[Federal Register Volume 59, Number 180 (Monday, September 19, 1994)]
[Unknown Section]
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From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-23125]
[[Page Unknown]]
[Federal Register: September 19, 1994]
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RESOLUTION TRUST CORPORATION
12 CFR Part 1640
RIN 3205-AA25
Marketing and Selling Real Property on an Individual Basis and
Disposition of Real Estate-Related Assets
AGENCY: Resolution Trust Corporation.
ACTION: Interim rule with request for comments.
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SUMMARY: The Resolution Trust Corporation (RTC) is hereby adopting an
interim rule with request for comments to implement the marketing
provisions contained in subsections (w)(2) and (3) of section 21A of
the Federal Home Loan Bank Act (FHLBA), recently added by section 3(a)
of the Resolution Trust Corporation Completion Act. This rule provides
policies and procedures required under subsections (w)(2) and (3) for
the marketing of real estate owned (REO) assets on an individual basis
and for the disposition of REO assets with a book value of more than
$400,000 and non-performing real estate loans with a book value of more
than $1 million.
This rule supersedes the marketing policy for real estate owned,
entitled ``Individual REO Sales,'' adopted by the RTC on April 15,
1993.
The RTC is seeking comments on all aspects of the interim rule.
DATES: This rule is effective September 19, 1994. Comments must be
submitted on or before October 19, 1994.
ADDRESSES: Written comments regarding the interim rule should be
addressed to John M. Buckley, Jr., Secretary, Resolution Trust
Corporation, 801 17th Street, N.W., Washington, D.C. 20434-0001.
Comments may be hand delivered to room 321 on business days between the
hours of 9:00 a.m. and 5:00 p.m. Comments may also be inspected in the
Public Reading Room, 801 17th Street, N.W., during the same business
hours. Phone number: (202) 416-6940; FAX number: (202) 416-4753.
FOR FURTHER INFORMATION CONTACT: William I. Jones, Counsel, RTC Legal
Division, (202) 736-3106; Anne P. Depenbrock, Senior Attorney, (202)
736-0198; Kymberly Copa, Senior Attorney, (202) 736-3087; Steve A.
Galloway, Small Investor Program Contact, (202) 416-4210; James R.
Wigand, Director, Office of Asset and SAMDA Program Management, (202)
416-7133; Henry W. Abbot, Senior Asset Specialist, (202) 416-7132;
Joseph W. Schantz, Asset Specialist, (202) 416-7302.
SUPPLEMENTARY INFORMATION:
Background
In August 1989, Congress enacted section 501 of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989, (FIRREA),
adding section 21A to the FHLBA (12 U.S.C. 1441a), and establishing the
RTC. Pursuant to section 21A(b) of the FHLBA, the RTC has the duty to
manage and resolve failed savings associations for which it is
appointed conservator or receiver and to conduct its operations in a
manner which maximizes the return from the sale of institutions or
their assets, makes efficient use of funds, and minimizes losses in the
resolution of institutions. In addition, the RTC is required to resolve
all failed thrifts by the ``least costly'' method. See section 13(c)(4)
of the Federal Deposit Insurance Act (FDIA) (12 U.S.C. 1823(c)(4)),
applicable to the RTC pursuant to section 21A(b)(4) of the FHLBA (12
U.S.C. 1441a(b)(4)).
The Resolution Trust Corporation Completion Act
The RTC Completion Act was signed by the President and took effect
on December 17, 1993 (Pub. L. 103-204). Section 3(a) of the RTC
Completion Act amended section 21A of the FHLBA by adding subsection
(w), a list of 21 managment reforms for the RTC. Implementation of two
of these reforms is the subject of this interim rule.
