Other Real Estate Owned and Technical Amendments, 17094-17102 [2019-08128]
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17094
§ 966.160
Federal Register / Vol. 84, No. 79 / Wednesday, April 24, 2019 / Proposed Rules
Reestablishment of districts.
(a) District No. 1: The counties of
Charlotte, Glades, Palm Beach, Lee,
Hendry, Collier, Broward, Monroe, and
Dade in the State of Florida.
(b) District No. 2: The counties of
Pinellas, Hillsborough, Polk, Osceola,
Brevard, Manatee, Hardee, Highlands,
Okeechobee, Indian River, St. Lucie,
Sarasota, De Soto, and Martin in the
State of Florida.
*
*
*
*
*
■ 3. Revise § 966.161 to read as follows:
§ 966.161 Reapportionment of Committee
Membership.
Pursuant to § 966.25, industry
membership on the Florida Tomato
Committee shall be reapportioned as
follows:
(a) District 1—six members and their
alternates.
(b) District 2—six members and their
alternates.
Dated: April 18, 2019.
Bruce Summers,
Administrator, Agricultural Marketing
Service.
[FR Doc. 2019–08173 Filed 4–23–19; 8:45 am]
BILLING CODE 3410–02–P
DEPARTMENT OF TREASURY
Office of the Comptroller of the
Currency
12 CFR Parts 3, 6, 34, 46, 160, 161, 163,
and 167
[Docket ID OCC–2019–0004]
RIN 1557–AE50
Other Real Estate Owned and
Technical Amendments
Office of the Comptroller of the
Currency (OCC), Treasury.
ACTION: Notice of proposed rulemaking
with request for public comment.
AGENCY:
The OCC is inviting comment
on a proposed rule that would 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is also proposing to remove outdated
capital rules for national banks and
Federal savings associations, which
include provisions related to OREO, and
make conforming edits to other rules
that reference those capital rules.
DATES: Comments must be received by
June 24, 2019.
ADDRESSES: You may submit comments
to the OCC by any of the methods set
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SUMMARY:
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forth below. Commenters are
encouraged to submit comments
through the Federal eRulemaking Portal
or email, if possible. Please use the title
‘‘Other Real Estate Owned and
Technical Amendments’’ to facilitate
the organization and distribution of the
comments. You may submit comments
by any of the following methods:
• Federal eRulemaking Portal—
‘‘Regulations.gov’’: Go to
www.regulations.gov. Enter ‘‘Docket ID
OCC–2019–0004’’ in the Search Box and
click ‘‘Search.’’ Click on ‘‘Comment
Now’’ to submit public comments.
• Click on the ‘‘Help’’ tab on the
Regulations.gov home page to get
information on using Regulations.gov,
including instructions for submitting
public comments.
• Email: regs.comments@
occ.treas.gov.
• Mail: Chief Counsel’s Office,
Attention: Comment Processing, Office
of the Comptroller of the Currency, 400
7th Street SW, Suite 3E–218,
Washington, DC 20219.
• Hand Delivery/Courier: 400 7th
Street SW, Suite 3E–218, Washington,
DC 20219.
Instructions: You must include
‘‘OCC’’ as the agency name and ‘‘Docket
ID OCC–2019–0004’’ in your comment.
In general, the OCC will enter all
comments received into the docket and
publish the comments on the
Regulations.gov website without
change, including any business or
personal information that you provide
such as name and address information,
email addresses, or phone numbers.
Comments received, including
attachments and other supporting
materials, are part of the public record
and subject to public disclosure. Do not
include any information in your
comment or supporting materials that
you consider confidential or
inappropriate for public disclosure.
You may review comments and other
related materials that pertain to this
rulemaking action by any of the
following methods:
• Viewing Comments Electronically:
Go to www.regulations.gov. Enter
‘‘Docket ID OCC–2019–0004’’ in the
Search box and click ‘‘Search.’’ Click on
‘‘Open Docket Folder’’ on the right side
of the screen. Comments and supporting
materials can be viewed and filtered by
clicking on ‘‘View all documents and
comments in this docket’’ and then
using the filtering tools on the left side
of the screen.
• Click on the ‘‘Help’’ tab on the
Regulations.gov home page to get
information on using Regulations.gov.
The docket may be viewed after the
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close of the comment period in the same
manner as during the comment period.
• Viewing Comments Personally: You
may personally inspect comments at the
OCC, 400 7th Street SW, Washington,
DC 20219. For security reasons, the OCC
requires that visitors make an
appointment to inspect comments. You
may do so by calling (202) 649–6700 or,
for persons who are deaf or hearing
impaired, TTY, (202) 649–5597. Upon
arrival, visitors will be required to
present valid government-issued photo
identification and submit to security
screening in order to inspect comments.
FOR FURTHER INFORMATION CONTACT:
For revisions to Part 34, Subpart E
(OREO): Charlotte Bahin, Senior
Advisor for Thrift Supervision, (202)
649–6281; or, J. William Binkley,
Attorney, Chief Counsel’s Office, (202)
649–5500.
For all revisions: Kevin Korzeniewski,
Counsel, Chief Counsel’s Office, (202)
649–5490; or for persons who are deaf
or hearing impaired, TTY, (202) 649–
5597.
SUPPLEMENTARY INFORMATION:
I. Background
The OCC is proposing to update its
regulatory framework for other real
estate owned (OREO) by revising its
rules to clarify and streamline the
regulation for national banks and to
apply the regulatory framework to
OREO activities Federal savings
associations for the reasons discussed
below. The OCC’s last significant
revision to the national bank OREO
rules occurred over twenty years ago.1
Since that time, the OCC has gained
additional supervisory experience
related to OREO, which it can apply to
improve the OREO rules. In addition,
the OCC now supervises Federal savings
associations pursuant to the Dodd-Frank
Wall Street Reform and Consumer
Protection Act (Dodd-Frank Act).2
Federal savings associations, unlike
national banks, are not subject to
statutory provisions governing OREO.
However, capital regulations and
handbooks issued by the Office of Thrift
Supervision (OTS) generally established
requirements and supervisory
expectations for OREO activities.
Following OCC and OTS integration, the
OCC rescinded or superseded many of
those documents, creating ambiguity
with respect to OREO standards for
Federal savings associations. The OCC
is proposing a framework for Federal
savings associations that generally is
consistent with the OTS framework
1 See
2 See
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61 FR 11294 (March 20, 1996).
12 U.S.C. 5412.
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described above. This framework is still
followed by many savings associations
and would offer flexibility consistent
with provisions in the Home Owners’
Loan Act (HOLA).
The OCC also is proposing to remove
Appendices A and B to 12 CFR part 3
(risk-based capital guidelines for
national banks) and 12 CFR part 167
(capital requirements for FSAs) and
make conforming technical edits to
other parts that reference those
provisions. When the OCC revised Part
3 it superseded Appendices A and B to
part 3 and part 167. However, because
there was a transition period for part 3,
the OCC retained those appendices at
that time.3 Part 167 includes provisions
relating to treatment of OREO held by
Federal savings associations that is no
longer in effect. The OCC is proposing
to remove part 167 and related
references to avoid any confusion with
the OREO treatment proposed in this
notice. Since Appendices A and B to
part 3 include the corresponding capital
provisions for national banks and are
similarly outdated, the OCC proposes to
rescind those appendices in this
proposal as well.
II. Statutory Authority for OREO
Twelve U.S.C. 29 establishes a
framework for when a national bank
may hold real property. A national bank
may hold real property for use in its
business as premises, as mortgaged to it
as security for a debt, in satisfaction of
debts previously contracted (DPC),4 or
as purchased at foreclosure to secure a
related debt. The statute limits a
national bank to a five-year holding
period for real property, other than real
property used as premises. However, the
statute allows a national bank to seek
approval from the Comptroller of the
Currency to hold real property for up to
five additional years. The OCC may
approve this additional time if the bank
has made a good faith attempt to
dispose of the property within the
initial five-year period or if disposal
within the five-year period would be
detrimental to the bank.
Twelve U.S.C. 1464 establishes
requirements for the chartering and
operation of Federal savings
associations, including the power to
make loans and investments. The
authority for a Federal savings
association to obtain real property in
connection with satisfaction of a loan
previously made, including at
foreclosure, is an inherent power
3 See
78 FR 62018 (October 11, 2013).
DPC property is property not
mortgaged in connection with obtaining a loan, but
instead used to satisfy a pre-existing loan.
4 Generally,
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associated with making a loan secured
by a mortgage on real property, which
is permitted by 12 U.S.C. 1464(c)(1)(B)
and (2)(B). In addition, 12 U.S.C.
1464(c)(4)(B) authorizes Federal savings
associations to invest in service
corporations,5 which, by regulation, are
permitted to engage in additional
activities in connection with real
property.6 Federal savings associations
are not subject to a five-year statutory
limit on the holding period for real
property.
III. Proposed Regulation for OREO
A. Definitions (§ 34.81)
This section would contain
definitions used in the OREO
regulation. This section would continue
to use the existing definitions for other
real estate owned (OREO); market value;
and recorded investment amount in the
revised regulation. The term OREO
would continue to mean DPC real estate
and former banking premises. The term
market value would continue to mean
the value of the property, as determined
under the appraisal rule in 12 CFR part
34, subpart C. Recorded investment
amount would continue to mean the
recorded loan balance (for loans) or the
net book value (for former banking
premises).
In addition, the proposal would
continue to use the current definition of
DPC real estate, but with minor
revisions related to lease accounting
described below. The definition of DPC
real estate would continue to mean real
estate acquired through any means in
satisfaction of a debt previously
contracted, consistent with the
authorities described earlier in this
preamble for national banks and Federal
savings associations to obtain property
in this manner. The existing definition
of the term includes capitalized and
operating leases, which are the two
types of leases recognized under current
accounting standards from the lessee’s
perspective. However, revised
5 Under 12 U.S.C. 1464(c)(4)(B), a Federal savings
association may invest in a service corporation if (i)
the service corporation is organized in the state
where the Federal savings association’s home office
is located; (ii) the corporation’s stock is available for
purchase only by other Federal and state savings
associations having home offices in such state; and
(iii) the Federal savings association’s aggregate
investments in service corporations do not exceed
three percent (3%) of its assets, with amounts in
excess of two percent (2%) of assets serving
primarily community, inner city, and community
development purposes. See also 12 CFR 5.59. If the
service corporation is controlled by a Federal
savings association, then the service corporation is
a subsidiary of the association. See 12 CFR
5.59(d)(5).
6 These activities include acquiring real estate for
development, leasing, or resale, and maintaining
and managing real estate. See 12 CFR 5.59(f)(5).
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accounting standards requiring
operating leases to be capitalized,
among other provisions, are scheduled
to be implemented in the near future.7
Therefore, the OCC proposes to revise
the terminology in the current definition
of DPC real estate to refer to leased real
estate, rather than to refer specifically to
capitalized and operating leases. The
proposed definition would continue to
cover all leases, but the revision will
ensure the regulation will not become
outdated after implementation of the
new accounting standards.
In addition, the proposal would revise
the definition of former banking
premises to include a reference to 12
CFR 7.1000(a)(2), which establishes
categories of real estate that national
banks and Federal savings associations
are permitted to own for use in their
banking activities. The revised
definition would define former banking
premises as real estate permitted under
section 7.1000(a)(2) that is no longer
used or contemplated to be used for the
purposes permitted by that rule. The
proposed revision should improve
regulatory consistency by clarifying that
both rules cover the same types of real
estate for banking activities and
eliminate confusion about whether the
rules refer to different types of
properties.
B. Holding Period (§ 34.82)
This section would specify how long
a national bank or a Federal saving
association may hold OREO, provide the
starting date for that holding period, and
address additional related provisions
affecting the holding period.
The holding period for national banks
under the current rule is the period
required by 12 U.S.C. 29. The statute
and the current rule provide for an
initial five-year holding period, with up
to an additional five years if approved
by the OCC. The proposal would not
change this holding period.
The proposal also would establish 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 OCC’s
supervisory experience is that both
types of institutions generally have or
7 See FASB ASU 2016–02, ‘‘Leases (Topic 842)’’
(February 2016).
