For any of you that do an audit of your Trust Department - I have an appraisal question. We are an OCC bank, but we have the following in policy:

"Property held in personal trust accounts will be appraised at least every three years..."

The reason that it is in policy is that it was in a book purchased from a vendor.

I don't think that this is an OCC requirement. It is not in the OCC Fiduciary Exam handbook, nor do I believe that it is in 12CFR 9, but I did find it in the OTS handbook (who does not regulate us) - I believe that may be the reason that our vendor put it in their policy book.

Any thoughts?

Becca,

I don't recall seeing a specific reference in the "new" comptroller handbook series, but if you have a copy of the OLD Comptroller's Handbook for Fiduciary Activities, (the one with the green cover)look at on page 36, bottom left column.

It says: "The bank, as trustee, must have a program of appraisal and inspection of all real estate held in accounts where the bank has investment responsibility. The appraisal program must require appraisals at least every three years for real properties held in personal trust accounts. In the case of real properties held in employee benefit accounts and collective investment funds, appriasals should be performed at least annually. The inspection program must require the inspection of real properties at least as often."


As I recall, the annual inspection and triennial appraisal was never specifically required by regulation, but more or less falls under the risk and management of trust assets. Also **IMPORTANT** the appraisal requirement for doesn't say anything about the appraisal meeting any USPAP standards or having to be completed by a credentialed appraiser.

If you think about it, what they are looking for is to make sure the TTEE is evaluating the real estate on a regular basis to see if it continues to be 1) an appropriate investment for the trust; 2) it is income producing (or if it'snot you can justify why not - as in the case of a grantor's residence); and 3) is the continued retention of the real estate consistent with the needs and requirements of the trust.

MMIM,
Where can I get my hands on the "old" handbook?

And thanks for the comments. I think we were (or I was) getting stuck on the word appraisal.

The "Old" book is out of print. But send me a PM.

With regard to the appraisal needing to conform to USPAP or being completed by a 'credentialed' (by which I think you mean 'certified') appraiser, the following is from SR 94-35:

"The agencies have concluded that a Title XI appraisal should not be required when regulated institutions engage in real estate-related financial transactions as fiduciaries and no other law (including state common law establishing the responsibilities of fiduciaries requires appraisals for those transactions. Losses as a result of these transactions would not, absent some negligence by the institution, be incurred by the institution. Therefore, exempting these transactions from the Title XI appraisal requirement should not adversely affect the safety and soundness of financial institutions. When a fiduciary transaction requires an appraisal under other law, that appraisal should conform to the requirements of the agencies' regulations."

I'm not sure about the regs for all states, but I do know that the regs in Pennsylvania require all appraisals to meet USPAP.