Featured Product

    OCC Amends Rule on Other Real Estate Owned Activities for Banks

    October 22, 2019

    OCC finalized a rule to clarify and streamline the regulation on other real estate owned (OREO) for national banks and to update the regulatory framework for OREO activities at Federal savings associations. OCC is also removing outdated capital rules for national banks and Federal savings associations, including provisions related to OREO, and is making conforming edits to the other rules that reference those capital rules. This final rule will apply to OREO activities at all national banks and federal savings associations and will be effective from December 01, 2019.

    OREO refers to real estate acquired in satisfaction of debts previously contracted and real estate no longer used or planned to be used to conduct banking activities. Post consultation, OCC is making minor adjustments to the proposed technical amendments related to the capital rules. Specifically, OCC is removing Appendices A and B to risk-based capital guidelines for national banks (12 CFR, Part 3) and capital requirements for Federal savings associations (12 CFR, Part 167) and making conforming technical edits to other CFR parts that reference those provisions.

    Additionally, the holding period for national banks under the final rule remains unchanged and consists of an initial five-year holding period, with up to an additional five years if approved by OCC. The final rule also establishes an initial holding period for Federal savings associations of five years after commencement of the holding period to ensure the safe and sound management of OREO holdings. If the Federal savings association has not disposed of the OREO within the initial five-year holding period, the savings association may request OCC approval to continue to hold the real property as OREO for up to five additional years. These provisions are consistent with the rules that apply to national banks. The final rule also adopts for Federal savings associations the existing national bank provision describing the date the holding period for OREO begins.

    Finally, the final rule updates and streamlines the notification provision by requiring prior notification only when the proposed additional expenditures and recorded investment in an individual OREO property exceeds 10% of the institution's total equity capital based on its most recent Call Report. National banks with significant loan-loss reserves or excessive losses recorded in accumulated other comprehensive income will generally have a reduced limit for notification. National banks holding assets that are deducted under the regulatory capital rule will generally have an increase in limit for notification under the final rule. OCC expects a similar result for Federal savings associations that previously used a notification framework based on lending limits.

     

    Related Link: Federal Register Notice

    Effective Date: December 01, 2019

    Keywords: Americas, US, Banking, OREO, Real Estate, Credit Risk, Regulatory Capital, Federal Savings Association, OCC

    Featured Experts
    Related Articles
    News

    HKMA Announces Liquidity Measures in Response to COVID-19 Outbreak

    HKMA issued a circular on liquidity measures that HKMA has taken or plans to take in response to COVID-19 outbreak.

    April 03, 2020 WebPage Regulatory News
    News

    BaFin Lowers Countercyclical Capital Buffer Amid COVID-19 Outbreak

    BaFin published a general order to lower the countercyclical capital buffer (CCyB) from 0.25% to 0% as of April 01, 2020.

    April 03, 2020 WebPage Regulatory News
    News

    ESMA Updates Risk Assessment in Light of COVID-19

    ESMA updated its risk assessment to account for the impact of the COVID-19 pandemic.

    April 02, 2020 WebPage Regulatory News
    News

    FSB Outlines and Reprioritizes Its Work to Address COVID-19 Risks

    FSB published a statement that outlines its work toward addressing the financial stability risks posed by COVID-19, along with the reprioritization of its work program for 2020.

    April 02, 2020 WebPage Regulatory News
    News

    EIOPA Announces Measures to Address the Impact of COVID-19

    Due to the outbreak of COVID-19, EIOPA is re-prioritizing and alleviating the burden by extending the deadlines or delaying projects where input from national competent authorities and/or industry is foreseen.

    April 02, 2020 WebPage Regulatory News
    News

    EBA Guidelines on Use of Payment Moratoria to Address Liquidity Issues

    EBA published detailed guidance on the treatment of legislative and non-legislative moratoria on loan repayments to be applied before June 30, 2020, in light of the COVID-19 crisis.

    April 02, 2020 WebPage Regulatory News
    News

    PRA Outlines Approach to Reporting and Disclosures Amid COVID-19

    PRA published a statement to outline its approach to regulatory reporting and Pillar 3 disclosures for UK banks, building societies, designated investment firms, and credit unions.

    April 02, 2020 WebPage Regulatory News
    News

    PRA Finalizes Certain Modeling Issues for Solvency II Internal Models

    PRA published a statement (PS9/20) that sets out the final policy on modeling of income-producing real estate loans and internal credit assessment for illiquid, unrated assets within the Solvency II internal models.

    April 02, 2020 WebPage Regulatory News
    News

    EIOPA Issues Statement on Mitigating Impact of COVID-19 Outbreak

    EIOPA issued a statement to insurers and intermediaries, urging them to take steps to mitigate the impact of COVID-19 on consumers.

    April 01, 2020 WebPage Regulatory News
    News

    APRA on Changes to Reporting Obligations for Banks Due to COVID-19

    APRA, in collaboration with the Reserve Bank of Australia (RBA) and the Australian Bureau of Statistics (ABS), published a letter outlining temporary changes in reporting obligations for authorized deposit-taking institutions and registered financial corporations, in response to COVID-19.

    April 01, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 4936