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obtain similar types of OREO. As with
national banks, in deciding whether to
grant the approval to hold OREO
beyond the initial five-year holding
period, the OCC would expect to
consider, among other factors, the
Federal savings association’s current
and prior efforts to dispose of the
property and safety and soundness
concerns related to an immediate
disposition of the property. During the
initial five-year holding period and any
subsequent approved period, the
Federal savings association would need
to make reasonable efforts to dispose of
the OREO. This provision is consistent
with prior OTS expectations. This
proposed framework also is consistent
with the requirement previously
applicable to Federal savings
associations under 12 CFR part 167,
which required savings associations to
deduct from regulatory capital the value
of OREO held for more than five years,
or a longer period with OCC approval,
as an equity investment. This provision
created incentives for Federal savings
associations to dispose of OREO within
five years, or a longer period approved
by the OCC, as the regulatory capital
treatment for failure to dispose of the
property generally would be more
onerous than disposing of the property.
The OCC believes that an initial fiveyear holding period is a sufficient
amount of time to dispose of most
OREO and the option to extend the
holding period for an additional five
years should be sufficient to address
atypical properties or unusual real
estate market conditions.
Question 1: Should the OCC require
national banks and Federal savings
associations to make specific efforts to
dispose of OREO within the specified
timeframes? If so, what efforts should
the OCC require?
The proposal also would adopt for
Federal savings associations the existing
national bank provision describing the
date the holding period for OREO
begins. Generally, the holding period for
DPC real estate would begin on the date
the property is transferred to the
national bank or Federal savings
association (for example, after a judicial
foreclosure or deed-in-lieu of
foreclosure), which may be different
than the date the institution must
recognize the property as OREO for
accounting and financial reporting
purposes. The title transfer law of the
state or other jurisdiction where the
property is located would govern when
the property is considered transferred to
the national bank or Federal savings
association. The holding period for
former bank premises would begin
when the national bank or Federal
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savings association ceases using a
property as bank premises (whether
outright or after relocating) or abandons
a plan to use property held for future
bank premises.
The OCC is proposing a modification
for OREO obtained by a Federal savings
association prior to the effective date of
this proposed rule. For this OREO, the
holding period would begin on the
rule’s effective date to provide for a full
initial five-year holding period. The
OCC still would consider the entire time
the OREO has been held by the Federal
savings association in evaluating any
request for an additional holding period
beyond that initial five years. The OCC
believes this accommodation would
provide Federal savings associations
with a reasonable timeframe to dispose
of OREO held prior to the effective date
of the rule, rather than calculating the
holding period back to the initial
transfer date.
Question 2: Does the proposed
adjustment to the calculation of the
holding period for OREO obtained by a
Federal savings association prior to the
effective date of the rule provide an
appropriate amount of time to dispose
of the OREO consistent with the
proposed rule?
The OCC also proposes to clarify that
when a national bank or Federal savings
association obtains OREO from a
merged or acquired institution, the
relevant holding period would
commence on the effective date of the
merger or acquisition and would not
include any time the OREO had been
held by the acquired institution prior to
the merger or acquisition. Similarly,
when an institution converts to a
national bank or Federal savings
association, the relevant holding period
would begin on the date of conversion.
However, if the institution was already
a national bank or Federal savings
association immediately prior to the
conversion, the holding period would
not reset on the conversion date.8 The
OCC believes this is appropriate because
different OREO standards might apply
to an institution before it becomes a
national bank or Federal savings
association, unless the institution is
already covered by the OCC’s OREO
rule. The proposed revision also would
apply to Federal savings associations
the existing national bank regulation
that the holding period for DPC real
estate that is subject to a redemption
period imposed under state law begins
8 For example, if a Federal savings association
that had OREO with a holding period that began in
January 2016, converted to a national bank in June
2019, the OCC would still consider the holding
period for the OREO to have begun in January 2016,
not June 2019.
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after the expiration of the redemption
period.
The proposed revised section also
would address an interpretive issue that
arises when a national bank or Federal
savings association enters into a
transaction to dispose of OREO, but the
real estate is conveyed back to the
institution for a reason other than a
subsequent purchase by the institution
(for example, if there is a failure to
complete the disposition or the
disposition is validly rescinded or
unwound). In those cases, the holding
period would be tolled during the
period of time the OREO property was
not under the bank’s or savings
association’s control. For example, if a
third party purchases OREO from a
national bank or Federal savings
association but later legally rescinds the
sale, the bank or savings association
cannot start a new five-year holding
period for the property. Instead, any
previous holding period (including
approved extensions) would be tolled
between the time the bank or savings
association sold and reacquired the real
property. Similarly, in certain U.S.
government mortgage loan programs a
national bank or Federal savings
association may be required to transfer
a foreclosed property to a U.S.
government entity, and that entity may
later validly reject receipt of the
property and return title to the bank or
savings association. In that case, the
national bank or Federal savings
association could not start a new fiveyear holding period for the property but
could toll any previous holding period
(including approved extensions) during
the time the government entity had
possession of the property. However, if
the national bank or Federal savings
association re-acquires property that
was previously OREO and had been
disposed of consistent with this part,
then the five-year holding period would
reset on that property. For example, if
a bank originates a mortgage loan in
connection with the sale of an OREO
property that met the requirements for
a valid disposition under part 34, but
later foreclose on that property due to
missed mortgage payments, then the
bank will obtain a new five-year holding
period.
Question 3: Are there ways the
calculations for the start of the holding
period and any subsequent tolling could
be improved? Should the OCC establish
a bright line for when a property is
acquired, rather than rely on state
transfer laws and redemption periods?
For real property, should the OCC refer
to accounting standards to determine
when a property is transferred to OREO?
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Question 4: Should the OCC allow a
national bank or Federal savings
association to restart the holding period
on OREO, even if the institution
converts to a different charter also
subject to part 34?
C. Disposition of OREO (§ 34.83)
This section would specify methods
for national banks and Federal savings
associations to dispose of OREO.
Generally, the proposal would retain the
existing disposal methods for national
banks and allow Federal savings
associations to dispose of OREO using
those same methods. These methods
include: (i) Selling the property outright
or over a period of time; (ii) using DPC
real estate as bank premises or affiliate
premises; or (iii) entering into subleases
of OREO leases. Writing OREO (whether
owned or leased) down to zero for
accounting purposes is not a valid
disposition under the existing rules and
would not be a valid disposition under
the proposed revisions.
To provide for additional flexibility to
dispose of OREO, the OCC also proposes
to add a new paragraph (a)(5) that
would allow the disposition of OREO in
other ways approved by the OCC
consistent with safe and sound banking
practices. For example, the OCC
previously has approved national banks
and Federal savings associations to
dispose of OREO in certain
circumstances by donating or escheating
OREO or by negotiating early
terminations of OREO leases.
The proposal would recognize that,
unlike a national bank, a Federal
savings association also may transfer
OREO to a service corporation. Under
HOLA and 12 CFR 5.59, a Federal
savings association may invest in a
service corporation, which may engage
in the same activities as its parent
Federal savings association under the
same terms and conditions. A service
corporation also may engage in
additional activities not permitted at a
Federal savings association, including
certain real estate related services such
as holding property as an investment in
real estate.9 In addition, 12 CFR 5.59(i)
permits a Federal savings association to
make a contribution to a service
corporation in the exercise of the
association’s salvage powers.10
9 See
12 U.S.C. 1464(c)(4)(B) and 12 CFR 5.59.
CFR 5.59(i) provides that a Federal savings
association may exercise its salvage power to make
a contribution or a loan . . . to a service corporation
(‘‘salvage investment’’) that exceeds the maximum
amount otherwise permitted under law or
regulation.’’ The Federal savings association must
demonstrate that: (i) The salvage investment
protects the association’s interest in the service
corporation; (ii) the salvage investment is consistent
with safety and soundness; and (iii) the association
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Consistent with HOLA and 12 CFR 5.59,
the proposal would allow a Federal
savings association, through a service
corporation, to hold OREO property as
an investment or for longer than 10
years. However, under current statutory
and regulatory capital requirements, a
Federal savings association must
deconsolidate, and deduct any
investments in, a subsidiary engaged in
activities not permissible for a national
bank, including holding property as an
investment in real estate.11
Finally, the proposed revised section
would retain the requirement that a
national bank must make a diligent and
ongoing effort to dispose of OREO and
maintain documentation of those efforts.
The proposal also would apply these
provisions to Federal savings
associations. Compliance with the
requirement to document the national
bank’s or Federal savings association’s
diligence when attempting to dispose of
OREO is an important consideration if
the national bank or Federal savings
association requests an extension to
hold OREO beyond the initial five-year
holding period. The proposed
requirement that a Federal savings
association make diligent efforts to
dispose of OREO and maintain relevant
documentation is consistent with both
prior OTS expectations that savings
associations develop salvage plans that
included provisions for disposition of
OREO and the existing requirement that
Federal savings associations maintain
documentation of appraisals of OREO.12
Question 5: Should the proposed rule
include additional disposition methods
for OREO held by national banks and
Federal savings associations? Are there
ways the proposed methods could be
improved or clarified? For owned,
rather than leased, real estate, should
the OCC defer to accounting standards
to determine when a property is sold
(that is, based on whether the transfer
qualifies for sales treatment under
accounting standards)?
D. Appraisal Requirements (§ 34.85)
This section would specify the
appraisal requirements applicable to
OREO. The proposal would carry over
the existing requirements for appraisals
of OREO for national banks and apply
those same requirements to Federal
savings associations. Generally, this
section requires an appraisal consistent
considered alternatives to the salvage investment
but determined the alternatives would not satisfy (i)
and (ii).
11 12 U.S.C. 1464(t)(5) and 12 CFR 3.22(a)(8).
Holding property as an investment in real estate is
not authorized for a national bank under 12 U.S.C.
29.
12 12 CFR 160.172.
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with 12 CFR part 34, subpart C when
property is obtained as OREO followed
by periodic monitoring thereafter. In
addition, the proposed section would
continue to include existing exceptions
from the appraisal requirements. For
example, an appraisal would not be
required if there is still a valid appraisal
that was created in a transaction
involving the property, as described in
§ 34.85(b). Because the requirements for
appraisals of OREO held by Federal
savings associations would be set out in
the proposed rule, the OCC also is
proposing to repeal 12 CFR 160.172,
which currently includes comparable
appraisal standards for OREO held by
Federal savings associations.
E. OREO Expenditures and Notification
(§ 34.86)
This section would contain provisions
related to permissible expenditures on
OREO. The proposal would codify
various interpretations regarding other
permissible expenses related to OREO
for national banks and Federal savings
associations in new paragraphs (a) and
(b). Paragraph (a) would allow national
banks and Federal savings associations
to pay any normal operating expenses
relating to the OREO property, such as
taxes, insurance, utilities, and
maintenance, and condominium
association fees, to the extent those fees
are reasonable and consistent with safe
and sound banking practices. This
proposed addition is consistent with a
provision in existing paragraph (b)(1),
prior interpretations issued by the OCC
for national banks, and prior OTS
expectations concerning payment of
taxes, insurance, and similar expenses
on OREO by Federal savings
associations.13
Paragraph (b) would allow national
banks and Federal savings associations
to pay expenses for the operation of a
business associated with the OREO
property, if: (i) Payment of the expenses
reduces the shortfall between the
current value of the property and the
national bank or Federal savings
association’s investment in the property;
and (ii) the expenses are consistent with
safe and sound banking practices. For
example, if a national bank or Federal
savings association obtains an OREO
property that includes a functioning
hotel and resort, the national bank or
Federal savings association may be able
to minimize its loss on the defaulted
loan by continuing to pay business
13 See Comptroller’s Handbook on ‘‘Other Real
Estate Owned’’ (August 2018). For Federal savings
associations, this provision was included in the
OTS Examination Handbook, Section 251, ‘‘Real
Estate Owned and Repossessed Assets’’ (December
2010), which has since been rescinded by the OCC.
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expenses to operate the hotel and resort,
such as staff wages, inventory,
management fees, and licensing fees,
while the OREO is being prepared for
sale. The OCC has previously addressed
these types of expenses for national
banks consistent with safe and sound
banking practices, and this provision
would extend the permission to Federal
savings associations.14
Under the current rule, a national
bank is permitted to make advances to
complete an OREO development or
improvement project (referred to as
‘‘additional expenditures’’). Paragraph
(c) would continue the existing
requirements for additional
expenditures on OREO for a national
bank and apply the same requirements
to a Federal savings association. A
national bank or Federal savings
association could make additional
expenditures only if: (i) The
expenditures are reasonably calculated
to reduce the shortfall between the
current value of the property and the
bank’s investment in the property; (ii)
the expenditures are not made for
purposes of speculation in real estate;
and (iii) the expenditures are consistent
with safe and sound banking practices.
