Purchase of OREO Property by Loan Officer

We have a situation where the bank has an OREO property and a loan officer wants to buy the property with an outside partner. What are the regualtions, if any, in a loan officer purchasing an OREO property and what other steps must the bank perform to ensure an arms length transaction?

Thank you.

Um, I know a guy that got fired for doing this at a bank we both worked at several year's ago.

I think the issue was that he bought it before it was made available to the public. I recall him telling me that he was told that it would have been okay if he had bought it at public auction or after it was on the market for a certain number of days.

Of course, this was about 1987, so .... grain of salt and all that.

Unless it is purchased at public auction just be ready for the regulators to but a microscope to this transaction. IMHO - it would hardly be worth the risk. Check your State laws also.

Thank you.

Check your Bank ethics/code of conduct policy too. It might prohibit this.

I believe our OREO property is sold at public auction. Even with repo'd cars, I think we prefer that someone other than the employee bids.