We are not aware of a requirement in Illinois law to obtain annual or periodic appraisals of OREO properties. Instead, we believe your bank is subject to the more flexible OREO standards established by your primary federal regulator, the FDIC, which mandates that banks obtain “appraisals or valuations  as  required  to  ensure  assets  are  reported  at  appropriate  values  and  any  material  change  in  market  conditions  or  physical  property  aspects  is  periodically  recognized.”

For resources related to our guidance, please see:

• FDIC, Guidance on Other Real Estate (July 1, 2008) (“VALUATION OF ORE: Institutions typically acquire ORE through foreclosure or deed in lieu of foreclosure after a borrower defaults on a loan. Institutions should obtain a new or updated valuation that complies with state law at the time of acquisition.

  Many state laws require institutions to obtain an annual valuation for each parcel of ORE. Institutions should implement procedures to obtain updated ORE valuations as needed to ensure that any material change in market conditions or the physical aspects of the property are recognized.

  Further, upon the disposition of ORE, certain state laws may govern appraisals and/ or valuations. If an institution is selling and financing the transaction, Part 323 of the FDIC Rules and Regulations and applicable state laws require an appraisal or an evaluation.”)
   

• FDIC Risk Management Manual of Examination Policies, Other Real Estate (“Many  states  require  institutions  to  obtain  ORE  appraisals  or valuations when acquiring, holding, and/or disposing of real estate.  Management should obtain ORE appraisals or valuations  as  required  to  ensure  assets  are  reported  at  appropriate  values  and  any  material  change  in  market  conditions  or  physical  property  aspects  is  periodically  recognized.    If  an  institution  is  selling  and  financing  the  sale  of  an  ORE  parcel,  Part  323  of  the  FDIC  Rules  and  Regulations,   Appraisals,   and   some   state   laws   require   updated appraisals or evaluations.”)

• FDIC Appraisal Regulations, 12 CFR 323.3(a) [as recently amended] (“An appraisal performed by a State certified or licensed appraiser is required for all real estate-related financial transactions except those in which:(1) The transaction value is $400,000 or less; . . .”)

• FDIC Appraisal Regulations, 12 CFR 323.3(b) [as recently amended] (“For a transaction that does not require the services of a State certified or licensed appraiser under paragraph (a)(1), (a)(5), (a)(7), or (a)(13) of this section, the institution shall obtain an appropriate evaluation of real property collateral that is consistent with safe and sound banking practices.”)