Resolution Trust Corporation: Loan Portfolio Pricing and Sales Process Could Be Improved

Highlights

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.

Recommendations

Recommendations for Executive Action

Agency Affected	Recommendation	Status
Resolution Trust Corporation	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.	Closed – Implemented 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.
Resolution Trust Corporation	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.	Closed – Implemented 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.
Resolution Trust Corporation	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.	Closed – Implemented 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.
Resolution Trust Corporation	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.	Closed – Implemented 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.
Resolution Trust Corporation	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.	Closed – Implemented 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.
Resolution Trust Corporation	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.	Closed – Implemented 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.

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Financial Markets and Institutions

Competitive procurementFederal corporationsFederal property managementMortgage loansPrice regulationProperty disposalReal estate salesReporting requirementsSales promotionBidders