[Federal Register Volume 59, Number 24 (Friday, February 4, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-2475]
[[Page Unknown]]
[Federal Register: February 4, 1994]
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RESOLUTION TRUST CORPORATION
Revised Policy Statement for the Disposition of Residential Units
Which Were Previously Subject to Rent and Securities Regulations
AGENCY: Resolution Trust Corporation.
ACTION: Revised statement of policy.
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SUMMARY: The Resolution Trust Corporation (RTC) has revised its policy
statement concerning the abrogation of leases on units in properties
which were subject to state and local rent or securities regulations
prior to their acquisition by the RTC as conservator or receiver for an
insured depository institution. This policy modifies the current
Statement of Policy for the Disposition of Residential Units Which Were
Previously Subject to Rent and Securities Regulations, dated February
22, 1991, by increasing to 130 percent of area median income the
maximum income of households governed by paragraph 4B of this policy.
EFFECTIVE DATE: This revised policy is effective February 4, 1994.
FOR FURTHER INFORMATION CONTACT:
Barry R. Wides, Deputy Director, Affordable Housing Disposition
Program, (800) 842-2970, extension 67138. (This is a toll-free number.)
SUPPLEMENTARY INFORMATION:
1. Purpose
To revise the policy statement concerning the abrogation of leases
on units in properties which were subject to state and local rent or
securities regulations prior to their acquisition by the RTC as
conservator or receiver for an insured depository institution.
2. Scope and Applicability
This statement of policy of the RTC is applicable when the RTC as
conservator or receiver of an insured depository institution acquires
cooperative and/or condominium residential dwelling units which were
subject to state or local rent or securities regulations prior to their
acquisition by the RTC.
3. Background
It is clearly the intention of the RTC to avoid displacing low- and
moderate-income tenants from such units. However, in making this
statement of policy, the RTC recognizes the competing interests
associated with such regulated cooperative and condominium units. On
the one hand, some state or local rent and securities regulations have
provided for the regulation of rents and the continuation of certain
tenancies at specified levels. On the other hand, the RTC's statutory
duties are to expeditiously manage and resolve failed insured
depository institutions, to maximize returns on their assets and comply
with the affordable housing provisions of the Financial Institutions
Reform, Recovery and Enforcement Act of 1989 (FIRREA). The RTC, and
ultimately the taxpayers, cannot be put in the position of continuing
to underwrite rental of such units at a significant loss to the RTC, or
be compelled to sell the units as tenant-occupied at greatly diminished
values due to the possible applicability of the rent and securities
regulations. The RTC has balanced the statutory mandates of the RTC and
the state and local interests at issue, and has determined that
disaffirmance or repudiation of leases of these units and the resulting
preemption of state and local rent and securities regulations, is
required in certain circumstances. The RTC has also determined that
expanding the definition of low- and moderate-income from one hundred
and fifteen percent (115 percent) of the median income in the area
involved, to one hundred and thirty percent (130 percent) of the median
income in the area involved, as determined by the U.S. Secretary of
Housing and Urban Development (HUD) with adjustments for family size,
will assist the RTC in meeting its statutory mandate to maximize the
preservation of the availability and affordability of residential real
property for low- and moderate-income individuals without significantly
adversely affecting the ability of the RTC to satisfy its numerous
other statutory duties. Accordingly, the RTC hereby revises its
Statement of Policy for the Disposition of Residential Units Which Were
Previously Subject to Rent or Securities Regulations dated February 22,
1991, as stated in paragraph 4B below. All other material terms of the
February 22, 1991, Statement of Policy remain unchanged.
4. Policy and Guidelines
A. The policy of the RTC will be to exercise its disaffirmance or
repudiation powers with regard to cooperative and/or condominium
residential dwelling units which were subject to state or local rent or
securities regulations prior to their acquisition by the RTC as
conservator or receiver of an insured depository institution when it
determines that: (1) The insured depository institution is a party to
the lease; (2) the performance of which the conservator or receiver
determines, in its discretion, to be burdensome; and (3) the
disaffirmance or repudiation of which the conservator or receiver
determines, in its discretion, will promote the orderly administration
of the institution's affairs, the RTC will not repudiate the leases.
B. Where the RTC finds that units are leased by low- or moderate-
income tenants, the RTC will not exercise its disaffirmance or
repudiation powers with respect to those units. For this purpose, a
low- or moderate-income tenant is defined as a family or individual
whose income does not exceed one hundred and thirty percent (130
percent) of the median income in the area involved, as determined by
the U.S. Secretary of Housing and Urban Development (HUD), with
adjustments for family size.
C. Where the RTC determines to disaffirm or repudiate leases of
such units, the RTC may, in its discretion, offer the units for sale to
the existing tenants or negotiate other arrangements, on terms which
the RTC finds acceptable, in accordance with its mandate to maximize
recoveries on the assets of the institutions in its control. If the
existing tenants decline or fail to purchase the units or to enter into
any other agreement acceptable to the RTC, the RTC will be free to
consummate the disaffirmance or repudiation and to take whatever action
it deems appropriate for the disposition of the units.
By order of the Executive Committee.
Dated at Washington, DC this 31st day of January, 1994.
Resolution Trust Corporation.
John M. Buckley, Jr.,
Secretary.
[FR Doc. 94-2475 Filed 2-3-94; 8:45 am]
BILLING CODE 6714-01-M