Subsection (w)(2)--Individual Marketing Period
Subsection (w)(2) of section 21A of the FHLBA requires the RTC to
market real property on an individual basis for at least 120 days
before making the property available on a portfolio basis or in a
multi-asset sales initiative. Subsection (w)(2), unlike subsection
(w)(3) discussed below, applies only to REO and not to loans or any
other types of assets. This provision applies to REO in which a thrift
under the RTC's jurisdiction holds, directly or indirectly, an
undivided or controlling interest. By including property held
indirectly by a thrift, this provision applies to subsidiary property
as well.
The provision excepts real property transferred in connection with
a resolution in which the acquirer purchases a significant portion of a
failed institution's assets and assumes either a significant portion of
the failed institution's liabilities or acts as agent for the RTC in
paying the claims of insured depositors. In other words, this exception
is designed to extend not only to the standard purchase and assumption
transaction, but also to an insured deposit transfer where the
acquiring institution does not actually assume the deposit liabilities.
Another exception exempts the transfer of real property by the original
pass-through receiver to a de novo institution organized by the RTC
pursuant to section 11(d)(2)(F) of the FDIA or section
21A(b)(10)(A)(iv) of the FHLBA.
Subsection (w)(2) requires the RTC to promulgate: (1) Regulations
which require the RTC to justify in writing the sale of any real
property asset on a portfolio basis or in a multi-asset initiative
after the 120-day individual marketing period, and (2) regulations to
carry out other requirements of the individual marketing provision.
Subsection (w)(3)--Marketing Procedures for Certain Assets
With respect to non-performing real estate loans with a book value
of more than $1 million and real property with a book value of more
than $400,000, subsection (w)(3) establishes several marketing
procedures for the RTC. Subsection (w)(3)(A) prohibits the RTC from
selling such assets unless:
(1) the RTC has assigned the management and disposition of such
asset to a qualified person or entity to:
(a) analyze each asset and consider alternative disposition
strategies;
(b) develop a written management and disposition plan; and
(c) implement that plan for a reasonable period of time; or
(2) the RTC determines in writing that a bulk transfer of the asset
would maximize the net recovery, while providing opportunity for broad
participation by qualified bidders, including minority- and women-owned
businesses.
Subsection (w)(3) permits the RTC to define ``asset'' to include
properties or loans which, although legally discrete, have sufficiently
common characteristics that they may logically be treated as a single
asset. Such a definition permits the RTC to provide a single asset
management and disposition plan for several assets. The statute also
expressly allows the RTC to define ``qualified person'' to include
employees assigned to the RTC and Thrift Depositor Protection Oversight
Board (TDPOB) employees. Implementation of these definitions requires
the RTC to promulgate regulations.
In addition to the exceptions created by the $400,000 and $1
million thresholds for real estate and non-performing real estate
loans, respectively, subsection (w)(3) establishes two exceptions to
the requirements of subsection (w)(3)(A). First, as under subsection
(w)(2), subsection (w)(3)(C) exempts assets transferred in connection
with a standard purchase and assumption agreement or an insured deposit
transfer agreement where a significant portion of the failed
institution's assets are transferred, as well as assets transferred to
a de novo institution organized by the RTC under section 11(d)(2)(F) of
the FDIA or section 21A(b)(10)(A)(iv) of the FHLBA. Second, subsection,
(w)(3)(C) permits the RTC to dispose of assets with book values above
the threshold, without complying with the requirements of (w)(3)(A),
whenever the RTC determines, in writing, that such a disposition will
bring a greater return.
Relationship to the Small Investor Program
Congress considered the needs of smaller investors in framing the
provisions contained in sections 21A(w) (2) and (3) of the FHLBA. The
needs of small investors were addressed by a) an emphasis on individual
marketing and sales of significant assets, and b) the structuring of
bulk transactions in a fashion which increases the participation by
bidders with moderate levels of capital.