These proposed requirements are
consistent with prior OTS expectations,
which addressed a Federal savings
association’s reasonable capital
expenditures to reduce the loss on
OREO obtained by the savings
association.15
In addition, paragraph (d) would
update the requirements for prior
notification for significant additional
expenditures on OREO for national
banks and extend the provision to
Federal savings associations. Currently,
under 12 CFR 34.86(b), a national bank
must notify the OCC at least 30 days
before making additional expenditures
if the amount of the expenditures and
recorded investment in the OREO
exceeds ten percent of the national
bank’s capital and surplus, which
generally is based on regulatory capital
calculated under 12 CFR part 3. Federal
savings associations, in turn, were
subject to supervisory review of any
expenditures on OREO in excess of their
lending limits, which are calculated
based on a formula that incorporates a
percentage of capital and surplus.16
14 See Comptroller’s Handbook on ‘‘Other Real
Estate Owned’’ (August 2018).
15 Id. For Federal savings associations, this
provision was included in the OTS Examination
Handbook, Section 251, ‘‘Real Estate Owned and
Repossessed Assets’’ (December 2010), which has
since been rescinded by the OCC.
16 This provision was reflected in the OTS
lending limits at 12 CFR 560.93 and included in the
OTS Examination Handbook, Section 211, ‘‘Loans
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While based on different calculations,
the supervisory review for Federal
savings associations had a similar
purpose as the required OCC
notification for national banks, namely,
to ensure that institutions did not
expend an excessive amount of funds to
complete or renovate OREO. The OCC
proposes to update and streamline the
notification provision by requiring prior
notification only when the proposed
additional expenditures and recorded
investment in an individual OREO
property exceeds 10 percent of the
institution’s total equity capital based
on the institution’s most recent
Consolidated Reports of Condition and
Income (Call Report). The OCC believes
using a measure based on total equity
capital for this purpose, rather than a
measure tied to 12 CFR part 3 regulatory
capital or lending limits, allows for a
less burdensome and more transparent
calculation, while not impairing the
OCC’s supervisory review of institutions
that propose making significant
additional expenditures on OREO.
A comparison of capital and surplus
and total equity capital for national
banks supports this approach.17 Based
on information from the June 30, 2018
Call Report, the measures of regulatory
capital and total equity capital are
numerically comparable, and identical
in some cases, for many national banks
that hold OREO. Under the proposed
measure, national banks with significant
loan loss reserves or excessive losses
recorded in accumulated other
comprehensive income would generally
have a lower limit for notification
compared with the existing measure.
The OCC believes this result is
appropriate, as those losses may
indicate national banks with a higher
risk profile for which notification of
significant OREO expenditures is most
relevant. National banks holding assets
that are deducted under the regulatory
capital rule, such as mortgage servicing
assets or investments in other financial
institutions, would generally have a
higher limit for notification under the
proposed measure.
Question 6: Is the proposed allowance
for payment of operating and business
expenses related to OREO, subject to the
proposed safety and soundness
standards, reasonable? Are there other
common OREO expenses the OCC
should consider specifically including
in the regulation?
to One Borrower’’ (December 2007)., The OCC has
superseded the rule and rescinded the guidance.
17 The OCC did not review these measures for
Federal savings associations because Federal
savings associations currently are not subject to
either the existing limit or proposed notification
provision for improvements to OREO.
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Question 7: Should the proposed
threshold for notification be based on a
measure other than total equity capital?
Should the proposed threshold be
higher or lower?
F. Additional Provisions
The OCC proposes to rescind existing
12 CFR 34.87, which requires national
banks to account for OREO consistent
with the instructions for the Call Report,
because it is now redundant to statutory
requirements. Historically, there have
been differences between regulatory
accounting principles and generally
accepted accounting principles (GAAP).
However, currently, national banks and
Federal savings associations must
follow GAAP when accounting for
transactions involving OREO.18
Therefore, codifying this requirement in
the OREO rule is unnecessary. Guidance
on the application of GAAP for OREO
transactions can be found in the
instructions for the Call Report and the
OCC’s Bank Accounting Advisory
Series.19 However, the OCC notes that,
although the accounting standard
generally establishes a bright line for
when a bank must report a property as
OREO for financial reporting purposes
(i.e., when a judge completes a judicial
foreclosure), section 34.82(b) does not
establish a bright line for when property
is originally transferred to a bank. As a
result, the date on which reporting
requirements begin for OREO under the
accounting standard may be different
than the date that the holding period
commences under 34.82(b), as described
above in Section III.B. We also note that
writing off a property or lease classified
as OREO for accounting purposes does
not eliminate the need to comply with
the requirements of this subpart,
including the requirement for appraisals
and disposition of the property or lease
under one of the allowed methods.
IV. Proposed Technical Amendments
As described above, the OCC also is
proposing to remove Appendices A and
B to 12 CFR part 3 (risk-based capital
guidelines for national banks) and 12
CFR part 167 (capital requirements for
FSAs) and make conforming technical
edits to other parts, as part 167 is
outdated and includes OREO provisions
that conflict with the provisions
described in this proposal. The OCC did
not immediately rescind those rules due
to an extended transition period to the
new capital rule for certain provisions.
The proposed rule also makes
18 See
12 U.S.C. 1831n(a)(2).
Accounting Advisory Series (August
2018), available at: https://www.occ.gov/
publications/publications-by-type/otherpublications-reports/baas.pdf.
19 Bank
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conforming technical changes to
portions of the OCC’s rules that refer to
Appendices A and B to 12 CFR part 3
or to 12 CFR part 167. Specifically, the
OCC would make conforming edits to 12
CFR 3.1, 6.1, 6.2, Appendix A to
Subpart D of part 34, 46.6, 160.100,
Appendix A to 160.101, 161.55, 163.74,
and 163.80. This proposed rule does not
impact the legal status of any reference
to the superseded capital rules in
outstanding compliance and
enforcement orders, agreements, and
memoranda of understanding entered
into by the OCC and a national bank or
Federal savings association, as those
references became references to 12 CFR
part 3 when the revised capital rule
became effective.
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V. Regulatory Analyses
A. Paperwork Reduction Act
Under the Paperwork Reduction Act
of 1995,20 the OCC may not conduct or
sponsor, and a person is not required to
respond to, an information collection
unless the information collection
displays a valid OMB control number.
The OCC has submitted the information
collection requirements imposed by this
proposal to OMB for review. However,
the proposal will not result in a change
in burden. While the respondent count
will increase with the addition of
Federal savings associations, we
estimate fewer notices from national
banks due to a decrease in charters since
the last review, resulting in no change
in burden.
Section 34.86(d) updates the
requirements for prior notification for
significant additional expenditures on
OREO for national banks and extends
the provision to Federal savings
associations. Currently, a national bank
must notify the OCC at least 30 days
before making additional expenditures
if the amount of the expenditures and
recorded investment in the OREO
exceeds ten percent of its capital and
surplus, based on regulatory capital
calculated under 12 CFR part 3. Federal
savings associations are subject to
supervisory review of any expenditures
on OREO in excess of their lending
limits, which are calculated based on a
formula that incorporates a percentage
of capital and surplus.
The proposal 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 percent of
the institution’s total equity capital
based on its most recent Call Report.
20 44
U.S.C. 3501 et seq.
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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
limit for notification under the proposal.
Title: Real Estate Lending and
Appraisals.
OMB Control No.: 1557–0190.
Frequency of Response: On occasion.
Affected Public: Businesses or other
for-profit organizations.
Estimated Number of Respondents: 6.
Estimated Burden per Respondent: 5
hours.
Estimated Total Annual Burden: 30
hours.
Comments are invited on:
(a) Whether the collections of
information are necessary for the proper
performance of the functions of the
OCC, including whether the information
has practical utility;
(b) The accuracy of the OCC’s
estimates of the burden of the
collections of information;
(c) Ways to enhance the quality,
utility, and clarity of the information to
be collected;
(d) Ways to minimize the burden of
the collections on respondents,
including through the use of automated
collection techniques or other forms of
information technology; and
(e) Estimates of capital or start-up
costs and costs of operation,
maintenance, and purchase of services
to provide information.
salaries or 2.5% of other noninterest
income. The economic impact on each
small national bank is estimated to be
de minimis. Therefore, the OCC certifies
the proposed rule would not have a
significant economic impact on a
substantial number of small entities.
B. Regulatory Flexibility Act Analysis
List of Subjects
The Regulatory Flexibility Act 21
requires an agency, in connection with
a proposed rule, to prepare an Initial
Regulatory Flexibility Analysis
describing the impact of the rule on
small entities (defined by the SBA for
purposes of the RFA to include
commercial banks and savings
institutions with total assets of $550
million or less and trust companies with
total revenue of $38.5 million or less) or
to certify that the proposed rule would
not have a significant economic impact
on a substantial number of small
entities. As of December 31, 2017, the
OCC supervised 886 small entities. The
proposed rule would apply to all
entities supervised by the OCC, and
therefore would affect a substantial
number of small entities. The economic
impact on each small Federal savings
association is estimated to be
approximately $1,872, which is not
significant based on 5% of total annual
12 CFR Part 3
Administrative practice and
procedure, Capital, National banks,
Reporting and recordkeeping
requirements, Risk.
21 5
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17099
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Fmt 4702
Sfmt 4702
C. OCC Unfunded Mandates Reform Act
of 1995
The OCC analyzed the proposed rule
under the factors set forth in the
Unfunded Mandates Reform Act of 1995
(UMRA) (2 U.S.C. 1532). Under this
analysis, the OCC considered whether
the proposed rule includes a Federal
mandate that may result in the
expenditure by State, local, and Tribal
governments, in the aggregate, or by the
private sector, of $100 million or more
in any one year (adjusted for inflation).
The OCC estimates that the total cost of
the proposed rule is $583,000.
Therefore, the OCC has determined that
this proposed rule would not result in
expenditures by State, local, and Tribal
governments, or the private sector, of
$100 million or more in any one year.
Accordingly, the OCC has not prepared
a written statement to accompany this
proposal.
D. Riegle Community Development and
Regulatory Improvement Act of 1994
This rulemaking would not impose
additional reporting, disclosure, or other
requirements on an insured depository
institution. Therefore, section 302(a) of
the Riegle Community Development and
Regulatory Improvement Act of 1994
does not apply to this rulemaking.
12 CFR Part 6
National banks.
12 CFR Part 34
Appraisal, Appraiser, Banks, Banking,
Consumer protection, Credit, Mortgages,
National banks, Reporting and
recordkeeping requirements, Savings
associations, Truth in lending.
12 CFR Part 46
Banks, Banking, Capital, Disclosures,
National banks, Reporting and
recordkeeping requirements, Risk,
Stress test.
12 CFR Part 160
Consumer protection, Investments,
Manufactured homes, Mortgages,
Reporting and recordkeeping
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Authority: 12 U.S.C. 1 et seq., 25b, 29, 93a,
371, 1462a, 1463, 1464, 1465, 1701j–3,
1828(o), 3331 et seq., 5101 et seq., and
5412(b)(2)(B) and 15 U.S.C. 1639h.
requirements, Savings associations,
Securities.
12 CFR Part 161
Administrative practice and
procedure, Savings associations.
Subpart D—Real Estate Lending
Standards
12 CFR Part 163
Accounting, Administrative practice
and procedure, Advertising, Conflicts of
interest, Crime, Currency, Investments,
Mortgages, Reporting and recordkeeping
requirements, Savings associations,
Surety bonds.
12 CFR Part 167
Capital, Reporting and recordkeeping
requirements, Risk, Savings
associations.
For the reasons set out in the
preamble, the OCC proposes to revise
the following parts as follows:
PART 3—CAPITAL ADEQUACY
STANDARDS
Authority: 12 U.S.C. 93a, 161, 1462,
1462a, 1463, 1464, 1818, 1828(n), 1828 note,
1831n note, 1835, 3907, 3909, and
5412(b)(2)(B).
[Amended]
2. Section 3.1 is amended by
removing and reserving paragraph
(f)(1)(ii) and removing paragraphs
(f)(1)(ii)(A), (f)(1)(ii)(B), (f)(1)(ii)(C), and
footnotes 1 and 2.
