No, you do not need to obtain approval to hold the property for over five years, because Illinois law now permits banks to hold other real estate owned (OREO) properties for ten years. The Illinois Banking Act was amended in 1997 to extend the holding period from five years to ten years — although that amendment also removed the possibility of obtaining approval for further extensions of the holding period. In addition, FDIC regulations limit a state bank’s OREO holding period to the maximum holding period permitted for a national bank, which also is ten years.

For resources related to our guidance, please see below:

• Illinois Banking Act, 205 ILCS 5/5(9) (permits Illinois banks to “own, possess, and carry as assets other real estate to which it may obtain title in the collection of its debts . . . for a total period of more than 10 years after acquiring title, either directly or indirectly”)

• IDFPR Interpretive Letter 98-3 (May 6, 1998) (“Before 1997, Section 5(9) of the Act permitted a bank to hold OREO for five years, or for a longer period of time if given an extension by the Agency. 205 ILCS 5/5(9). However, Public Act 90-301 amended Section 5(9) last year to provide for a 10 year OREO retention period and to specifically eliminate the provision which authorized the Agency to grant requests for extensions of holding time beyond the 10 year limit. It is therefore our opinion that the Agency no longer has the authority to grant extensions for banks to hold OREO.”)