These new statutory provisions in many ways reflect the programs
begun by the RTC in the spring of 1993 to enhance opportunities for
individual and small investors. On April 13, 1993, the RTC announced
the establishment of the Small Investor Program on an interim basis to
ensure that RTC's assets are available for sale individually to small
investors with moderate levels of capital. By memorandum dated April
15, 1993, entitled ``Individual REO Sales,'' the RTC adopted a
marketing policy for REO similar to the procedure outlined in section
21A(w)(2) of the FHLBA. That policy required the active marketing of
most REO for 120 days prior to its inclusion in any multi-asset sales
initiative. The procedures adopted in this interim rule replace the
previous policy.
Small Investor Program Offices have been established in the RTC's
Washington, D.C. headquarters and in each of the RTC's six Field
Offices with staff dedicated to addressing the needs of small
investors. The Small Investor Program targets individual investors and
small investor groups, including Minority and Women-Owned Businesses
(MWOB) with the capacity to purchase: (i) REO assets and portfolios
valued up to $5 million, (ii) loan pools up to $10 million, (iii)
subsidiaries valued from $5 thousand to $30 million, and (iv) equity
investments from $4 million to $9 million in joint venture
transactions.
The Small Investor Program was instrumental in the implementation
of two ``Equity Partnership'' Programs designed to increase
opportunities for the small investor: the Judgments, Deficiencies, and
Charge-Offs (JDCs) Program and the ``S-Series'' Program. These loan
disposition initiatives have encouraged greater participation from
small investors by reducing asset pool sizes and lowering equity
requirements and other fees.
The RTC frequently conducts non-performing loan auctions to achieve
broad market exposure and obtain the best price through the competitive
bidding process. However, the average size of portfolios has been
decreased and are more geographically limited to allow small investors
a greater opportunity to compete for these assets. In addition, the
overall required bidding deposit has been reduced from $100,000 to
$50,000 to increase the participation of small investors.
Loan portfolio offerings available through the Small Investor
Program have become smaller, more geographically segmented, and the
pools of assets are structured by specific asset type to appeal to
small investors. For each loan offering, a comprehensive and
specifically targeted marketing campaign is implemented to promote the
offering and attract a sufficient number of potential purchasers to the
sale.
Localized real estate auctions are held more frequently and are
more geographically focused to increase opportunities for small
investors to purchase assets.
Sealed Bid offerings are available through the Small Investor
Program which allow investors to value independently an individual
asset or package of assets and submit a confidential bid along with
other interested parties. Comprehensive sales brochures are available
which provide detailed property and bidding information.
Seminars are conducted frequently to inform potential small
investors of the goals of the Small Investor Program and the
opportunities available to purchase assets of the Resolution Trust
Corporation.
Initiatives such as these fulfill the new legislation's goal of
providing opportunities to a broad range of qualified bidders and will
be continued throughout the remaining life of the RTC. In addition,
these initiatives undertaken by the Small Investor Program are
consistent with the original duties mandated by section 21A(b)(3) of
the FHLBA, (i.e., to dispose of assets from failed savings
associations, obtain the maximum value for those assets, and minimize
the cost of resolutions to taxpayers.)
Description and Explanation of the Interim Rule
Subpart A--Marketing and Selling Real Property on an Individual Basis
for 120 Days
Section 1640.1 describes the purposes and scope of Subpart A of the
interim rule, implementing section 21A(w)(2) of the FHLBA.
This Subpart requires the RTC to comply with new individual
marketing and sales requirements for real property assets held by the
RTC on or after December 17, 1993, unless they were the subject of a
contract to sell or other disposition contract on that date. The RTC is
relying on the effective date of the RTC Completion Act to determine
the property affected by this new provision; nothing in the legislation
suggests that such contracts should be abrogated.
Section 1640.2 contains the definitions of significant terms used
in this Subpart. Consistent with the requirement that the RTC has an
undivided or controlling interest in the asset subject to this
provision, the definition of ``real property'' expressly excludes a
time share interest, a space lease, or a security interest in property,
including a mortgage or deed of trust.