■
Appendix A to Part 3 [Removed]
3. Remove Appendix A to part 3.
Appendix B to Part 3 [Removed]
■
4. Remove Appendix B to part 3.
PART 6—PROMPT CORRECTIVE
ACTION
5. The authority citation for part 6
continues to read as follows:
■
Authority: 12 U.S.C. 93a, 1831o,
5412(b)(2)(B).
§ 6.1
[Amended]
6. Section 6.1 is amended by
removing and reserving paragraph (f)(1),
and removing paragraphs (f)(1)(i) and
(f)(1)(ii).
■
§ 6.2
[Amended]
7. Section 6.2 is amended by
removing footnotes 30, 31, 32, 33, 34,
and 35.
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■
PART 34—REAL ESTATE LENDING
AND APPRAISALS
8. The authority citation for part 34
continues to read as follows:
■
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2 For the state member banks, the term
‘‘total capital’’ means ‘‘total risk-based
capital’’ as defined in Appendix A to 12 CFR
part 208. For insured state non-member
banks, ‘‘total capital’’ refers to that term
described in table I of Appendix A to 12 CFR
part 325. For national banks and Federal
savings associations, the term ‘‘total capital’’
is defined at 12 CFR 3.2.
*
*
*
*
*
10. Section 34.81 is amended by:
a. Removing the paragraph
designations for paragraphs (a) through
(f);
■ b. Removing the definition of capital
and surplus; and
■ c. Revising the definitions of debts
previously contracted (DPC) real estate
and former banking premises.
The revisions read as set forth below.
■
■
1. The authority citation for part 3
continues to read as follows:
■
9. Footnote 2 of Appendix A to
Subpart D of part 34 is amended to read
as follows:
*
*
*
*
*
■
Subpart E—Other Real Estate Owned
■
§ 3.1
Appendix A to Subpart D of Part 34
[Amended]
§ 34.81
Definitions.
*
*
*
*
*
Debts previously contracted (DPC)
real estate means real estate (including
leases) acquired by a national bank or
Federal savings association through any
means in full or partial satisfaction of a
debt previously contracted.
*
*
*
*
*
Former banking premises means real
estate permissible under § 7.1000(a)(2)
of this chapter that is no longer used or
contemplated to be used for the
purposes permitted in that section.
*
*
*
*
*
■ 11. Section 34.82 is amended by:
■ a. Revising paragraphs (a) and (b); and
■ b. Adding paragraphs (d) and (e).
The revisions and additions read as
set forth below.
§ 34.82
Holding Period.
(a) Holding period for OREO. (1)
National bank. A national bank shall
dispose of OREO at the earliest time that
prudent judgment dictates, but not later
than the end of the holding period (or
an extension thereof) permitted by 12
U.S.C. 29.
(2) Federal savings association. A
Federal savings association may hold
OREO for not more than five years after
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commencement of the holding period.
On the request of a Federal savings
association, the OCC may extend the
holding period for not more than an
additional five years.
(b) Commencement of holding period.
The holding period begins on the date
that:
(1) Ownership of the property is
originally transferred to a national bank
or Federal savings association,
including as a result of a merger with or
acquisition of another organization
holding OREO;
(2) A national bank or Federal savings
association completes relocation from
former banking premises to new
banking premises or ceases to use the
former banking premises without
relocating; or
(3) A national bank or Federal savings
association decides not to use real estate
acquired for future banking expansion;
or
(4) An institution converts to a
national bank or Federal savings
association, unless the institution was a
national bank or Federal savings
association immediately prior to the
conversion.
(5) Is the effective date of the final
rule, for OREO obtained by a Federal
savings association prior to that date.
*
*
*
*
*
(d) Effect of failed disposition. If a
national bank or Federal savings
association disposes of OREO, but the
real estate subsequently is conveyed
back to the institution within five years
as a result of a valid rescission or
invalidation of the original disposition,
then the holding period will be tolled
for the period during which the real
estate was not in possession of the
national bank or Federal savings
association.
(e) Re-acquisition of former OREO. If
a national bank or Federal savings
association reacquires a property that
had been OREO and was disposed of
consistent with § 34.83, the holding
period will reset.
■ 12. Section 34.83 is amended by:
■ a. Revising the section heading;
■ b. Revising paragraphs (a)
introductory text, (a)(3) introductory
text, (a)(3)(i)(B), (a)(3)(ii);
■ c. Revising paragraph (a)(4) by
removing ‘‘.’’ at the end of the paragraph
and adding ‘‘; or’’ in its place;
■ d. Adding paragraph (a)(5);
■ e. Redesignating paragraph (b) as
paragraph (c);
■ f. Adding new paragraph (b); and
■ g. Adding in paragraph (c) the words
‘‘or Federal savings association’’ after
‘‘national bank’’ in the first sentence.
The revisions and additions read as
set forth below.
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§ 34.83
Disposition of OREO.
(a) Disposition. A national bank or
Federal savings association may dispose
of OREO in the following ways:
*
*
*
*
*
(3) With respect to a lease:
(i) By obtaining an assignment or a
coterminous sublease. If a national bank
or Federal savings association enters
into a sublease that is not coterminous,
the period during which the master
lease must be divested will be
suspended for the duration of the
sublease, and will begin running again
upon termination of the sublease. A
national bank or Federal savings
association holding a lease as OREO
may enter into an extension of the lease
that would exceed the holding period
referred to in § 34.82 if the extension
meets the following criteria:
(A) * * *
(B) The national bank or Federal
savings association, prior to entering
into the extension, has a firm
commitment from a prospective
subtenant to sublease the property; and
*
*
*
*
*
(ii) Should the OCC determine that a
national bank or Federal savings
association has entered into a lease,
extension of a lease, or a sublease for the
purpose of real estate speculation, the
OCC will take appropriate measures to
address the violation, which may
include requiring the bank or savings
association to take immediate steps to
divest the lease or sublease; and
*
*
*
*
*
(5) By any other method approved by
the OCC.
(b) Additional method for Federal
savings associations. A Federal savings
association also may transfer OREO to a
service corporation. A service
corporation may hold real property
transferred to it:
(1) As OREO, subject to the
requirements otherwise applicable to
the Federal savings association under
this Subpart E; or
(2) As an investment in real estate
under § 5.59.
*
*
*
*
*
§ 34.85
[Amended]
13. Section 34.85 is amended by:
a. Adding the words ‘‘or Federal
savings association’’ after ‘‘national
bank’’, wherever it appears; and
■ b. Adding the words ‘‘or savings
association’’ after ‘‘the bank’’, wherever
it appears.
■ 14. Revise § 34.86 including the
section heading to read as follows:
■
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■
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§ 34.86 OREO expenditures and
notification.
17101
PART 46—ANNUAL STRESS TEST
16. The authority citation for part 46
continues to read as follows:
■
(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.
(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) Reasonably calculated to reduce
any shortfall between the property’s
market value and the recorded
investment amount;
(2) Not made for the purpose of
speculation in real estate; and
(3) Consistent with safe and sound
banking practices.
(d) 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 or
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 (d)(1) only once.
(2) The required notification must
demonstrate that the additional
expenditure is consistent with the
conditions and limitations in paragraph
(c) 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.
2 For the state member banks, the term
‘‘total capital’’ means ‘‘total risk-based
capital’’ as defined in Appendix A to 12 CFR
part 208. For insured state non-member
banks, ‘‘total capital’’ refers to that term
described in table I of Appendix A to 12 CFR
part 325. For national banks and Federal
savings associations, the term ‘‘total capital’’
is defined at 12 CFR 3.2.
§ 34.87
§ 163.74
■
[Removed]
15. Remove § 34.87.
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Authority: 12 U.S.C. 93a; 1463(a)(2);
5365(i)(2); and 5412(b)(2)(B).
§ 46.6
[Amended]
17. Section 46.6 paragraph (a)(2) is
amended by removing the words ‘‘or
part 167, as applicable,’’ after ‘‘12 CFR
part 3’’ in the first sentence.
■
PART 160—LENDING AND
INVESTMENT
18. The authority for part 160
continues to read as follows:
■
Authority: 12 U.S.C. 1462a, 1463, 1464,
1467a, 1701j–3, 1828, 3803, 3806,
5412(b)(2)(B); 42 U.S.C. 4106.
§ 160.100
[Amended]
19. Section 160.100 is amended by
removing ‘‘or 167.1, as applicable,’’.
■
Appendix A to § 160.101 [Amended]
20. Footnote 2 of the Appendix to
Section 160.101 is amended to read as
follows:
*
*
*
*
*
■
*
*
§ 160.172
■
*
*
*
[Removed]
21. Remove § 160.172.
PART 161—DEFINITIONS FOR
REGULATIONS AFFECTING ALL
SAVINGS ASSOCIATIONS
22. The authority for part 161
continues to read as follows:
■
Authority: 12 U.S.C. 1462a, 1463, 1464,
1467a, 5412(b)(2)(B).
§ 161.55
[Amended]
23. Section 161.55 paragraph (c) is
amended by removing the words ‘‘or
part 167, as applicable’’ after ‘‘12 CFR
part 3’’.
■
PART 163—SAVINGS
ASSOCIATIONS—OPERATIONS
24. The authority for part 163
continues to read as follows:
■
Authority: 12 U.S.C. 1462a, 1463, 1464,
1467a, 1817, 1820, 1828, 1831o, 3806, 5101
et seq., 5412(b)(2)(B); 31 U.S.C. 5318; 42
U.S.C. 4106.
■
[Amended]
25. Section 163.74 is amended:
E:\FR\FM\24APP1.SGM
24APP1
17102
Federal Register / Vol. 84, No. 79 / Wednesday, April 24, 2019 / Proposed Rules
a. Removing in paragraph (i)(2)(iv),
the wording ‘‘or part 167, as
applicable,’’ after ‘‘12 CFR part 3’’; and;
■ b. Removing in the first sentence of
paragraph (i)(2)(v) the wording ‘‘or part
167, as applicable,’’ after ‘‘12 CFR part
3’’.
■
§ 163.80
[Amended]
26. In § 163.80 amend the first
sentence of paragraph (e)(1) by
removing the wording ‘‘or part 167, as
applicable’’.
■
PART 167 [Removed]
■
27. Remove part 167.
Dated: April 17, 2019.
Joseph M. Otting,
Comptroller of the Currency.
[FR Doc. 2019–08128 Filed 4–23–19; 8:45 am]
BILLING CODE 4810–33–P
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 39
[Docket No. FAA–2019–0250; Product
Identifier 2018–NM–157–AD]
RIN 2120–AA64
Airworthiness Directives; Airbus SAS
Airplanes
Federal Aviation
Administration (FAA), DOT.
ACTION: Notice of proposed rulemaking
(NPRM).
AGENCY:
We propose to supersede
Airworthiness Directive (AD) 2015–17–
14, which applies to all Airbus SAS
Model A319 series airplanes; Model
A320–211, –212, –214, –231, –232, and
–233 airplanes, and Model A321–111,
–112, –131, –211, –212, –213, –231, and
–232 airplanes. AD 2015–17–14 requires
repetitive rototest inspections of the
open tack holes and rivet holes at the
cargo floor support fittings of the
fuselage, including doing all applicable
related investigative actions, and repair
if necessary. Since we issued AD 2015–
17–14, further analysis and widespread
fatigue damage (WFD) evaluations
identified the need to reduce the initial
compliance times and repetitive
intervals for the inspections for certain
airplanes, and to add work for certain
airplanes. This proposed AD would
continue to require the actions of AD
2015–17–14, would add actions for
certain airplanes, and would reduce the
compliance times for certain airplanes,
as specified in an European Aviation
Safety Agency (EASA) AD, which will
jbell on DSK30RV082PROD with PROPOSALS
SUMMARY:
VerDate Sep<11>2014
16:04 Apr 23, 2019
Jkt 247001
be incorporated by reference. This
proposed AD would also reduce the
applicability. We are proposing this AD
to address the unsafe condition on these
products.
DATES: We must receive comments on
this proposed AD by June 10, 2019.
ADDRESSES: You may send comments,
using the procedures found in 14 CFR
11.43 and 11.45, by any of the following
methods:
• Federal eRulemaking Portal: Go to
https://www.regulations.gov. Follow the
instructions for submitting comments.
• Fax: 202–493–2251.
• Mail: U.S. Department of
Transportation, Docket Operations, M–
30, West Building Ground Floor, Room
W12–140, 1200 New Jersey Avenue SE,
Washington, DC 20590.
