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Resolution Trust Corporation: Better Information Could Enhance Controls Over Loan Servicing Costs

GGD-94-41 Published: Dec 22, 1993. Publicly Released: Dec 22, 1993.
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Highlights

GAO discussed the Resolution Trust Corporation's (RTC) loan servicing contracting requirements, fee structures, and costs.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Resolution Trust Corporation To improve loan servicing contracting practices, the President and Chief Executive Officer, RTC, should direct the Chief Financial Officer and the Senior Vice President for Asset Management and Sales to routinely collect the information needed to monitor loan servicing fees and expenses and use this information to develop cost-effective compensation structures in future contracts.
Closed – Implemented
RTC has initiated several actions to improve the accuracy of loan servicing cost data and set fee structures that are appropriate for the services provided. RTC's actions have included collecting detailed information on fees paid to contract servicers, using this information to guide the setting of fee structures, maintaining fee and cost comparison schedules to determine the least costly servicing arrangements, and removing assets from higher cost servicers.
Resolution Trust Corporation The President and Chief Executive Officer, RTC, should require the Office of Contracts, under the Vice President, Division of Administration and Corporate Relations, to direct and coordinate all loan servicing contract solicitations and to ensure that the contracts include standard provisions allowing their use by all RTC offices.
Closed – Implemented
RTC has developed standard loan servicing agreements and statements of work to be used by all RTC offices regardless of its region of origination.

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Topics

Bank failuresContract costsContract oversightContract performanceContractor paymentsFederal property managementFinancial managementInternal controlsLoan repaymentsMortgage loans