When read together, subsections (w)(2) and (w)(3) of section 21A of
the FHLBA indicate that Congress intended the concept of a single asset
to include two or more legally discrete assets which are so
interconnected as to constitute a single economic unit. On that basis,
the RTC has defined ``single real property asset'' to allow for the
inclusion of more than one asset in which the RTC holds an undivided or
controlling interest, if such assets may logically be treated as a
common asset because they have at least two common characteristics.
Some examples of such characteristics are contiguity, economic
integration, shared utility systems, former common ownership or
operation, common infrastructure improvements, and common recreational
facilities.
Subsection (c) of section 1640.2 defines the term ``market'' as
providing notice to the public of the availability of the property for
sale. This definition encompasses a variety of marketing techniques,
thereby permitting the RTC the discretion to choose the technique which
best suits a particular asset. Marketing of an asset involves exposure
to a target market through a variety of methods. These methods may
include, without limitation, advertising in local, regional or national
newspapers or other publications, advertising in trade journals for
specialized properties such as hotels, distributing of professional
marketing materials, or listing of the property with a broker or other
contractor with the expertise to expose the property extensively in its
target market.
Section 1640.3(a) of the interim rule requires the RTC to market
and sell real property assets solely on an individual basis for 120
days or until an asset is sold under subsection (b) of the same
section. During the initial 120-day marketing period, however, the RTC
may promote the sale of more than a single real property asset in a
single promotional medium. In addition, during that marketing period,
that the RTC may sell or otherwise dispose of, a single real property
asset in an open or sealed-bid auction, or other multi-asset marketing
program, so long as bids are received and accepted only for individual
properties.
Section 1640.4 provides that upon the expiration of the 120-day
period, any single real property asset which remains unsold may be
disposed of in connection with a portfolio sale or a multi-asset sales
initiative under section 1640.4, only if the RTC determines in writing
that such a disposition would likely maximize the net recovery to the
RTC. As used in this rule, a portfolio sale or multi-asset sales
initiative refers to the method of asset disposition of two or more
assets (without sufficiently common characteristics to be treated as a
single asset) where the RTC permits the sale of two or more assets for
one indivisible price.
Section 1640.5 sets forth the exceptions to the individual
marketing and sales requirement. The provisions of section 21A(w)(2) of
the FHLBA, as implemented by the interim rule, do not apply to real
property transferred as part of so-called ``purchase-and-assumption''
agreements, i.e., where assets are sold simultaneously with a
resolution in which a buyer (i.e., an acquiring financial institution)
purchases a significant proportion of the assets and either assumes a
significant proportion of the liabilities or acts as agent of the RTC
for purposes of paying insured deposits. The RTC has interpreted this
exemption to apply to any single real property asset for which the RTC
has granted the acquiring financial institution an option to purchase
the asset, although, if the option expires and the asset remains the
property of the RTC, then section 21A(w)(2) of the FHLBA and these
implementing regulations would then apply to the property. Also
exempted from the individual marketing and sales requirement are single
real property assets which are transferred to de novo institutions,
organized by the RTC pursuant to section 11(d)(2)(F) of the FDIA or
section 21A(b)(10)(A)(iv) of the FHLBA.
Subpart B--Disposition of Real Estate-Related Assets
Section 1640.11 of the interim rule describes the purpose and scope
of this Subpart, i.e., to establish the methods by which the RTC
intends to comply with the disposition provisions of section 21A(w)(3)
of the FHLBA applicable to real estate-related assets held by the RTC
on or after December 17, 1993, which are not subject to a contract to
sell or other disposition contract as of that date. Subsection (c) of
section 1640.11 recognizes that the RTC may have taken actions, prior
to the effective date of this Subpart, to satisfy the new statutory
requirements, which should be used to determine the RTC's compliance
with those requirements.