• Hand Delivery: U.S. Department of
Transportation, Docket Operations, M–
30, West Building Ground Floor, Room
W12–140, 1200 New Jersey Avenue SE,
Washington, DC 20590, between 9 a.m.
and 5 p.m., Monday through Friday,
except Federal holidays.
For the incorporation by reference
(IBR) material described in the ‘‘Related
IBR material under 1 CFR part 51’’
section in SUPPLEMENTARY INFORMATION,
contact EASA, Konrad-Adenauer-Ufer 3,
50668 Cologne, Germany; telephone +49
221 89990 1000; email ADs@
easa.europa.eu; internet
www.easa.europa.eu. You may find this
IBR material on the EASA website at
https://ad.easa.europa.eu. You may
view this IBR material at the FAA,
Transport Standards Branch, 2200
South 216th St., Des Moines, WA. For
information on the availability of this
material at the FAA, call 206–231–3195.
It is also available in the AD docket on
the internet at https://
www.regulations.gov.
Examining the AD Docket
You may examine the AD docket on
the internet at https://
www.regulations.gov by searching for
and locating Docket No. FAA–2019–
0250; or in person at Docket Operations
between 9 a.m. and 5 p.m., Monday
through Friday, except Federal holidays.
The AD docket contains this NPRM, the
regulatory evaluation, any comments
received, and other information. The
street address for Docket Operations
(telephone 800–647–5527) is in the
ADDRESSES section. Comments will be
available in the AD docket shortly after
receipt.
FOR FURTHER INFORMATION CONTACT:
Sanjay Ralhan, Aerospace Engineer,
International Section, Transport
Standards Branch, FAA, 2200 South
216th St., Des Moines, WA 98198;
telephone and fax 206–231–3223.
PO 00000
Frm 00014
Fmt 4702
Sfmt 4702
SUPPLEMENTARY INFORMATION:
Comments Invited
We invite you to send any written
relevant data, views, or arguments about
this proposal. Send your comments to
an address listed under the ADDRESSES
section. Include ‘‘Docket No. FAA–
2019–0250; Product Identifier 2018–
NM–157–AD’’ at the beginning of your
comments. We specifically invite
comments on the overall regulatory,
economic, environmental, and energy
aspects of this NPRM. We will consider
all comments received by the closing
date and may amend this NPRM based
on those comments.
We will post all comments we
receive, without change, to https://
www.regulations.gov, including any
personal information you provide. We
will also post a report summarizing each
substantive verbal contact we receive
about this NPRM.
Discussion
Fatigue damage can occur locally, in
small areas or structural design details,
or globally, in widespread areas.
Multiple-site damage is widespread
damage that occurs in a large structural
element such as a single rivet line of a
lap splice joining two large skin panels.
Widespread damage can also occur in
multiple elements such as adjacent
frames or stringers. Multiple-site
damage and multiple-element damage
cracks are typically too small initially to
be reliably detected with normal
inspection methods. Without
intervention, these cracks will grow,
and eventually compromise the
structural integrity of the airplane. This
condition is known as WFD. It is
associated with general degradation of
large areas of structure with similar
structural details and stress levels. As
an airplane ages, WFD will likely occur,
and will certainly occur if the airplane
is operated long enough without any
intervention.
The FAA’s WFD final rule (75 FR
69746, November 15, 2010) became
effective on January 14, 2011. The WFD
rule requires certain actions to prevent
structural failure due to WFD
throughout the operational life of
certain existing transport category
airplanes and all of these airplanes that
will be certificated in the future. For
existing and future airplanes subject to
the WFD rule, the rule requires that
design approval holders (DAHs)
establish a limit of validity (LOV) of the
engineering data that support the
structural maintenance program.
Operators affected by the WFD rule may
not fly an airplane beyond its LOV,
unless an extended LOV is approved.
E:\FR\FM\24APP1.SGM
24APP1
Agencies
[Federal Register Volume 84, Number 79 (Wednesday, April 24, 2019)]
[Proposed Rules]
[Pages 17094-17102]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-08128]
=======================================================================
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DEPARTMENT OF TREASURY
Office of the Comptroller of the Currency
12 CFR Parts 3, 6, 34, 46, 160, 161, 163, and 167
[Docket ID OCC-2019-0004]
RIN 1557-AE50
Other Real Estate Owned and Technical Amendments
AGENCY: Office of the Comptroller of the Currency (OCC), Treasury.
ACTION: Notice of proposed rulemaking with request for public comment.
-----------------------------------------------------------------------
SUMMARY: The OCC is inviting comment on a proposed rule that would
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 proposing
to remove outdated capital rules for national banks and Federal savings
associations, which include provisions related to OREO, and make
conforming edits to other rules that reference those capital rules.
DATES: Comments must be received by June 24, 2019.
ADDRESSES: You may submit comments to the OCC by any of the methods set
forth below. Commenters are encouraged to submit comments through the
Federal eRulemaking Portal or email, if possible. Please use the title
``Other Real Estate Owned and Technical Amendments'' to facilitate the
organization and distribution of the comments. You may submit comments
by any of the following methods:
Federal eRulemaking Portal--``Regulations.gov'': Go to
www.regulations.gov. Enter ``Docket ID OCC-2019-0004'' in the Search
Box and click ``Search.'' Click on ``Comment Now'' to submit public
comments.
Click on the ``Help'' tab on the Regulations.gov home page
to get information on using Regulations.gov, including instructions for
submitting public comments.
Email: [email protected].
Mail: Chief Counsel's Office, Attention: Comment
Processing, Office of the Comptroller of the Currency, 400 7th Street
SW, Suite 3E-218, Washington, DC 20219.
Hand Delivery/Courier: 400 7th Street SW, Suite 3E-218,
Washington, DC 20219.
Instructions: You must include ``OCC'' as the agency name and
``Docket ID OCC-2019-0004'' in your comment.
In general, the OCC will enter all comments received into the
docket and publish the comments on the Regulations.gov website without
change, including any business or personal information that you provide
such as name and address information, email addresses, or phone
numbers. Comments received, including attachments and other supporting
materials, are part of the public record and subject to public
disclosure. Do not include any information in your comment or
supporting materials that you consider confidential or inappropriate
for public disclosure.
You may review comments and other related materials that pertain to
this rulemaking action by any of the following methods:
Viewing Comments Electronically: Go to
www.regulations.gov. Enter ``Docket ID OCC-2019-0004'' in the Search
box and click ``Search.'' Click on ``Open Docket Folder'' on the right
side of the screen. Comments and supporting materials can be viewed and
filtered by clicking on ``View all documents and comments in this
docket'' and then using the filtering tools on the left side of the
screen.
Click on the ``Help'' tab on the Regulations.gov home page
to get information on using Regulations.gov. The docket may be viewed
after the close of the comment period in the same manner as during the
comment period.
Viewing Comments Personally: You may personally inspect
comments at the OCC, 400 7th Street SW, Washington, DC 20219. For
security reasons, the OCC requires that visitors make an appointment to
inspect comments. You may do so by calling (202) 649-6700 or, for
persons who are deaf or hearing impaired, TTY, (202) 649-5597. Upon
arrival, visitors will be required to present valid government-issued
photo identification and submit to security screening in order to
inspect comments.
FOR FURTHER INFORMATION CONTACT:
For revisions to Part 34, Subpart E (OREO): Charlotte Bahin, Senior
Advisor for Thrift Supervision, (202) 649-6281; or, J. William Binkley,
Attorney, Chief Counsel's Office, (202) 649-5500.
For all revisions: Kevin Korzeniewski, Counsel, Chief Counsel's
Office, (202) 649-5490; or for persons who are deaf or hearing
impaired, TTY, (202) 649-5597.
SUPPLEMENTARY INFORMATION:
I. Background
The OCC is proposing to update its regulatory framework for other
real estate owned (OREO) by revising its rules to clarify and
streamline the regulation for national banks and to apply the
regulatory framework to OREO activities Federal savings associations
for the reasons discussed below. The OCC's last significant revision to
the national bank OREO rules occurred over twenty years ago.\1\ Since
that time, the OCC has gained additional supervisory experience related
to OREO, which it can apply to improve the OREO rules. In addition, the
OCC now supervises Federal savings associations pursuant to the Dodd-
Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank
Act).\2\ Federal savings associations, unlike national banks, are not
subject to statutory provisions governing OREO. However, capital
regulations and handbooks issued by the Office of Thrift Supervision
(OTS) generally established requirements and supervisory expectations
for OREO activities. Following OCC and OTS integration, the OCC
rescinded or superseded many of those documents, creating ambiguity
with respect to OREO standards for Federal savings associations. The
OCC is proposing a framework for Federal savings associations that
generally is consistent with the OTS framework
[[Page 17095]]
described above. This framework is still followed by many savings
associations and would offer flexibility consistent with provisions in
the Home Owners' Loan Act (HOLA).
---------------------------------------------------------------------------
\1\ See 61 FR 11294 (March 20, 1996).
\2\ See 12 U.S.C. 5412.
---------------------------------------------------------------------------
The OCC also is proposing to remove Appendices A and B to 12 CFR
part 3 (risk-based capital guidelines for national banks) and 12 CFR
part 167 (capital requirements for FSAs) and make conforming technical
edits to other parts that reference those provisions. When the OCC
revised Part 3 it superseded Appendices A and B to part 3 and part 167.
However, because there was a transition period for part 3, the OCC
retained those appendices at that time.\3\ Part 167 includes provisions
relating to treatment of OREO held by Federal savings associations that
is no longer in effect. The OCC is proposing to remove part 167 and
related references to avoid any confusion with the OREO treatment
proposed in this notice. Since Appendices A and B to part 3 include the
corresponding capital provisions for national banks and are similarly
outdated, the OCC proposes to rescind those appendices in this proposal
as well.
---------------------------------------------------------------------------
\3\ See 78 FR 62018 (October 11, 2013).
---------------------------------------------------------------------------
II. Statutory Authority for OREO
Twelve U.S.C. 29 establishes a framework for when a national bank
may hold real property. A national bank may hold real property for use
in its business as premises, as mortgaged to it as security for a debt,
in satisfaction of debts previously contracted (DPC),\4\ or as
purchased at foreclosure to secure a related debt. The statute limits a
national bank to a five-year holding period for real property, other
than real property used as premises. However, the statute allows a
national bank to seek approval from the Comptroller of the Currency to
hold real property for up to five additional years. The OCC may approve
this additional time if the bank has made a good faith attempt to
dispose of the property within the initial five-year period or if
disposal within the five-year period would be detrimental to the bank.
---------------------------------------------------------------------------
\4\ Generally, DPC property is property not mortgaged in
connection with obtaining a loan, but instead used to satisfy a pre-
existing loan.
---------------------------------------------------------------------------
Twelve U.S.C. 1464 establishes requirements for the chartering and
operation of Federal savings associations, including the power to make
loans and investments. The authority for a Federal savings association
to obtain real property in connection with satisfaction of a loan
previously made, including at foreclosure, is an inherent power
associated with making a loan secured by a mortgage on real property,
which is permitted by 12 U.S.C. 1464(c)(1)(B) and (2)(B). In addition,
12 U.S.C. 1464(c)(4)(B) authorizes Federal savings associations to
invest in service corporations,\5\ which, by regulation, are permitted
to engage in additional activities in connection with real property.\6\
Federal savings associations are not subject to a five-year statutory
limit on the holding period for real property.
---------------------------------------------------------------------------
\5\ Under 12 U.S.C. 1464(c)(4)(B), a Federal savings association
may invest in a service corporation if (i) the service corporation
is organized in the state where the Federal savings association's
home office is located; (ii) the corporation's stock is available
for purchase only by other Federal and state savings associations
having home offices in such state; and (iii) the Federal savings
association's aggregate investments in service corporations do not
exceed three percent (3%) of its assets, with amounts in excess of
two percent (2%) of assets serving primarily community, inner city,
and community development purposes. See also 12 CFR 5.59. If the
service corporation is controlled by a Federal savings association,
then the service corporation is a subsidiary of the association. See
12 CFR 5.59(d)(5).
\6\ These activities include acquiring real estate for
development, leasing, or resale, and maintaining and managing real
estate. See 12 CFR 5.59(f)(5).
---------------------------------------------------------------------------
III. Proposed Regulation for OREO
A. Definitions (Sec. 34.81)
This section would contain definitions used in the OREO regulation.
