Current through Reg. 49, No. 38; September 20, 2024
(a)
Definitions. Words and terms used in this subchapter that are defined in
Finance Code, §
RSA 181.001
et
seq. have the same meanings as defined therein. The following words
and terms when used in this subchapter shall have the following meanings,
unless the context clearly indicates the contrary.
(1) Appraisal--A written report by a state
certified or licensed appraiser containing sufficient information to support
the trust company's evaluation of OREO taking into consideration market value,
analyzing appropriate deductions or discounts, and conforming to generally
accepted appraisal standards, unless principles of safety and soundness
applicable to trust companies require stricter standards.
(2) Appraiser--A state certified or licensed
staff appraiser or a state certified or licensed third party fee appraiser with
relevant and competent experience and background as related to a particular
appraisal assignment.
(3)
Coterminous sublease--A lease with the same duration as the remainder of the
master lease.
(4) Evaluation--A
written report prepared by an evaluator describing the OREO and its condition,
the source of information used in the analysis, the actual analysis and
supporting information, and the estimate of the OREO's market value, with any
limiting conditions.
(5)
Evaluator--An individual who has related real estate training or experience and
knowledge of the market relevant to the OREO but who has no direct or indirect
interest in the OREO. An appraiser may be an evaluator.
(6) Generally accepted appraisal
standards--The Uniform Standards of Professional Appraisal Practice (USPAP)
promulgated by the Appraisal Standards Board, Appraisal Foundation, Washington,
D.C.
(7) Market value--The most
probable price which a property should bring in a competitive and open market
under all conditions requisite to a fair sale, the buyer and seller each acting
prudently and knowledgeably, and assuming the price is not affected by undue
stimulus. Implicit in this definition is the consummation of a sale as of a
specified date and the passing of title from seller to buyer under conditions
whereby:
(A) buyer and seller are typically
motivated;
(B) both parties are
well informed or well advised, and acting in what they consider their own best
interests;
(C) a reasonable time is
allowed for exposure in the open market;
(D) payment is made in terms of cash in U.S.
dollars or in terms of financial arrangements comparable thereto; and
(E) the price represents the normal
consideration for the property sold unaffected by special or creative financing
or sales concessions granted by anyone associated with the sale.
(8) Non-coterminous sublease--A
lease with a duration shorter than the remainder of the master lease.
(9) Other Real Estate Owned (OREO)--Real
estate, including improvements, mineral interests, surface, and subsurface
rights, owned in whole or in part or leased by a trust company, no matter how
acquired, which is not a trust company facility as defined by paragraph (3) of
this subsection or leasehold property as permitted under Finance Code, §
RSA 184.203.
(10) Staff appraiser--An appraiser on the
staff of a trust company who has no direct or indirect interest in the
OREO.
(11) Third party fee
appraiser--An appraiser who has an independent contractor relationship with a
trust company and has no direct or indirect interest in the OREO.
(12) Trust company facility--Real property,
including improvements, owned or leased, to the extent the lease or the
leasehold improvements are capitalized, by a trust company if the real estate
is held for the purposes set forth in Finance Code, §
RSA 184.001, and is not
disqualified under Finance Code, §
RSA
184.002(b). The term also
includes capitalized leasehold improvements if held for the same
purposes.
(13) Year--For the
purposes of this section, a calendar year.
(b) Prohibition on real estate ownership. A
trust company may not acquire or hold real estate except as specifically
provided under Finance Code, §§
RSA 184.001 -
RSA 184.003 and
RSA 184.203, and this
section.
(c) Acquisition of OREO
with restricted capital. A trust company may hold OREO purchased with the
restricted capital of the trust company only if acquired:
(1) by purchase under judicial or nonjudicial
foreclosure, or through a deed in lieu of foreclosure, of real estate that is
security for a debt or debts previously contracted in good faith;
(2) by purchase to protect its interest in a
debt or debts previously contracted if prudent and necessary to avoid or
minimize loss;
(3) with prior
written approval of the banking commissioner, by an exchange of OREO or
personal property for real estate to avoid or minimize loss on the real estate
exchanged or to facilitate the disposition of OREO;
(4) with prior written approval of the
banking commissioner, by purchase of additional real estate to avoid or
minimize loss on OREO currently held;
(5) by involuntary acquisition of an
ownership interest or leasehold interest in real estate as a result of or
incidental to a judicial or nonjudicial foreclosure, or by adverse possession,
or by operation of law without any action on the part of the trust company to
obtain such interest; or
(6) by
loss of designation of real estate owned or leased by the trust company as a
trust company facility.
(d) Acquisition of OREO with secondary
capital. A trust company may hold OREO purchased with the secondary capital of
the trust company, subject to the exercise of prudent judgment using the
factors set forth in Finance Code, §
RSA
184.101(f).