The requirements of Subpart B apply only to a single real property
asset or non-performing single real estate-related loan, which are
considered ``real estate-related assets'' for these purposes. Under
section 1640.12, the RTC defines relevant terms for purposes of Subpart
B, such as real property, single real property asset, real estate-
related asset, and non-performing single real estate-related loan. A
``single real property asset'' is defined as a real property asset with
a book value of more than $400,000 as determined by the RTC, in which
the RTC has an undivided or controlling interest. As under Subpart A,
two or more separate real property assets, each with a value of more
than $4,000, may be logically treated as a single real property asset
if they have at least two common characteristics, as described above. A
``non-performing single real estate-related loan'' is a loan or group
of loans with sufficiently common characteristics, each with a book
value of more than $1 million as determined by the RTC, in which the
RTC holds an undivided or controlling interest, secured by real
property, which is more than 90 days delinquent.
The definition of ``non-performing single real estate-related
loan'' includes a participation loan whenever the RTC in fact controls
the management and disposition of that loan, and the book value of the
entire loan, not just the RTC's share, is greater than $1 million.
However, the definition does not include a participation loan which the
RTC does not control, no matter how large the RTC`s ownership interest
is in the loan.
Section 1640.13 requires the RTC to assign the responsibility for
the management and disposition of a real estate-related asset to a
qualified person or entity prior to disposition of the asset, unless
the RTC makes a written determination that a bulk sale would likely
maximize net recovery to the RTC and provide broad participation by
qualified bidders, including minority- and women-owned businesses.
Under section 1640.12, a ``qualified person or entity'' for a real
estate-related asset is defined as an employee of the RTC or the TDPOB
or an asset management contractor of the RTC who meets the minimum
qualifications established by the RTC for managing and analyzing assets
of the same type. The qualified person or entity assigned to the
property must analyze each individual asset, consider alternative
disposition strategies, recommend a disposition strategy to maximize
net recovery to the RTC, develop a written management and disposition
plan, and implement that plan for a reasonable period of time.
Alternative disposition strategies for REO may include, at a
minimum, sale on an individual basis via broker and sale on an
individual basis via auction or sealed bid. For non-performing real
estate loans, disposition strategies usually include modification,
foreclosure or other legal action, compromise and settlement, and
individual sale via auction or sealed bid.
Like Subpart A, Subpart B does not apply to real estate-related
assets sold simultaneously with a purchase-and-assumption agreement
(including option agreements during the duration of the option) or
transferred by the RTC to a de novo institution (discussed more fully
above under Subpart A). Subpart B, by its terms, does not apply to
individual real estate assets with a book value of $400,000 or less or
individual non-performing real estate loans with a book value of $1
million or less. In addition, Subpart B does not apply to assets
meeting these thresholds, if the RTC determines that a disposition not
in conformity with Subpart B and section 21A(w)(3) of the FHLBA would
bring a greater return.
Finally, subsection (w)(3)(D) provides that no provision in (w)(3)
shall supersede the requirements of subsection (w)(2). Section 1640.15
reiterates this principle of implementation by providing that nothing
contained in Subpart B supersedes the requirements of (w)(2) or Subpart
A. Consequently, all real property with a book value of more than
$400,000 must be marketed on an individual basis for a minimum of 120
days in conformity with subsection (w)(2) and Subpart A of these
regulations.
Administrative Procedure Act
The RTC is adopting this rule as an interim rule. It will be
effective immediately upon publication in the Federal Register without
the usual notice and comment period or delayed effective date generally
provided for in the Administrative Procedure Act, 5 U.S.C. 553. For the
most part, this rule implements the express language of section 21A(w)
(2) and (3) of the FHLBA, as recently added by the RTC Completion Act.
Promulgation of the rule on an expedited basis is necessary to permit
the immediate implementation of these new provisions in order to avoid
any additional losses that could occur due to a delay in the sales of
assets in connection with the resolution of failed thrifts pending the
usual delayed effective date. Thus, the RTC finds that the benefits to
the public in adopting the interim rule outweigh any possible harm
resulting from not seeking comment on the proposed rule in advance of
its effective date. The RTC actively solicits comments on this interim
rule and will consider those comments in the adoption of the rule as
final.
