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#332635 - 03/14/05 02:36 PM OREO "costs"
Anonymous
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Does anyone have any info on what can be considered as "costs" when booking a R/E loan after foreclosure? We know how to do this but can't find any clear guidance on what actually constitutes "costs". For example, does it include estimated costs to sell, such as anticpated realtor commissions?

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#332636 - 03/14/05 04:20 PM Re: OREO "costs"
Pale Rider Offline
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We have a long established policy that a deduction of 8% off appraised value will cover all acquisition and holding costs, including the cost to sell. The majority of the time we don't use the whole 8% and end up booking a gain on sale.
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#332637 - 03/14/05 05:57 PM Re: OREO "costs"
Creditcopper Offline
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Michigan
Quote:

Does anyone have any info on what can be considered as "costs" when booking a R/E loan after foreclosure? We know how to do this but can't find any clear guidance on what actually constitutes "costs". For example, does it include estimated costs to sell, such as anticpated realtor commissions?





This is the guidance adopted by the joint FFIEC council on accounting for OREO properties. Basically it points you to SFAS 66 for proper disposal costs and what you can capitalize, etc. This is from the OCC's website.
http://www.occ.treas.gov/ftp/bb/93-42a.doc
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