Resolution Trust Corporation:
Performing Assets Sold to Acquirers of Minority Thrifts
GGD-96-44: Published: Dec 22, 1995. Publicly Released: Dec 22, 1995.
Pursuant to a legislative requirement, GAO reviewed the Resolution Trust Corporation's (RTC) efforts during fiscal year (FY) 1995 to sell performing assets to acquirers of failed thrifts under the Minority Preference Resolutions Program.
GAO found that: (1) RTC established a reasonable process for the independent valuation of residential mortgage loans that were offered for sale to minority acquirers; (2) RTC contracted out the initial phase of the loan pricing process to be fair to minority acquirers while maximizing the total return on asset disposition; (3) 11 of the 14 minorities who bought thrifts from RTC under the Minority Preference Resolutions Program purchased 4,063 residential mortgage loans during FY 1995 for $289.6 million; (4) the two valuation contractors priced mortgage loans using a methodology that considered adjustments in interest rates, credit risk, and was consistent with Freddie Mac's and Fannie Mae's pricing methodology; and (5) RTC did not adopt the loan pricing methodology proposed by minority acquirers who believed the mortgage loans were over priced, since it believed the existing methodology established a fair market value for the loans.