This section would continue to use the existing definitions for other
real estate owned (OREO); market value; and recorded investment amount
in the revised regulation. The term OREO would continue to mean DPC
real estate and former banking premises. The term market value would
continue to mean the value of the property, as determined under the
appraisal rule in 12 CFR part 34, subpart C. Recorded investment amount
would continue to mean the recorded loan balance (for loans) or the net
book value (for former banking premises).
In addition, the proposal would continue to use the current
definition of DPC real estate, but with minor revisions related to
lease accounting described below. The definition of DPC real estate
would continue to mean real estate acquired through any means in
satisfaction of a debt previously contracted, consistent with the
authorities described earlier in this preamble for national banks and
Federal savings associations to obtain property in this manner. The
existing definition of the term includes capitalized and operating
leases, which are the two types of leases recognized under current
accounting standards from the lessee's perspective. However, revised
accounting standards requiring operating leases to be capitalized,
among other provisions, are scheduled to be implemented in the near
future.\7\ Therefore, the OCC proposes to revise the terminology in the
current definition of DPC real estate to refer to leased real estate,
rather than to refer specifically to capitalized and operating leases.
The proposed definition would continue to cover all leases, but the
revision will ensure the regulation will not become outdated after
implementation of the new accounting standards.
---------------------------------------------------------------------------
\7\ See FASB ASU 2016-02, ``Leases (Topic 842)'' (February
2016).
---------------------------------------------------------------------------
In addition, the proposal would revise the definition of former
banking premises to include a reference to 12 CFR 7.1000(a)(2), which
establishes categories of real estate that national banks and Federal
savings associations are permitted to own for use in their banking
activities. The revised definition would define former banking premises
as real estate permitted under section 7.1000(a)(2) that is no longer
used or contemplated to be used for the purposes permitted by that
rule. The proposed revision should improve regulatory consistency by
clarifying that both rules cover the same types of real estate for
banking activities and eliminate confusion about whether the rules
refer to different types of properties.
B. Holding Period (Sec. 34.82)
This section would specify how long a national bank or a Federal
saving association may hold OREO, provide the starting date for that
holding period, and address additional related provisions affecting the
holding period.
The holding period for national banks under the current rule is the
period required by 12 U.S.C. 29. The statute and the current rule
provide for an initial five-year holding period, with up to an
additional five years if approved by the OCC. The proposal would not
change this holding period.
The proposal also would establish 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 OCC's
supervisory experience is that both types of institutions generally
have or
[[Page 17096]]
obtain similar types of OREO. As with national banks, in deciding
whether to grant the approval to hold OREO beyond the initial five-year
holding period, the OCC would expect to consider, among other factors,
the Federal savings association's current and prior efforts to dispose
of the property and safety and soundness concerns related to an
immediate disposition of the property. During the initial five-year
holding period and any subsequent approved period, the Federal savings
association would need to make reasonable efforts to dispose of the
OREO. This provision is consistent with prior OTS expectations. This
proposed framework also is consistent with the requirement previously
applicable to Federal savings associations under 12 CFR part 167, which
required savings associations to deduct from regulatory capital the
value of OREO held for more than five years, or a longer period with
OCC approval, as an equity investment. This provision created
incentives for Federal savings associations to dispose of OREO within
five years, or a longer period approved by the OCC, as the regulatory
capital treatment for failure to dispose of the property generally
would be more onerous than disposing of the property. The OCC believes
that an initial five-year holding period is a sufficient amount of time
to dispose of most OREO and the option to extend the holding period for
an additional five years should be sufficient to address atypical
properties or unusual real estate market conditions.
Question 1: Should the OCC require national banks and Federal
savings associations to make specific efforts to dispose of OREO within
the specified timeframes? If so, what efforts should the OCC require?
The proposal also would adopt for Federal savings associations the
existing national bank provision describing the date the holding period
for OREO begins. Generally, the holding period for DPC real estate
would begin on the date the property is transferred to the national
bank or Federal savings association (for example, after a judicial
foreclosure or deed-in-lieu of foreclosure), which may be different
than the date the institution must recognize the property as OREO for
accounting and financial reporting purposes. The title transfer law of
the state or other jurisdiction where the property is located would
govern when the property is considered transferred to the national bank
or Federal savings association. The holding period for former bank
premises would begin when the national bank or Federal savings
association ceases using a property as bank premises (whether outright
or after relocating) or abandons a plan to use property held for future
bank premises.
The OCC is proposing a modification for OREO obtained by a Federal
savings association prior to the effective date of this proposed rule.
For this OREO, the holding period would begin on the rule's effective
date to provide for a full initial five-year holding period. The OCC
still would consider the entire time the OREO has been held by the
Federal savings association in evaluating any request for an additional
holding period beyond that initial five years. The OCC believes this
accommodation would provide Federal savings associations with a
reasonable timeframe to dispose of OREO held prior to the effective
date of the rule, rather than calculating the holding period back to
the initial transfer date.
Question 2: Does the proposed adjustment to the calculation of the
holding period for OREO obtained by a Federal savings association prior
to the effective date of the rule provide an appropriate amount of time
to dispose of the OREO consistent with the proposed rule?
The OCC also proposes to clarify that when a national bank or
Federal savings association obtains OREO from a merged or acquired
institution, the relevant holding period would commence on the
effective date of the merger or acquisition and would not include any
time the OREO had been held by the acquired institution prior to the
merger or acquisition. Similarly, when an institution converts to a
national bank or Federal savings association, the relevant holding
period would begin on the date of conversion. However, if the
institution was already a national bank or Federal savings association
immediately prior to the conversion, the holding period would not reset
on the conversion date.\8\ The OCC believes this is appropriate because
different OREO standards might apply to an institution before it
becomes a national bank or Federal savings association, unless the
institution is already covered by the OCC's OREO rule. The proposed
revision also would apply to Federal savings associations the existing
national bank regulation that the holding period for DPC real estate
that is subject to a redemption period imposed under state law begins
after the expiration of the redemption period.
---------------------------------------------------------------------------
\8\ For example, if a Federal savings association that had OREO
with a holding period that began in January 2016, converted to a
national bank in June 2019, the OCC would still consider the holding
period for the OREO to have begun in January 2016, not June 2019.
---------------------------------------------------------------------------
The proposed revised section also would address an interpretive
issue that arises when a national bank or Federal savings association
enters into a transaction to dispose of OREO, but the real estate is
conveyed back to the institution for a reason other than a subsequent
purchase by the institution (for example, if there is a failure to
complete the disposition or the disposition is validly rescinded or
unwound). In those cases, the holding period would be tolled during the
period of time the OREO property was not under the bank's or savings
association's control. For example, if a third party purchases OREO
from a national bank or Federal savings association but later legally
rescinds the sale, the bank or savings association cannot start a new
five-year holding period for the property. Instead, any previous
holding period (including approved extensions) would be tolled between
the time the bank or savings association sold and reacquired the real
property. Similarly, in certain U.S. government mortgage loan programs
a national bank or Federal savings association may be required to
transfer a foreclosed property to a U.S. government entity, and that
entity may later validly reject receipt of the property and return
title to the bank or savings association. In that case, the national
bank or Federal savings association could not start a new five-year
holding period for the property but could toll any previous holding
period (including approved extensions) during the time the government
entity had possession of the property. However, if the national bank or
Federal savings association re-acquires property that was previously
OREO and had been disposed of consistent with this part, then the five-
year holding period would reset on that property. For example, if a
bank originates a mortgage loan in connection with the sale of an OREO
property that met the requirements for a valid disposition under part
34, but later foreclose on that property due to missed mortgage
payments, then the bank will obtain a new five-year holding period.
Question 3: Are there ways the calculations for the start of the
holding period and any subsequent tolling could be improved? Should the
OCC establish a bright line for when a property is acquired, rather
than rely on state transfer laws and redemption periods? For real
property, should the OCC refer to accounting standards to determine
when a property is transferred to OREO?
[[Page 17097]]
Question 4: Should the OCC allow a national bank or Federal savings
association to restart the holding period on OREO, even if the
institution converts to a different charter also subject to part 34?
C. Disposition of OREO (Sec. 34.83)
This section would specify methods for national banks and Federal
savings associations to dispose of OREO. Generally, the proposal would
retain the existing disposal methods for national banks and allow
Federal savings associations to dispose of OREO using those same
methods. These methods include: (i) Selling the property outright or
over a period of time; (ii) using DPC real estate as bank premises or
affiliate premises; or (iii) entering into subleases of OREO leases.
Writing OREO (whether owned or leased) down to zero for accounting
purposes is not a valid disposition under the existing rules and would
not be a valid disposition under the proposed revisions.
To provide for additional flexibility to dispose of OREO, the OCC
also proposes to add a new paragraph (a)(5) that would allow the
disposition of OREO in other ways approved by the OCC consistent with
safe and sound banking practices. For example, the OCC previously has
approved national banks and Federal savings associations to dispose of
OREO in certain circumstances by donating or escheating OREO or by
negotiating early terminations of OREO leases.
The proposal would recognize that, unlike a national bank, a
Federal savings association also may transfer OREO to a service
corporation. Under HOLA and 12 CFR 5.59, a Federal savings association
may invest in a service corporation, which may engage in the same
activities as its parent Federal savings association under the same
terms and conditions. A service corporation also may engage in
additional activities not permitted at a Federal savings association,
including certain real estate related services such as holding property
as an investment in real estate.\9\ In addition, 12 CFR 5.59(i) permits
a Federal savings association to make a contribution to a service
corporation in the exercise of the association's salvage powers.\10\
Consistent with HOLA and 12 CFR 5.59, the proposal would allow a
Federal savings association, through a service corporation, to hold
OREO property as an investment or for longer than 10 years. However,
under current statutory and regulatory capital requirements, a Federal
savings association must deconsolidate, and deduct any investments in,
a subsidiary engaged in activities not permissible for a national bank,
including holding property as an investment in real estate.\11\
---------------------------------------------------------------------------
\9\ See 12 U.S.C. 1464(c)(4)(B) and 12 CFR 5.59.
\10\ 12 CFR 5.59(i) provides that a Federal savings association
may exercise its salvage power to make a contribution or a loan . .
. to a service corporation (``salvage investment'') that exceeds the
maximum amount otherwise permitted under law or regulation.'' The
Federal savings association must demonstrate that: (i) The salvage
investment protects the association's interest in the service
corporation; (ii) the salvage investment is consistent with safety
and soundness; and (iii) the association considered alternatives to
the salvage investment but determined the alternatives would not
satisfy (i) and (ii).
\11\ 12 U.S.C. 1464(t)(5) and 12 CFR 3.22(a)(8). Holding
property as an investment in real estate is not authorized for a
national bank under 12 U.S.C. 29.
---------------------------------------------------------------------------
Finally, the proposed revised section would retain the requirement
that a national bank must make a diligent and ongoing effort to dispose
of OREO and maintain documentation of those efforts. The proposal also
would apply these provisions to Federal savings associations.
Compliance with the requirement to document the national bank's or
Federal savings association's diligence when attempting to dispose of
OREO is an important consideration if the national bank or Federal
savings association requests an extension to hold OREO beyond the
initial five-year holding period. The proposed requirement that a
Federal savings association make diligent efforts to dispose of OREO
and maintain relevant documentation is consistent with both prior OTS
expectations that savings associations develop salvage plans that
included provisions for disposition of OREO and the existing
requirement that Federal savings associations maintain documentation of
appraisals of OREO.\12\
---------------------------------------------------------------------------
\12\ 12 CFR 160.172.
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Question 5: Should the proposed rule include additional disposition
methods for OREO held by national banks and Federal savings
associations? Are there ways the proposed methods could be improved or
clarified? For owned, rather than leased, real estate, should the OCC
defer to accounting standards to determine when a property is sold
(that is, based on whether the transfer qualifies for sales treatment
under accounting standards)?
D. Appraisal Requirements (Sec. 34.85)
This section would specify the appraisal requirements applicable to
OREO. The proposal would carry over the existing requirements for
appraisals of OREO for national banks and apply those same requirements
to Federal savings associations. Generally, this section requires an
appraisal consistent with 12 CFR part 34, subpart C when property is
obtained as OREO followed by periodic monitoring thereafter. In
addition, the proposed section would continue to include existing
exceptions from the appraisal requirements. For example, an appraisal
would not be required if there is still a valid appraisal that was
created in a transaction involving the property, as described in Sec.
