis. Charge-offs on residential mortgage loans, home equity loans and lines of credit and construction loans are recognized when triggering events, such as foreclosure actions, short sales, or deeds accepted in lieu of repayment, result in less than full repayment of the recorded investment in the loans. Partial or full charge-offs are also recognized for the amount of impairment on loans considered collateral dependent that meet one or more of the conditions described below. • For residential mortgage loans, payments are greater than 180 days delinquent; • For home equity lines of credit, equity loans, and residential loans restructured in a TDR, payments are greater than 90 days delinquent; • For all classes of loans restructured in a TDR with a high debt-to-income ratio at time of modification; • For all classes of loans, a sheriff sale is scheduled within 60 days to sell the collateral securing the loan; • For all classes of loans, all borrowers have been discharged of their obligation through a Chapter 7 bankruptcy; • For all classes of loans, within 60 days of notification, all borrowers obligated on the loan have filed Chapter 7 bankruptcy and have not reaffirmed or been dismissed; • For all classes of loans, a borrower obligated on a loan has filed bankruptcy and the loan is greater than 30 days delinquent; and • For all classes of loans, it becomes evident that a loss is probable. Collateral dependent residential mortgage loans and construction loans are charged off to the extent the recorded investment in the loan, net of anticipated mortgage insurance claims, exceeds the fair value, less estimated costs to dispose of the underlying property. Management can determine if the loan is uncollectible for reasons such as foreclosures exceeding a reasonable time frame and recommend a full charge-off. Home equity loans or lines of credit are charged off to the extent the recorded investment in the loan plus the balance of any senior liens exceeds the fair value, less estimated costs to dispose of the underlying property, or management determines the collateral is not sufficient to satisfy the loan. A loan in any portfolio identified as collateral dependent will continue to be reported as impaired until it is no longer considered collateral dependent, is less than 30 days past due and does not have a prior charge-off. A loan in any portfolio that has a partial charge-off consequent to impairment evaluation will continue to be individually evaluated for impairment until, at a minimum, the impairment has been recovered. Residential mortgage loans, home equity loans and lines of credit and construction loans restructured in TDRs that are not evaluated based on collateral are separately evaluated for impairment on a loan by loan basis at the time of restructuring and at each subsequent reporting date for as long as they are reported as TDRs. The impairment evaluation is based on the present value of expected future cash flows discounted at the effective interest rate of the original loan. Expected future cash flows include a discount factor representing a potential for default. Valuation allowances are recorded for the excess of the recorded investments over the result of the cash flow analysis. Loans discharged in Chapter 7 bankruptcy are reported as TDRs and also evaluated based on the present value of expected future cash flows unless evaluated based on collateral. We evaluate these loans using the expected future cash flows because we expect the borrower, not liquidation of the collateral, to be the source of repayment for the loan. Other loans are not considered for restructuring. A loan restructured in a TDR is classified as an impaired loan for a minimum of one year. After one year, that loan may be reclassified out of the balance of impaired loans if the loan was restructured to yield a market rate for loans of similar credit risk at the time of restructuring and the loan is not impaired based on the terms of the restructuring agreement. No loans whose terms were restructured in TDRs were reclassified from impaired loans during the nine months ended June 30, 2020 and June 30, 2019. Initial concessions granted on loans restructured as TDRs may include reduction of interest rate, extension of amortization period, forbearance or other actions. Some TDRs have experienced a combination of concessions. TDRs also may occur as a result of bankruptcy proceedings. Loans discharged in Chapter 7 bankruptcy are classified as multiple restructurings if the loan's original terms had also been restructured by the Company. The recorded investment in TDRs by category as of June 30, 2020 and September 30, 2019 is shown in the tables below. June 30, 2020 Initial Restructuring Multiple Bankruptcy Total Residential Core $ 31,662 $ 23,562 $ 16,418 $ 71,642 Residential Home Today 15,504 15,499 3,219 34,222 Home equity loans and lines of credit 31,570 3,052 2,692 37,314 Total $ 78,736 $ 42,113 $ 22,329 $ 143,178 September 30, 2019 Initial Restructuring Multiple Bankruptcy Total Residential Core $ 35,829 $ 24,951 $ 19,494 $ 80,274 Residential Home Today 16,233 16,868 3,234 36,335 Home equity loans and lines of credit 34,459 3,115 3,225 40,799 Total $ 86,521 $ 44,934 $ 25,953 $ 157,408 TDRs may be restructured more than once. Among other requirements, a subsequent restructuring may be available for a borrower upon the expiration of temporary restructuring terms if the borrower cannot return to regular loan payments. If the borrower is experiencing an income curtailment that temporarily has reduced their capacity to repay, such as loss of employment, reduction of work hours, non-paid leave or short-term disability, a temporary restructuring is considered. If the borrower lacks the capacity to repay the loan at the current terms due to a permanent condition, a permanent restructuring is considered. In evaluating the need for a subsequent restructuring, the borrower’s ability to repay is generally ass |
