Federal Reserve Board Issues Q&A on OREO Asset Management

The Federal Reserve Board of Governors (“FRB”) recently issued a 19-page Q&A directed at bank and S&L holding companies and state member banks. Noting that financial institutions have experienced a significant increase in OREO as a result of the weakened housing market, the FRB intends the Q&A to act as guidance and clarification of FRB policies on OREO asset management. Topics covered in the Q&A include the following:

• Transfers of assets to OREO

• Reporting and Classification

• Appraisals

• Property Management

• Operational and Legal Issues

• Sales and Transfers of OREO