The Federal Reserve Board of Governors (FRB) recently issued a handy FAQ-sheet style list of questions and answers for banks, S&L’s, and other Federal Reserve-regulated entities as a reminder of how to account for all those OREO’s and stay on good terms with the feds.
OREO’s are ‘other real estate owned’ by Federal Reserve-regulated entities which are not directly related to the institution’s business. OREO’s are considered non-earning assets for purposes of regulatory accounting.
The FAQ sheet consists of 31 questions clarifying existing polices and promoting “prudent practices for the management of an institution’s OREO assets, addressing both safety-and-soundness policies and consumer compliance issues.” The FAQ sheet contains sections on the following topics:
- Transferring an asset to OREO status
- Reporting and classification
- Appraisal concepts
- Ongoing property management
- Operational and legal issues
- Sales and transfers of OREO assets
The publication is not a moment too soon, as foreclosures rates are just beginning to inch downward. California still ranks highest in the nation, with 1 out of 288 homes in foreclosure in June 2012.
We’ve discussed compliance issues to some extent recently, and the industry built around helping companies comply with state and federal regulations. If you’ve ever thought maybe banks were being a little melodramatic about the whole compliance thing, take a few minutes to browse the FRB OREO FAQ sheet. Then check out the BSA and its progeny.
If you are a bank or another business facing compliance requirements, consult with legal counsel to ensure compliance or to help you develop a compliance plan. The attorneys at Glass & Goldberg provide high quality, cost-effective legal services and advice for clients in all aspects of business litigation and transactional law. Call us at (818) 888-2220, email us at firstname.lastname@example.org, or visit us on the web at www.glassgoldberg.com to learn more about the firm and to sign up for future newsletters.