Initial Regulatory Flexibility Analysis
As required by the Regulatory Flexibility Act, 5 U.S.C. 601, et
seq., the following initial regulatory flexibility analysis is
provided:
1. Reasons, objectives, and legal bases underlying the interim
rule. These elements have been discussed above in the Supplementary
Information section.
2. Small entities to which the rule would apply. This rule applies
only to procedures for the RTC's marketing and disposition of certain
types of assets.
3. Impact of the interim rule on small businesses. This rule
imposes no burden on small businesses. Rather, as part of the RTC's
Small Investor Program, it is intended to offer small businesses
greater opportunities to acquire certain types of assets from the RTC.
4. Overlapping or conflicting federal rules. There are no known
federal rules that overlap, duplicate, or conflict with the interim
rule.
5. Alternatives to the interim rule. The RTC has not identified
alternatives that would be less burdensome to small businesses and yet
effectively accomplish the objectives of the interim rule because it
imposes no burden on small businesses.
Request for Public Comment
The RTC is issuing this interim rule to implement immediately
statutory direction to market and sell real property on an individual
basis for 120 days and to provide procedures favoring the individual
management and disposition of larger real estate-related assets, unless
a bulk transaction would likely maximize the net recovery to the RTC.
Nonetheless, the RTC is hereby requesting comment on all aspects of
this interim rule during a 30-day comment period.
List of Subjects in 12 CFR Part 1640
Savings associations.
For the reasons set out in the preamble, the RTC hereby adds Part
1640 to title 12, chapter XVI of the Code of Federal Regulations, to
read as follows:
PART 1640--MARKETING AND SALE OF REAL ESTATE AND REAL ESTATE-
RELATED ASSETS
Subpart A--Marketing and Selling Real Property on an Individual Basis
for 120 Days
Sec.
1640.1 Purpose and scope.
1640.2 Definitions.
1640.3 Procedure during initial 120-day marketing period.
1640.4 Procedure after initial 120-day marketing period.
1640.5 Exceptions.
Subpart B--Disposition of Real Estate-Related Assets
1640.11 Purpose and scope.
1640.12 Definitions.
1640.13 Procedure for disposition of real estate-related assets.
1640.14 Exceptions.
1640.15 Coordination with subpart A of this part and section
21A(w)(2) of the Federal Home Loan Bank Act.
Authority: 12 U.S.C. 1441a (w)(2) and (w)(3).
Subpart A--Marketing and Selling Real Property on an Individual
Basis for 120 Days
Sec. 1640.1 Purpose and scope.
(a) This subpart provides the implementing regulations required by
section 21A(w)(2) of the Federal Home Loan Bank Act, which requires the
Resolution Trust Corporation (RTC) to market and sell real property
assets solely on an individual basis for an initial 120-day marketing
period and which, after such initial 120-day marketing period, further
requires the RTC to justify in writing the disposition of real property
assets on a portfolio basis or as part of a multi-asset sales
initiative.
(b) This subpart applies with respect to all single real property
assets held by the RTC on or after December 17, 1993; provided,
however, that this subpart shall not apply with respect to any such
assets which were the subject of a contract to sell or other
disposition contract on December 17, 1993.
Sec. 1640.2 Definitions.