(e) Appraisal requirements. Paragraphs (1) -
(3) of this subsection apply to OREO acquired with the restricted capital of
the trust company.
(1) Subject to paragraph
(2) of this subsection, when OREO is acquired, a trust company must
substantiate the market value of the OREO by obtaining an appraisal within 90
days of the date of acquisition, unless extended by the banking commissioner.
An evaluation may be substituted for an appraisal if the recorded book value of
the OREO is $500,000 or less.
(2)
An additional appraisal or evaluation is not required when a trust company
acquires OREO if a valid appraisal or appropriate evaluation was made in
connection with a real estate loan that financed the acquisition of the OREO
and the appraisal or evaluation is less than one year old.
(3) An evaluation shall be made on all OREO
at least once a year. An appraisal shall be made at least once every three
years, unless extended by the banking commissioner, on OREO with a recorded
book value in excess of $500,000.
(4) Notwithstanding another provision of this
section, the banking commissioner may require an appraisal of OREO if the
banking commissioner considers an appraisal necessary to address safety and
soundness concerns.
(f)
Additional expenditures on OREO. A trust company may re-fit OREO for new
tenants or make normal repairs and incur routine maintenance costs to preserve
or protect the value of the OREO or to render the OREO in saleable condition
without prior notification to or approval by the banking commissioner. Other
advances or additional expenditures on OREO acquired with the restricted
capital of the trust company must have the prior written approval of the
banking commissioner, and must not be:
(1)
made for the purpose of speculation in real estate;
(2) made for the purpose of changing or
altering the current status or intended use of the OREO; or
(3) inconsistent with principles of safety
and soundness applicable to trust companies.
(g) Holding period.
(1) A trust company must dispose of OREO
acquired with the restricted capital of the trust company no later than five
years after it was acquired or ceases to be used as a trust company facility,
unless an extension of time for disposing of the real estate is granted in
writing by the banking commissioner pursuant to Finance Code, §
RSA
184.003(d).
(2) The holding period commences on the date
that:
(A) ownership is acquired by the trust
company pursuant to subsection (c)(1) - (5) of this section;
(B) OREO is acquired by the trust company
through merger/consolidation, conversion, or purchase and assumption;
(C) the trust company first learns of its
ownership interest in real estate which has devolved to the trust company by
operation of law under subsection (c)(6) of this section;
(D) the trust company ceases to use a former
trust company facility or completes its relocation from a former trust company
facility to a new trust company facility; or
(E) is three years following the acquisition
of real estate as a trust company facility for future expansion or relocation
of the trust company if the real estate has not been occupied by the trust
company, unless the banking commissioner has granted written approval to a
further delay in the improvement and occupation of the real estate.
(3) The banking commissioner may
grant one or more additional extensions of time for disposing of OREO acquired
with the restricted capital of the trust company if the commissioner finds that
the trust company has made a good faith effort to dispose of the OREO or that
disposal of the OREO would be detrimental to the safety and soundness of the
trust company.
(h)
Disposition efforts; documentation. A trust company must make diligent and
ongoing efforts to dispose of OREO acquired with the restricted capital of the
trust company and must maintain documentation adequate to reflect those
efforts. Such documentation must be available for inspection by the
commissioner. If secondary capital is adequate to reclassify OREO in a manner
that does not impinge on restricted capital, this disposition requirement does
not apply.
(i) Disposition of OREO.
A trust company may dispose of OREO by:
(1)
selling the OREO in a transaction that qualifies as a sale under regulatory
accounting principles;
(2) selling
the OREO pursuant to a land contract or contract for deed;
(3) retaining the property for its own use as
a trust company facility, subject to the approval of the
commissioner;
(4) transferring the
OREO for market value to an affiliate, subject to Finance Code, §
RSA 183.109, and
applicable federal law, including
RSA 371c,
RSA
371c-1, and
RSA
1828(j);
(5) if the OREO is a master lease, obtaining
a coterminous sublease or an assignment of a coterminous sublease, provided
that if the trust company acquires or obtains assignment of a non-coterminous
sublease, the holding period during which the master lease must be divested is
suspended for the duration of the sublease and will commence running again upon
termination of the sublease; or
(6)
entering into a transaction that does not qualify for disposal under paragraphs
(1) - (5) of this subsection; provided that its obligation to dispose of the
OREO is not met until the trust company receives or accumulates from the
purchaser an amount in cash, principal and interest payments, and private
mortgage insurance totaling 10% of the sales price, as measured in accordance
with regulatory accounting principles.
(j) Accounting for investments in facilities
and OREO. A state trust company shall comply with regulatory accounting
principles in accounting for its:
(1)
investment in and depreciation of facilities, furniture, fixtures, and
equipment; and
(2) investment in
OREO and disposition of OREO.
