BSP Rules on ROPOA Appraisal and Valuation Reserves

The acquired property is recorded at the lower amount between the balance of the loan (including principal and booked interest receivable or principal less unamortized income) and bid/purchase price.
When the booked amount exceeds the appraised value, an allowance for probable losses equal to the excess must be set up.

Properties must be appraised at least every two years.
Immediate re-appraisal is required if there is a material decline in the value of ROPOA.

100% valuation reserves must be provided for:
- Foreclosure expenses and charges included in book value, excluding non-refundable capital gains and documentary stamp taxes.
- Excess of book value over appraised value.
- Properties with lost titles or those being contested in court.
- Properties where usufruct rights are impracticable (e.g., erosion).
Additional valuation reserves computed annually from expiration of statutory redemption period or contract perfection as follows:
- 6th year: 10% (accumulated 10%)
- 7th year: 10% (accumulated 20%)
- 8th year: 10% (accumulated 30%)
- 9th year: 10% (accumulated 40%)
- 10th year: 10% (accumulated 50%)

100% valuation reserves must be provided for:
1. Property unsold for more than three years from acquisition.
2. Property worthless or unsalable.
3. Property with lost title or title contested in court.
4. Foreclosure expenses and other charges included in book value.
5. Excess of book value over appraised or realizable value.
Additional annual valuation reserves from foreclosure date or contract perfection as follows:
- 1st year: 50% (accumulated 50%)
- 2nd year: 30% (accumulated 80%)
- 3rd year: 20% (accumulated 100%)

Banks are mandated to strictly adhere to these regulations governing ROPOA appraisal, recording, valuation reserves, and loss recognition as prescribed by BSP Circular No. 306 and Appendix 18 of the Manual of Regulations for Banks.