Resolution Trust Corporation:

Loan Portfolio Pricing and Sales Process Could Be Improved

GGD-93-116: Published: Jul 23, 1993. Publicly Released: Aug 17, 1993.

Additional Materials:

Contact:

J. William Gadsby
(202) 736-0479
contact@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

Pursuant to a congressional request, GAO reviewed the Resolution Trust Corporation's (RTC) portfolio sales of loans and real estate assets, focusing on: (1) loan portfolio pricing; (2) the loan portfolio sales process; and (3) the availability of loan portfolio sales information.

GAO found that: (1) RTC could not determine whether it was maximizing recoveries on many of its loan portfolio sales or the reasonableness of bids because field offices often set reserve prices at 85 percent of the loan portfolio's book value to facilitate approval; (2) most of the 60 investors surveyed gave a positive rating to certain aspects of the RTC loan portfolio sales process; (3) problems that discouraged investors' participation or caused them to submit lower bids in RTC loan portfolio sales included vague announcement letters for loan offerings, inaccurate or incomplete loan portfolio information in bid packages, late notification of bidding results, and nonresponsiveness to problems after loan sales were closed; (4) RTC lacked consistent and comprehensive information to effectively analyze and evaluate its loan portfolio sales results because its field offices and the National Sales Center did not systematically prepare reports on loan portfolio sales and the types and amounts of information in sales reports varied; and (5) without consistent and comprehensive information, RTC cannot measure the success of its efforts or identify potential improvements in the loan portfolio sales process.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: RTC conducts periodic internal control reviews of all its offices. RTC's Office of Asset Management and Sales has revised its internal control review guidance to include steps to determine whether field offices' portfolio sales data are collected, summarized, and analyzed consistently and comprehensively. RTC internal control review teams are verifying supporting documentation for compliance with policies and procedures. RTC has completed the latest round of reviews at all field office sites. Reviewers found no problems with the sales data being collected, summarized, and analyzed by field offices.

    Recommendation: To further improve the effectiveness of the loan portfolio sales effort, the President and Chief Executive Officer, RTC, should direct the Senior Vice President for Asset Management and Sales to schedule periodic management reviews of the loan portfolio sales process to ensure that loan portfolio sales data are collected, summarized, and analyzed consistently and comprehensively.

    Agency Affected: Resolution Trust Corporation

  2. Status: Closed - Implemented

    Comments: RTC conducts periodic internal control reviews of all its offices. RTC's Office of Asset Management and Sales has revised its internal control review guidance to include steps to determine whether field offices are responding promptly to investors' post-closing problems. RTC internal control review teams are verifying supporting documentation for compliance with policies and procedures. RTC has completed the latest round of reviews at all field office sites. Reviewers found no problems with practices in responding to investor post-closing problems quickly.

    Recommendation: To further improve the effectiveness of the loan portfolio sales effort, the President and Chief Executive Officer, RTC, should direct the Senior Vice President for Asset Management and Sales to schedule periodic management reviews of the loan portfolio sales process to ensure that investors' post-closing problems are responded to promptly.

    Agency Affected: Resolution Trust Corporation

  3. Status: Closed - Implemented

    Comments: RTC conducts periodic internal control reviews of all its offices. RTC's Office of Asset Management and Sales has revised its internal control review guidance to include steps to determine whether field offices are providing bidding results to investors as quickly as possible after the closing of each individual transaction. RTC internal control review teams are verifying supporting documentation used for compliance with policies and procedures. RTC has completed the latest round of reviews at all field office sites. Reviewers found no problems with practices to ensure bidding results are provided to investors in a timely manner.

    Recommendation: To further improve the effectiveness of the loan portfolio sales effort, the President and Chief Executive Officer, RTC, should direct the Senior Vice President for Asset Management and Sales to schedule periodic management reviews of the loan portfolio sales process to ensure that bidding results are being provided to all investors as quickly as possible after the closing of each individual transaction without placing the transaction in jeopardy.

    Agency Affected: Resolution Trust Corporation

  4. Status: Closed - Implemented

    Comments: RTC conducts periodic internal control reviews of all its offices. RTC's Office of Asset Management and Sales has revised its internal control review guidance to include steps to determine whether field offices' loan portfolio sales bid packages contain accurate and complete information about the loan portfolios being offered for sale. RTC internal control review teams are verifying supporting documentation for compliance with policies and procedures. RTC has completed the latest round of reviews at all field office sites. Reviewers found no problems with the contents of the bid packages.

    Recommendation: To further improve the effectiveness of the loan portfolio sales effort, the President and Chief Executive Officer, RTC, should direct the Senior Vice President for Asset Management and Sales to schedule periodic management reviews of the loan portfolio sales process to ensure that bid packages contain accurate and complete information about the loan portfolios being sold.

    Agency Affected: Resolution Trust Corporation

  5. Status: Closed - Implemented

    Comments: RTC conducts periodic internal control reviews of all its offices. RTC's Office of Asset Management and Sales revised its internal control review guidance to include steps to determine whether field office staff are setting reserve prices on the basis of the characteristics of the loan portfolios being offered for sale. RTC internal control review teams are verifying supporting documentation and reviewing methodologies used for compliance with policies and procedures. RTC has completed the latest round of reviews at all field office sites. Reviewers found no problems with practices for setting reserve prices.

    Recommendation: To further improve the effectiveness of the loan portfolio sales effort, the President and Chief Executive Officer, RTC, should direct the Senior Vice President for Asset Management and Sales to schedule periodic management reviews of the loan portfolio sales process to ensure that National Sales Center and field office staff are setting reserve prices based on the characteristics of the loan portfolios offered for sale.

    Agency Affected: Resolution Trust Corporation

  6. Status: Closed - Implemented

    Comments: RTC conducts periodic internal control reviews of all its offices. RTC's Office of Asset Management and Sales has revised its internal control review guidance to include steps to determine whether field offices' portfolio sales databases provide the information necessary to evaluate RTC's progress in achieving program goals. RTC internal control review teams are verifying supporting documentation for compliance with policies and procedures. RTC has completed the latest round of reviews at all field office sites. Reviewers found no problems with the sales database information.

    Recommendation: To further improve the effectiveness of the loan portfolio sales effort, the President and Chief Executive Officer, RTC, should direct the Senior Vice President for Asset Management and Sales to schedule periodic management reviews of the loan portfolio sales process to ensure that the loan portfolio sales database provides the information necessary to evaluate RTC progress in achieving program goals.

    Agency Affected: Resolution Trust Corporation

 

Explore the full database of GAO's Open Recommendations »

Jul 25, 2016

Jul 5, 2016

May 6, 2016

Apr 21, 2016

Apr 18, 2016

Apr 12, 2016

Mar 28, 2016

Mar 8, 2016

Feb 16, 2016

Jan 27, 2016

Looking for more? Browse all our products here