34.85(b). Because the requirements for appraisals of OREO held by
Federal savings associations would be set out in the proposed rule, the
OCC also is proposing to repeal 12 CFR 160.172, which currently
includes comparable appraisal standards for OREO held by Federal
savings associations.
E. OREO Expenditures and Notification (Sec. 34.86)
This section would contain provisions related to permissible
expenditures on OREO. The proposal would codify various interpretations
regarding other permissible expenses related to OREO for national banks
and Federal savings associations in new paragraphs (a) and (b).
Paragraph (a) would allow national banks and Federal savings
associations to pay any normal operating expenses relating to the OREO
property, such as taxes, insurance, utilities, and maintenance, and
condominium association fees, to the extent those fees are reasonable
and consistent with safe and sound banking practices. This proposed
addition is consistent with a provision in existing paragraph (b)(1),
prior interpretations issued by the OCC for national banks, and prior
OTS expectations concerning payment of taxes, insurance, and similar
expenses on OREO by Federal savings associations.\13\
---------------------------------------------------------------------------
\13\ See Comptroller's Handbook on ``Other Real Estate Owned''
(August 2018). For Federal savings associations, this provision was
included in the OTS Examination Handbook, Section 251, ``Real Estate
Owned and Repossessed Assets'' (December 2010), which has since been
rescinded by the OCC.
---------------------------------------------------------------------------
Paragraph (b) would allow national banks and Federal savings
associations to pay expenses for the operation of a business associated
with the OREO property, if: (i) Payment of the expenses reduces the
shortfall between the current value of the property and the national
bank or Federal savings association's investment in the property; and
(ii) the expenses are consistent with safe and sound banking practices.
For example, if a national bank or Federal savings association obtains
an OREO property that includes a functioning hotel and resort, the
national bank or Federal savings association may be able to minimize
its loss on the defaulted loan by continuing to pay business
[[Page 17098]]
expenses to operate the hotel and resort, such as staff wages,
inventory, management fees, and licensing fees, while the OREO is being
prepared for sale. The OCC has previously addressed these types of
expenses for national banks consistent with safe and sound banking
practices, and this provision would extend the permission to Federal
savings associations.\14\
---------------------------------------------------------------------------
\14\ See Comptroller's Handbook on ``Other Real Estate Owned''
(August 2018).
---------------------------------------------------------------------------
Under the current rule, a national bank is permitted to make
advances to complete an OREO development or improvement project
(referred to as ``additional expenditures''). Paragraph (c) would
continue the existing requirements for additional expenditures on OREO
for a national bank and apply the same requirements to a Federal
savings association. A national bank or Federal savings association
could make additional expenditures only if: (i) The expenditures are
reasonably calculated to reduce the shortfall between the current value
of the property and the bank's investment in the property; (ii) the
expenditures are not made for purposes of speculation in real estate;
and (iii) the expenditures are consistent with safe and sound banking
practices. These proposed requirements are consistent with prior OTS
expectations, which addressed a Federal savings association's
reasonable capital expenditures to reduce the loss on OREO obtained by
the savings association.\15\
---------------------------------------------------------------------------
\15\ Id. For Federal savings associations, this provision was
included in the OTS Examination Handbook, Section 251, ``Real Estate
Owned and Repossessed Assets'' (December 2010), which has since been
rescinded by the OCC.
---------------------------------------------------------------------------
In addition, paragraph (d) would update the requirements for prior
notification for significant additional expenditures on OREO for
national banks and extend the provision to Federal savings
associations. Currently, under 12 CFR 34.86(b), a national bank must
notify the OCC at least 30 days before making additional expenditures
if the amount of the expenditures and recorded investment in the OREO
exceeds ten percent of the national bank's capital and surplus, which
generally is based on regulatory capital calculated under 12 CFR part
3. Federal savings associations, in turn, were subject to supervisory
review of any expenditures on OREO in excess of their lending limits,
which are calculated based on a formula that incorporates a percentage
of capital and surplus.\16\ While based on different calculations, the
supervisory review for Federal savings associations had a similar
purpose as the required OCC notification for national banks, namely, to
ensure that institutions did not expend an excessive amount of funds to
complete or renovate OREO. The OCC proposes to update and streamline
the notification provision by requiring prior notification only when
the proposed additional expenditures and recorded investment in an
individual OREO property exceeds 10 percent of the institution's total
equity capital based on the institution's most recent Consolidated
Reports of Condition and Income (Call Report). The OCC believes using a
measure based on total equity capital for this purpose, rather than a
measure tied to 12 CFR part 3 regulatory capital or lending limits,
allows for a less burdensome and more transparent calculation, while
not impairing the OCC's supervisory review of institutions that propose
making significant additional expenditures on OREO.
---------------------------------------------------------------------------
\16\ This provision was reflected in the OTS lending limits at
12 CFR 560.93 and included in the OTS Examination Handbook, Section
211, ``Loans to One Borrower'' (December 2007)., The OCC has
superseded the rule and rescinded the guidance.
---------------------------------------------------------------------------
A comparison of capital and surplus and total equity capital for
national banks supports this approach.\17\ Based on information from
the June 30, 2018 Call Report, the measures of regulatory capital and
total equity capital are numerically comparable, and identical in some
cases, for many national banks that hold OREO. Under the proposed
measure, national banks with significant loan loss reserves or
excessive losses recorded in accumulated other comprehensive income
would generally have a lower limit for notification compared with the
existing measure. The OCC believes this result is appropriate, as those
losses may indicate national banks with a higher risk profile for which
notification of significant OREO expenditures is most relevant.
National banks holding assets that are deducted under the regulatory
capital rule, such as mortgage servicing assets or investments in other
financial institutions, would generally have a higher limit for
notification under the proposed measure.
---------------------------------------------------------------------------
\17\ The OCC did not review these measures for Federal savings
associations because Federal savings associations currently are not
subject to either the existing limit or proposed notification
provision for improvements to OREO.
---------------------------------------------------------------------------
Question 6: Is the proposed allowance for payment of operating and
business expenses related to OREO, subject to the proposed safety and
soundness standards, reasonable? Are there other common OREO expenses
the OCC should consider specifically including in the regulation?
Question 7: Should the proposed threshold for notification be based
on a measure other than total equity capital? Should the proposed
threshold be higher or lower?
F. Additional Provisions
The OCC proposes to rescind existing 12 CFR 34.87, which requires
national banks to account for OREO consistent with the instructions for
the Call Report, because it is now redundant to statutory requirements.
Historically, there have been differences between regulatory accounting
principles and generally accepted accounting principles (GAAP).
However, currently, national banks and Federal savings associations
must follow GAAP when accounting for transactions involving OREO.\18\
Therefore, codifying this requirement in the OREO rule is unnecessary.
Guidance on the application of GAAP for OREO transactions can be found
in the instructions for the Call Report and the OCC's Bank Accounting
Advisory Series.\19\ However, the OCC notes that, although the
accounting standard generally establishes a bright line for when a bank
must report a property as OREO for financial reporting purposes (i.e.,
when a judge completes a judicial foreclosure), section 34.82(b) does
not establish a bright line for when property is originally transferred
to a bank. As a result, the date on which reporting requirements begin
for OREO under the accounting standard may be different than the date
that the holding period commences under 34.82(b), as described above in
Section III.B. We also note that writing off a property or lease
classified as OREO for accounting purposes does not eliminate the need
to comply with the requirements of this subpart, including the
requirement for appraisals and disposition of the property or lease
under one of the allowed methods.
---------------------------------------------------------------------------
\18\ See 12 U.S.C. 1831n(a)(2).
\19\ Bank Accounting Advisory Series (August 2018), available
at: https://www.occ.gov/publications/publications-by-type/other-publications-reports/baas.pdf.
---------------------------------------------------------------------------
IV. Proposed Technical Amendments
As described above, the OCC also is proposing to remove Appendices
A and B to 12 CFR part 3 (risk-based capital guidelines for national
banks) and 12 CFR part 167 (capital requirements for FSAs) and make
conforming technical edits to other parts, as part 167 is outdated and
includes OREO provisions that conflict with the provisions described in
this proposal. The OCC did not immediately rescind those rules due to
an extended transition period to the new capital rule for certain
provisions. The proposed rule also makes
[[Page 17099]]
conforming technical changes to portions of the OCC's rules that refer
to Appendices A and B to 12 CFR part 3 or to 12 CFR part 167.
Specifically, the OCC would make conforming edits to 12 CFR 3.1, 6.1,
6.2, Appendix A to Subpart D of part 34, 46.6, 160.100, Appendix A to
160.101, 161.55, 163.74, and 163.80. This proposed rule does not impact
the legal status of any reference to the superseded capital rules in
outstanding compliance and enforcement orders, agreements, and
memoranda of understanding entered into by the OCC and a national bank
or Federal savings association, as those references became references
to 12 CFR part 3 when the revised capital rule became effective.
V. Regulatory Analyses
A. Paperwork Reduction Act
Under the Paperwork Reduction Act of 1995,\20\ the OCC may not
conduct or sponsor, and a person is not required to respond to, an
information collection unless the information collection displays a
valid OMB control number. The OCC has submitted the information
collection requirements imposed by this proposal to OMB for review.
However, the proposal will not result in a change in burden. While the
respondent count will increase with the addition of Federal savings
associations, we estimate fewer notices from national banks due to a
decrease in charters since the last review, resulting in no change in
burden.
---------------------------------------------------------------------------
\20\ 44 U.S.C. 3501 et seq.
---------------------------------------------------------------------------
Section 34.86(d) updates the requirements for prior notification
for significant additional expenditures on OREO for national banks and
extends the provision to Federal savings associations. Currently, a
national bank must notify the OCC at least 30 days before making
additional expenditures if the amount of the expenditures and recorded
investment in the OREO exceeds ten percent of its capital and surplus,
based on regulatory capital calculated under 12 CFR part 3. Federal
savings associations are subject to supervisory review of any
expenditures on OREO in excess of their lending limits, which are
calculated based on a formula that incorporates a percentage of capital
and surplus.
The proposal 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 percent 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 limit for
notification under the proposal.
Title: Real Estate Lending and Appraisals.
OMB Control No.: 1557-0190.
Frequency of Response: On occasion.
Affected Public: Businesses or other for-profit organizations.
Estimated Number of Respondents: 6.
Estimated Burden per Respondent: 5 hours.
Estimated Total Annual Burden: 30 hours.
Comments are invited on:
(a) Whether the collections of information are necessary for the
proper performance of the functions of the OCC, including whether the
information has practical utility;
(b) The accuracy of the OCC's estimates of the burden of the
collections of information;
(c) Ways to enhance the quality, utility, and clarity of the
information to be collected;
(d) Ways to minimize the burden of the collections on respondents,
including through the use of automated collection techniques or other
forms of information technology; and
(e) Estimates of capital or start-up costs and costs of operation,
maintenance, and purchase of services to provide information.
B. Regulatory Flexibility Act Analysis
The Regulatory Flexibility Act \21\ requires an agency, in
connection with a proposed rule, to prepare an Initial Regulatory
Flexibility Analysis describing the impact of the rule on small
entities (defined by the SBA for purposes of the RFA to include
commercial banks and savings institutions with total assets of $550
million or less and trust companies with total revenue of $38.5 million
or less) or to certify that the proposed rule would not have a
significant economic impact on a substantial number of small entities.
As of December 31, 2017, the OCC supervised 886 small entities. The
proposed rule would apply to all entities supervised by the OCC, and
therefore would affect a substantial number of small entities. The
economic impact on each small Federal savings association is estimated
to be approximately $1,872, which is not significant based on 5% of
total annual salaries or 2.5% of other noninterest income. The economic
impact on each small national bank is estimated to be de minimis.
Therefore, the OCC certifies the proposed rule would not have a
significant economic impact on a substantial number of small entities.
---------------------------------------------------------------------------
\21\ 5 U.S.C. 601 et seq.
---------------------------------------------------------------------------
C. OCC Unfunded Mandates Reform Act of 1995
The OCC analyzed the proposed rule under the factors set forth in
the Unfunded Mandates Reform Act of 1995 (UMRA) (2 U.S.C. 1532). Under
this analysis, the OCC considered whether the proposed rule includes a
Federal mandate that may result in the expenditure by State, local, and
Tribal governments, in the aggregate, or by the private sector, of $100
million or more in any one year (adjusted for inflation). The OCC
estimates that the total cost of the proposed rule is $583,000.
