OCC Fines Bank $30 Million for Exceeding Holding Period for Foreclosed Real Estate

The OCC recently announced a $30 million civil money penalty against a national bank for committing violations of the statutory holding period limit for foreclosed real estate.

12 U.S.C. § 29 and 12 C.F.R. § 34.82 provide that regulated national banks cannot hold “other real estate owned” (OREO) assets for a period longer than five-years. According to the OCC, as a result of deficient processes and controls in the identification and monitoring of the OREO holding period, the bank committed over 200 violations of the holding period between April 4, 2017, and August 14, 2019. The consent order, however, indicates that the bank became aware of the underlying issues in 2015 and that the OCC notified the bank that its internal controls governing OREO assets were decentralized, ineffective, and inadequate in 2017. As a result, in assessing the civil money penalty, the OCC found that the bank also failed to meet its commitments to implement corrective actions, which led to additional violations.