Resolution Trust Corporation: Real Estate Activities in Pine Bluff, Arkansas

Published by the Government Accountability Office on 1990-11-09.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

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     GAO                                  Fact, Sheet, for the Honorable
                                          lkryl Anthony, Jr. , House of

i    Novrtre ter 1990
pi                                        RESOLUTION TRUST
                                          Real Estate Activities
                                          in Pine Bluff,

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(-$$()       United States
             General Accounting Office
             Washington, D.C. 20548

             General Government Division


             November 9,199O

             The Honorable Beryl Anthony,            Jr.
             House of Representatives
             Dear Mr. Anthony:
             On March 5, 1990, Chairman J. J. Pickle,                    Subcommittee    on
             Oversight,         House Committee on Ways and Means, requested
             certain       information      on Resolution      Trust Corporation      (RTC)
             activities         in six geographic      areas.      This fact sheet
             addresses        questions     on RTC real estate        holdings   and
             property       management activities         in one of those areas--Pine
             Bluff      zip codes 71601 and 71603 in the Fourth
             Congressional         District     of Arkansas.       Chairman Pickle     asked
             that we send this information              directly      to you since you
             represent        this area.       The five other areas are being
             covered in separate            fact sheets,     including      one on North
             Little      Rock, Arkansas,        that is also being sent to you at
             Chairman Pickle's           request.
             Specifically,        the Chairman asked for information     on (1)
             thrifts      and real estate assets placed under RTC control;
              (2) real estate assets that have been sold and the
             purchasers       of those sold for $1 million      or more; (3) the
             number of real estate agents that have been qualified              or
             disqualified       for RTC contracts     and, for those
             disqualified,        the reasons why; and (4) the names of
             managers of any high-value          real estate  properties   in the
             inventory       and what they are paid.      The following  discussion
             provides      this information,
             The Office     of Thrift      Supervision     initially     places troubled
             thrifts    under the direct        su ervision        of RTC--which serves
             as conservator1        or receiver !i --when certain        conditions,   such
             as insolvency,        capital   inadequacy,       or unsafe and unsound
             practices,     exist.


             l-A conservator    is appointed    to, among other          things,  operate
             the thrift     as a going concern,     and preserve         and conserve
             the assets and properties       of the thrift.
             2A receiver      is charged by law with the duty            of winding     up
             the affairs      of a bank or savings association.
    In Arkansas,     RTC had nine thrifts        with total    assets of
    about $2.6 billion       in conservatorship        as of June 30, 1990.
    It also controlled      the remaining      assets of five thrifts          in
    Arkansas that had been resolved,           that is, sold to new
    owners or closed if no purchaser           had been found.        None of
    the conservatorships        or resolved    thrifts     were located     in
    Pine Bluff,    Arkansas,     but two conservatorships         in Little
    Rock, Arkansas,     have branch offices          in Pine Bluff.      Savers
    Savings Association        has two branch offices        in Pine Bluff,
    and First    Savings of Arkansas has one.
    Within   the review area, we identified        3 real estate assets
    RTC had for sale, which consisted         of 23 pieces of property,
    owned by 2 conservatorships        (Savers Savings and First
    Savings)    in Arkansas.   The total     combined asking price for
    these properties     was $200,500.
    One of these assets,          owned by Savers Savings Association,
    consisted      of 18 separate       properties,       including      10 single-
    family    residences,       5 duplexes      (10 housing units),           and 3
    lots on Chestnut Street           in Pine Bluff.           Eight of the
    single-family       residences      and 8 of 10 duplex units were
    rented.       Savers had contracted          with a real estate broker--
    Glover Realty of Pine Bluff--            to market these properties              as
    a package for $156,000.             However, Savers'           asset manager
    said Savers would sell individual                units provided        it
    received      an offer    that met the sales guidelines               set by the
    RTC Oversight       Board and the Financial             Institutions       Reform,
    Recovery,      and Enforcement       Act of 1989.
    First  Savings of Arkansas owned the                other two assets.   One
    asset,  four vacant lots,  was listed               for $32,000.   The other
    asset,  also a vacant lot,  was listed                for $12,500.
     None of the property under RTC control  within                   the review
    'area had been sold as of June 30, 1990.
    RTC procedures       do not require         real estate       agents to
    register     with it because state laws and regulations                    require
    agents to work through licensed                 brokers.      However, RTC real
    estate    brokers     interested      in handling        RTC property     are
    required     to register.        Brokers must certify           that their
    employees or subcontractors,              including       real estate agents,
    meet qualification          and integrity        requirements.        AS of July
    20, 1990, 504 brokers had registered                   with RTC to provide
    real estate      brokerage      services      in Pine Bluff.        Twenty-six
    were located       in Arkansas,       but not in Pine Bluff;           the
    remaining      478 brokers were from other states.

