In interpretive letter #1907 (“Letter #1097”) the OCC permitted a national bank (the “Bank”) to purchase a small amount of “debts previously contracted” (“DPC”) real estate from a third party in connection with the Bank’s larger purchase of commercial real estate mortgage loans from a dissolving real estate trust by concluding that such purchase did not violate 12 U.S.C § 29, which restricts a national bank’s real estate activities. The OCC allowed the purchase of the DPC real estate because the Bank agreed to sell the DPC real estate immediately, to an unrelated third party, for the same purchase price the Bank paid to the trust. The OCC reasoned that, in the past it had permitted national banks to hold for a “moment-in-time” assets that national banks are generally not permitted to hold, if this was necessary for the national bank to carry out a transaction or activity that is permissible. In Letter #1097, the Bank represented that a “moment-in-time” acquisition of the DPC real estate was necessary to facilitate the purchase of loans secured by liens or real estate, a transaction expressly authorized under 12 C.F.R. § 34.3. Therefore, the OCC concluded that, the Bank’s “moment-in-time” acquisition of the DPC real estate would not be prohibited by 12 U.S.C. § 29.
Alert May 06, 2008