For purposes of this subpart, the following definitions apply:
(a) Controlling interest, with respect to a single real property
asset, shall mean an ownership interest which gives the RTC the ability
to direct and control the disposition of such asset;
(b) Initial 120-day marketing period, with respect to a single real
property asset, shall mean the 120-day period beginning on the date on
which the RTC first markets such asset on an individual basis;
(c) Insured depository institution shall have the meaning given
such term in section 3(c) of the Federal Deposit Insurance Act;
(d) Market shall mean to provide notice to the public of the
availability of a single real property asset for sale through methods
calculated to reach persons who can reasonably be expected to have an
interest in acquiring such asset. Examples of methods which the RTC may
employ for initiating marketing include, but are not limited to, the
following:
(1) Listing of such an asset with a real estate broker, multiple
listing service or contractor qualified to market the asset; and
(2) Advertising the availability of such an asset in a general
interest publication, such as a local, regional or national newspaper,
or in a specialized publication, such as a business or trade
publication or marketing brochure;
(e) Portfolio sale or multi-asset sales initiative shall mean a
method of asset disposition in which the RTC permits the purchase, or
other disposition, of two or more single real property assets for one
indivisible price;
(f) Real property shall mean improved or unimproved property held
in fee simple or pursuant to a ground lease, a leasehold in connection
with shares in a cooperative corporation or similar entity and any
other property constituting real property within the meaning of the law
of the State (as defined in section 3 of the Federal Deposit Insurance
Act) in which the property is situated. The term shall not mean a time
share interest, a space lease or a security interest in property,
including a mortgage or deed of trust;
(g) RTC or Resolution Trust Corporation shall mean the Resolution
Trust Corporation, established in section 21A of the Federal Home Loan
Bank Act, in its corporate capacity, its capacity as conservator, its
capacity as receiver, or its capacity as the owner of a subsidiary of a
depository institution under conservatorship or receivership, or in any
combination thereof;
(h) Single real property asset shall mean--
(1) A legally separate and distinct real property asset, in which
the RTC holds an undivided or controlling interest; or
(2) Two or more legally separate and distinct real property assets,
in which the RTC holds an undivided or controlling interest, which may
be logically treated as a single asset because the assets have at least
two common characteristics, including contiguity, economic integration,
shared utility systems, former common ownership, former common
operation, common infrastructure improvements, common recreational
facilities and other similar characteristics;
(i) Undivided interest, with respect to a single real property
asset, shall mean an interest which gives the RTC complete ownership
and control of the disposition of such asset; and
(j) Sale shall mean a disposition by sale or otherwise, whereby the
RTC transfers its interest in a single real property asset to another
person or entity.
Sec. 1640.3 Procedure during initial 120-day marketing period.
(a) Marketing. (1) The RTC shall market a single real property
asset on an individual basis for 120 days or until such asset is sold
in accordance with paragraph (b) of this section during the initial
120-day marketing period. Provided, however, nothing contained in this
paragraph shall be construed to prohibit the RTC from promoting the
sale on an individual basis, in accordance with paragraph (b), of this
section, of more than one single real property asset in the same
marketing materials.
(2) Any actions, which otherwise satisfy the standards of this
subpart, undertaken by the RTC to market a single real property asset
prior to September 19, 1994 shall be used to determine compliance with
this subpart.
(b) Disposition. During the initial 120-day marketing period for a
single real property asset, the RTC shall only sell or otherwise
dispose of, such asset solely on an individual basis, and the RTC shall
not dispose of such asset in connection with a portfolio sale or a
multi-asset sales initiative. Provided, however, nothing contained in
this paragraph shall be construed to prohibit the RTC from selling, or
otherwise disposing of, a single real property asset during such period
in an open or sealed-bid auction, or other multi-asset marketing
program, in which bids are received and accepted only on an individual
basis.
Sec. 1640.4 Procedure after initial 120-day marketing period.
With respect to a single real property asset which remains unsold
after the initial 120-day marketing period for such asset, the RTC may
only dispose of such asset in connection with a portfolio sale or a
multi-asset sales initiative if the RTC determines in writing that such
disposition of the asset would maximize the net recovery to the RTC.
Sec. 1640.5 Exceptions.