I           B-241276

            RTC may disqualify         brokers,     or any other contractors,       on
            the basis of information            provided  on the Fitness     and
            Integrity    Certifications         Form that must be submitted       with
            the firm's    Contractor       Registration    Request.      As of July 31,
            1990, none of the brokers with offices               located   in the
            review area had been disqualified.               In fact,    as of that
            date, only 19 firms of any type nationwide                 had been
            disqualified     from being considered         for RTC work.      Firms may
            ask for a reconsideration            of their  status    at any time after
            they have been disqualified.
            The fact that a firm is registered                   with RTC and its name is
            included       on the contractor         registry      simply enables the firm
            to be considered         for RTC contracts           and receive
            solicitations        for services.          Inclusion      in the registry      does
            not imply that the firm is qualified                     to do work for RTC or
            that it is an approved RTC contractor.                       RTC contracting
            procedures       require     contracting       officers      to determine
            qualifications         and obtain      additional       ethics   certifications
            from potential         contractors       each time a firm is considered
            for a contract.
            Savers Savings had contracted       for property      management
            services   for the Chestnut   Street    properties.      Nolen
            Mortgage Service Company of North Little            Rock, Arkansas,
            received   $800 a month to provide      property     management
            services   for the 10 residences      and 5 duplexes Savers
            Savings owned in Pine Bluff.        None of the properties
            identified    in the review area were high-value         assets.
            To obtain     information      requested     by the Chairman,        we
            gathered    data primarily        from the RTC Central          Regional
            Office.    We also gathered           data from thrifts        under the RTC’s
            control   in Little       Rock, Arkansas,        and RTC's national       real
            property    inventory      database.      We used information         from
            RTC's March 31, 1990, database and updated it to June 30,
            1990, with data obtained            from thrifts     under RTC's control
            in Little     Rock and Batesville,         Arkansas.       We did not verify
            the computerized        data; therefore,         we cannot attest       to the
            completeness       or accuracy of the property           listings.
            RTC has experienced      considerable    problems with its real
            property   inventory    system.     It was aware that data in the
            system were not always complete and accurate          and has been
            trying   to verify   the data as it updates the inventory.

    ~-241276                                                                            t

    Because of these data quality     problems,    RTC placed a
    disclaimer     on the database magnetic   tapes and floppy disks.
    The disclaimer      stated that
                  information        contained     in the computer product        is
        n&'g;aranteed         and is submitted          subject    to, without
        notice,     correction,        errors,   prior     sale or withdrawal
        from the market.            The RTC, now and forever,           makes no
        guarantee,      warranty,       or representation,         expressed   or
        implied,     as to the location,          quality,      kind, character,
        size, description,           or fitness      for any use or purpose,
        of any property         listed     and/or described        in the computer
    RTC is in the process of hiring         a contractor     to develop and
    operate a completely       new system for its automated real
    property    inventory   records.    It expects this new system to
    be in place during      the first   quarter   of 1991.      Since RTC
    solicited     for a system that was currently        operational     it
    does not expect the delays sometimes experienced               in systems
    We discussed    the results   of our work with the managing
    officials    of RTC's Central   Region, who agreed with the
    facts presented    in this document.
    We did our work from April  through               July 1990 in accordance
    with generally accepted government                auditing standards.

    As agreed      with the Subcommittee,      no further  distribution                of
    this fact      sheet is planned;   however, we will      make copies
    available      to other interested    parties    upon request.
    The major      contributors to this fact           sheet are listed        in the
    appendix.       If you have any questions,           please contact        me on
             .     yours,

    Director,  Federal'
       Management Issues


ApbENDIX                                                                APPENDIX


Gaston     L. Gianni,  Jr.,   Associate    Director,   Federal Management   Issues
Ronald     L. King, Assistant    Director,     Federal Management Issues
Stuart     M. Kaufman,   Senior Social Scientist
George Jones, Evaluator-in-Charge
Raymond E. Hiel,  Evaluator
Hye Y. Meador, Evaluator


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