Banking and Finance Law Daily OCC final rule clarifies, streamlines OREO regulations
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Monday, October 21, 2019

OCC final rule clarifies, streamlines OREO regulations

By Stephanie K. Mann, J.D.

The final rule also removes outdated capital rules.

The Office of the Comptroller of the Currency has issued a final rule to clarify and streamline its regulation on other real estate owned (OREO) for national banks and update the regulatory framework for OREO activities at federal savings associations. The OCC is also removing outdated capital rules for national banks and federal savings associations, which include provisions related to OREO, and making conforming edits to other rules that reference those capital rules. The rule becomes effective on Dec. 1, 2019.

The OCC previously invited comments on its proposal and received two comments (see Banking and Finance Law Daily, April 23, 2019). Both comments requested clarification or adjustments to the provisions on appraisals of OREO. However, the OCC stated that it does not believe changes are necessary to the rule text in response to the comments, and therefore adopted the final rule substantially as proposed. However, the OCC is making minor adjustments to the proposed technical amendments related to the capital rules.

The final rule notes that its last significant revision to the national bank OREO rules occurred more than 20 years ago. Since the last revision, the agency now supervises federal savings associations pursuant to the Dodd-Frank Act. While federal savings associations are not subject to statutory provisions governing OREO, capital regulations and handbooks issued by the Office of Thrift Supervision generally established requirements and supervisory expectations for OREO activities. After the OCC and OTS integration, the OCC rescinded or superseded many of those documents, creating ambiguity as to OREO standards for federal savings associations. The framework the OCC is proposing generally is consistent with the OTS framework formerly in place.

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