Code of Federal Regulations (Last Updated: May 6, 2024) |
Title 12 - Banks and Banking |
Chapter I - Comptroller of the Currency, Department of the Treasury |
Part 34 - Real Estate Lending and Appraisals |
Subpart E - Other Real Estate Owned |
§ 34.86 - OREO expenditures and notification.
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§ 34.86 Additional OREO expenditures and notification.
(a) Additional expenditures on OREO(a) Operating expenditures. A national bank or Federal savings association may pay operating expenses on OREO, including taxes, insurance, utilities, and maintenance, that are reasonable and consistent with safe and sound banking practices.
(b) Business expenditures. A national bank or Federal savings association may pay expenses for OREO that includes the operation of a business, provided the expenses are:
(1) Reasonably calculated to reduce any shortfall between the property's market value and the recorded investment amount; and
(2) Consistent with safe and sound banking practices.
Are reasonably(c) Additional expenditures. For OREO that is a development or improvement project, a national bank or Federal savings association may make advances to complete the project if the advances are:
(1)
parcelReasonably calculated to reduce any shortfall between the
bank'sproperty's market value and the
Are notrecorded investment amount;
(2)
Are consistentNot made for the purpose of speculation in real estate; and
(3)
Consistent with safe and sound banking practices.
b(
capital and surplusd) Notification procedures for additional expenditures.
(1) A national bank or Federal savings association shall notify the appropriate supervisory office at least 30 days before implementing a development or improvement plan for OREO when the sum of the plan's estimated cost and the bank's or savings association's current recorded investment amount (including any unpaid prior liens on the property) exceeds 10 percent of the bank's
bor savings association's total equity capital on its most recent report of condition. A national bank or Federal savings association need notify the OCC under this paragraph (
A national bank need not notify the OCC that the bank intends to re-fit an existing building for new tenants or to make normal repairs and incur maintenance costs to protect the value of the collateral.d)(1) only once.
a(2) The required notification must demonstrate that the additional expenditure is consistent with the conditions and limitations in paragraph (
bank'sc) of this section.
(3) Unless informed otherwise, the national bank or Federal savings association may implement the proposed plan on the thirty-first day (or sooner, if notified by the OCC) following receipt by the OCC of the
notification, subject to any conditions imposed by the OCC.
[84 FR 56375, Oct. 22, 2019]