Summary

GAO, in a report issued a year ago (GAO/GGD-92-36FS), examined the cost of resolving failed thrifts. That report contained information on the Resolution Trust Corporation's (RTC) recovery rates and an analysis of the data from RTC's Real Estate Owned Management System. This report updates that information. Although cumulative sales of real estate more than doubled from October 1991 to September 1992, RTC's sales recoveries--measured as a percentage of net proceeds to book value--have dropped steadily. The recovery data on a cumulative basis also show a decline. Overall, the gap between the sales price for real estate and appraised value continued to widen; data from September 1992 show that the average sales price was about 17 percent less than the appraised value.

GAO found that: (1) the RTC methodology for estimating asset recoveries was reasonable; (2) the Real Estate Owned Management System (REOMS) had slow response times during data input and retrieval, cumbersome computer screen formats, and restrictive reporting options; (3) the data were often inaccurate, incomplete, and outdated; (4) cumulative real estate sales increased more than 100 percent from October 1991 to September 1992; (5) RTC sales recoveries have declined; (6) single-family, land, and commercial real estate property categories showed some reduction in recoveries; (7) recoveries for real estate assets sold in receivership were less than for assets sold in conservatorship; (8) the gap between the real estate sales price and the appraised value continued to widen; and (9) RTC closing costs remained constant at 10 percent of the sale price.