Therefore, the OCC has determined that this proposed rule would not
result in expenditures by State, local, and Tribal governments, or the
private sector, of $100 million or more in any one year. Accordingly,
the OCC has not prepared a written statement to accompany this
proposal.
D. Riegle Community Development and Regulatory Improvement Act of 1994
This rulemaking would not impose additional reporting, disclosure,
or other requirements on an insured depository institution. Therefore,
section 302(a) of the Riegle Community Development and Regulatory
Improvement Act of 1994 does not apply to this rulemaking.
List of Subjects
12 CFR Part 3
Administrative practice and procedure, Capital, National banks,
Reporting and recordkeeping requirements, Risk.
12 CFR Part 6
National banks.
12 CFR Part 34
Appraisal, Appraiser, Banks, Banking, Consumer protection, Credit,
Mortgages, National banks, Reporting and recordkeeping requirements,
Savings associations, Truth in lending.
12 CFR Part 46
Banks, Banking, Capital, Disclosures, National banks, Reporting and
recordkeeping requirements, Risk, Stress test.
12 CFR Part 160
Consumer protection, Investments, Manufactured homes, Mortgages,
Reporting and recordkeeping
[[Page 17100]]
requirements, Savings associations, Securities.
12 CFR Part 161
Administrative practice and procedure, Savings associations.
12 CFR Part 163
Accounting, Administrative practice and procedure, Advertising,
Conflicts of interest, Crime, Currency, Investments, Mortgages,
Reporting and recordkeeping requirements, Savings associations, Surety
bonds.
12 CFR Part 167
Capital, Reporting and recordkeeping requirements, Risk, Savings
associations.
For the reasons set out in the preamble, the OCC proposes to revise
the following parts as follows:
PART 3--CAPITAL ADEQUACY STANDARDS
0
1. The authority citation for part 3 continues to read as follows:
Authority: 12 U.S.C. 93a, 161, 1462, 1462a, 1463, 1464, 1818,
1828(n), 1828 note, 1831n note, 1835, 3907, 3909, and 5412(b)(2)(B).
Sec. 3.1 [Amended]
0
2. Section 3.1 is amended by removing and reserving paragraph
(f)(1)(ii) and removing paragraphs (f)(1)(ii)(A), (f)(1)(ii)(B),
(f)(1)(ii)(C), and footnotes 1 and 2.
Appendix A to Part 3 [Removed]
0
3. Remove Appendix A to part 3.
Appendix B to Part 3 [Removed]
0
4. Remove Appendix B to part 3.
PART 6--PROMPT CORRECTIVE ACTION
0
5. The authority citation for part 6 continues to read as follows:
Authority: 12 U.S.C. 93a, 1831o, 5412(b)(2)(B).
Sec. 6.1 [Amended]
0
6. Section 6.1 is amended by removing and reserving paragraph (f)(1),
and removing paragraphs (f)(1)(i) and (f)(1)(ii).
Sec. 6.2 [Amended]
0
7. Section 6.2 is amended by removing footnotes 30, 31, 32, 33, 34, and
35.
PART 34--REAL ESTATE LENDING AND APPRAISALS
0
8. The authority citation for part 34 continues to read as follows:
Authority: 12 U.S.C. 1 et seq., 25b, 29, 93a, 371, 1462a, 1463,
1464, 1465, 1701j-3, 1828(o), 3331 et seq., 5101 et seq., and
5412(b)(2)(B) and 15 U.S.C. 1639h.
Subpart D--Real Estate Lending Standards
Appendix A to Subpart D of Part 34 [Amended]
0
9. Footnote 2 of Appendix A to Subpart D of part 34 is amended to read
as follows:
* * * * *
\2\ For the state member banks, the term ``total capital'' means
``total risk-based capital'' as defined in Appendix A to 12 CFR part
208. For insured state non-member banks, ``total capital'' refers to
that term described in table I of Appendix A to 12 CFR part 325. For
national banks and Federal savings associations, the term ``total
capital'' is defined at 12 CFR 3.2.
* * * * *
Subpart E--Other Real Estate Owned
0
10. Section 34.81 is amended by:
0
a. Removing the paragraph designations for paragraphs (a) through (f);
0
b. Removing the definition of capital and surplus; and
0
c. Revising the definitions of debts previously contracted (DPC) real
estate and former banking premises.
The revisions read as set forth below.
Sec. 34.81 Definitions.
* * * * *
Debts previously contracted (DPC) real estate means real estate
(including leases) acquired by a national bank or Federal savings
association through any means in full or partial satisfaction of a debt
previously contracted.
* * * * *
Former banking premises means real estate permissible under Sec.
7.1000(a)(2) of this chapter that is no longer used or contemplated to
be used for the purposes permitted in that section.
* * * * *
0
11. Section 34.82 is amended by:
0
a. Revising paragraphs (a) and (b); and
0
b. Adding paragraphs (d) and (e).
The revisions and additions read as set forth below.
Sec. 34.82 Holding Period.
(a) Holding period for OREO. (1) National bank. A national bank
shall dispose of OREO at the earliest time that prudent judgment
dictates, but not later than the end of the holding period (or an
extension thereof) permitted by 12 U.S.C. 29.
(2) Federal savings association. A Federal savings association may
hold OREO for not more than five years after commencement of the
holding period. On the request of a Federal savings association, the
OCC may extend the holding period for not more than an additional five
years.
(b) Commencement of holding period. The holding period begins on
the date that:
(1) Ownership of the property is originally transferred to a
national bank or Federal savings association, including as a result of
a merger with or acquisition of another organization holding OREO;
(2) A national bank or Federal savings association completes
relocation from former banking premises to new banking premises or
ceases to use the former banking premises without relocating; or
(3) A national bank or Federal savings association decides not to
use real estate acquired for future banking expansion; or
(4) An institution converts to a national bank or Federal savings
association, unless the institution was a national bank or Federal
savings association immediately prior to the conversion.
(5) Is the effective date of the final rule, for OREO obtained by a
Federal savings association prior to that date.
* * * * *
(d) Effect of failed disposition. If a national bank or Federal
savings association disposes of OREO, but the real estate subsequently
is conveyed back to the institution within five years as a result of a
valid rescission or invalidation of the original disposition, then the
holding period will be tolled for the period during which the real
estate was not in possession of the national bank or Federal savings
association.
(e) Re-acquisition of former OREO. If a national bank or Federal
savings association reacquires a property that had been OREO and was
disposed of consistent with Sec. 34.83, the holding period will reset.
0
12. Section 34.83 is amended by:
0
a. Revising the section heading;
0
b. Revising paragraphs (a) introductory text, (a)(3) introductory text,
(a)(3)(i)(B), (a)(3)(ii);
0
c. Revising paragraph (a)(4) by removing ``.'' at the end of the
paragraph and adding ``; or'' in its place;
0
d. Adding paragraph (a)(5);
0
e. Redesignating paragraph (b) as paragraph (c);
0
f. Adding new paragraph (b); and
0
g. Adding in paragraph (c) the words ``or Federal savings association''
after ``national bank'' in the first sentence.
The revisions and additions read as set forth below.
[[Page 17101]]
Sec. 34.83 Disposition of OREO.
(a) Disposition. A national bank or Federal savings association may
dispose of OREO in the following ways:
* * * * *
(3) With respect to a lease:
(i) By obtaining an assignment or a coterminous sublease. If a
national bank or Federal savings association enters into a sublease
that is not coterminous, the period during which the master lease must
be divested will be suspended for the duration of the sublease, and
will begin running again upon termination of the sublease. A national
bank or Federal savings association holding a lease as OREO may enter
into an extension of the lease that would exceed the holding period
referred to in Sec. 34.82 if the extension meets the following
criteria:
(A) * * *
(B) The national bank or Federal savings association, prior to
entering into the extension, has a firm commitment from a prospective
subtenant to sublease the property; and
* * * * *
(ii) Should the OCC determine that a national bank or Federal
savings association has entered into a lease, extension of a lease, or
a sublease for the purpose of real estate speculation, the OCC will
take appropriate measures to address the violation, which may include
requiring the bank or savings association to take immediate steps to
divest the lease or sublease; and
* * * * *
(5) By any other method approved by the OCC.
(b) Additional method for Federal savings associations. A Federal
savings association also may transfer OREO to a service corporation. A
service corporation may hold real property transferred to it:
(1) As OREO, subject to the requirements otherwise applicable to
the Federal savings association under this Subpart E; or
(2) As an investment in real estate under Sec. 5.59.
* * * * *
Sec. 34.85 [Amended]
0
13. Section 34.85 is amended by:
0
a. Adding the words ``or Federal savings association'' after ``national
bank'', wherever it appears; and
0
b. Adding the words ``or savings association'' after ``the bank'',
wherever it appears.
0
14. Revise Sec. 34.86 including the section heading to read as
follows:
Sec. 34.86 OREO expenditures and notification.
(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.
(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) Reasonably calculated to reduce any shortfall between the
property's market value and the recorded investment amount;
(2) Not made for the purpose of speculation in real estate; and
(3) Consistent with safe and sound banking practices.
(d) 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 or 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
(d)(1) only once.
(2) The required notification must demonstrate that the additional
expenditure is consistent with the conditions and limitations in
paragraph (c) 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.
Sec. 34.87 [Removed]
0
15. Remove Sec. 34.87.
PART 46--ANNUAL STRESS TEST
0
16. The authority citation for part 46 continues to read as follows:
Authority: 12 U.S.C. 93a; 1463(a)(2); 5365(i)(2); and
5412(b)(2)(B).
Sec. 46.6 [Amended]
0
17. Section 46.6 paragraph (a)(2) is amended by removing the words ``or
part 167, as applicable,'' after ``12 CFR part 3'' in the first
sentence.
PART 160--LENDING AND INVESTMENT
0
18. The authority for part 160 continues to read as follows:
Authority: 12 U.S.C. 1462a, 1463, 1464, 1467a, 1701j-3, 1828,
3803, 3806, 5412(b)(2)(B); 42 U.S.C. 4106.
Sec. 160.100 [Amended]
0
19. Section 160.100 is amended by removing ``or 167.1, as
applicable,''.
Appendix A to Sec. 160.101 [Amended]
0
20. Footnote 2 of the Appendix to Section 160.101 is amended to read as
follows:
* * * * *
\2\ For the state member banks, the term ``total capital'' means
``total risk-based capital'' as defined in Appendix A to 12 CFR part
208. For insured state non-member banks, ``total capital'' refers to
that term described in table I of Appendix A to 12 CFR part 325. For
national banks and Federal savings associations, the term ``total
capital'' is defined at 12 CFR 3.2.
* * * * *
Sec. 160.172 [Removed]
0
21. Remove Sec. 160.172.
PART 161--DEFINITIONS FOR REGULATIONS AFFECTING ALL SAVINGS
ASSOCIATIONS
0
22. The authority for part 161 continues to read as follows:
Authority: 12 U.S.C. 1462a, 1463, 1464, 1467a, 5412(b)(2)(B).
Sec. 161.55 [Amended]
0
23. Section 161.55 paragraph (c) is amended by removing the words ``or
part 167, as applicable'' after ``12 CFR part 3''.
PART 163--SAVINGS ASSOCIATIONS--OPERATIONS
0
24. The authority for part 163 continues to read as follows:
Authority: 12 U.S.C. 1462a, 1463, 1464, 1467a, 1817, 1820,
1828, 1831o, 3806, 5101 et seq., 5412(b)(2)(B); 31 U.S.C. 5318; 42
U.S.C. 4106.
Sec. 163.74 [Amended]
0
25. Section 163.74 is amended:
[[Page 17102]]
0
a. Removing in paragraph (i)(2)(iv), the wording ``or part 167, as
applicable,'' after ``12 CFR part 3''; and;
0
b. Removing in the first sentence of paragraph (i)(2)(v) the wording
``or part 167, as applicable,'' after ``12 CFR part 3''.
Sec. 163.80 [Amended]
0
26. In Sec. 163.80 amend the first sentence of paragraph (e)(1) by
removing the wording ``or part 167, as applicable''.
PART 167 [Removed]
0
27. Remove part 167.
Dated: April 17, 2019.
Joseph M. Otting,
Comptroller of the Currency.
[FR Doc. 2019-08128 Filed 4-23-19; 8:45 am]
BILLING CODE 4810-33-P