The provisions of this subpart and section 21A(w)(2) of the Federal
Home Loan Bank Act shall not apply:
(a) To single real property assets which are sold simultaneously
with a resolution in which a buyer purchases a significant proportion
of the assets and either assumes a significant proportion of the
liabilities or acts as agent of the RTC for purposes of paying insured
deposits of an institution described in section 21A(b)(3)(A) of the
Federal Home Loan Bank Act. (This exemption applies to any single real
property asset for which the RTC has granted the buyer an option to
purchase; provided, however, if at the expiration of such option the
asset remains the property of the RTC, then the provisions of this
subpart and section 21A(w)(2) of the Federal Home Loan Bank Act shall
then apply to such asset.); or
(b) To single real property assets which are transferred by the RTC
to a new insured depository institution organized by the RTC pursuant
to section 11(d)(2)(F) of the Federal Deposit Insurance Act or section
21A(b)(10)(A)(iv) of the Federal Home Loan Bank Act.
Subpart B--Disposition of Real Estate-Related Assets
Sec. 1640.11 Purpose and scope.
(a) This subpart establishes the methods of implementing section
21A(w)(3) of the Federal Home Loan Bank Act, which establishes
requirements regarding the disposition of real property with a book
value of more than $400,000 and non-performing real estate-related
loans with a book value of more than $1,000,000.
(b) This subpart applies with respect to all real estate-related
assets held by the RTC on or after December 17, 1993; provided,
however, this subpart shall not apply with respect to any such assets
which were the subject of a contract to sell or other disposition
contract on December 17, 1993.
(c) Any actions of the RTC, which otherwise satisfy the standards
of section 21A(w)(3) of the Federal Home Loan Bank Act and this
subpart, undertaken prior to September 19, 1994 shall be used to
determine compliance with section 21A(w)(3) of the Federal Home Loan
Bank Act and this subpart.
Sec. 1640.12 Definitions.
For purposes of this subpart and section 21A(w)(3) of the Federal
Home Loan Bank Act, the following definitions apply:
(a) Bulk transaction shall--(1) With respect to a single real
property asset, have the same meaning as given the terms portfolio sale
and multi-asset sales initiative in 12 CFR 1640.2(e); and
(2) With respect to a single non-performing real estate-related
loan, mean a sale or other disposition in which the RTC permits the
purchase, or other disposition, of two or more such loans for one
indivisible price;
(b) Controlling interest, with respect to a real estate-related
asset, shall mean an ownership interest which gives the RTC the ability
to direct and control the disposition of such asset;
(c) Employee of the RTC shall mean an employee of the Federal
Deposit Insurance Corporation or other agency assigned to the RTC under
section 21A(b)(8) of the Federal Home Loan Bank Act, or an employee of
a depository institution for which the RTC has been appointed
conservator or receiver, or an employee of a subsidiary of such an
institution;
(d) Qualified person or entity, with respect to a real estate-
related asset, shall mean an employee or an asset management contractor
of the RTC or of the Thrift Depositor Protection Oversight Board who
meets the minimum qualifications established by the RTC for managing
and analyzing assets of the same type as such real estate-related
asset;
(e) Real estate-related asset shall mean a single real property
asset or a single non-performing real estate-related loan;
(f) Real property shall mean improved or unimproved property held
in fee simple or pursuant to a ground lease, a leasehold in connection
with shares in a cooperative corporation or similar entity and any
other property constituting real property within the meaning of the law
of the State (as defined in section 3 of the Federal Deposit Insurance
Act) in which the property is situated. The term shall not mean a time
share interest, a space lease or a security interest in property,
including a mortgage or deed of trust;
(g) RTC or Resolution Trust Corporation shall mean the Resolution
Trust Corporation, established in section 21A of the Federal Home Loan
Bank Act, in its corporate capacity, its capacity as conservator, its
capacity as receiver, or its capacity as the owner of a subsidiary of a
depository institution under conservatorship or receivership, or in any
combination thereof;
(h) Single non-performing real estate-related loan shall mean--
(1) A loan, in which the RTC holds an undivided or controlling
interest, secured by real property, with a book value of more than
$1,000,000, as determined by the RTC, which is more than 90 days
delinquent; or
(2) A group of loans, in which the RTC holds an undivided or
controlling interest, secured by real property, each of which has a
book value of more than $1,000,000 and is more than 90 days delinquent,
which may be logically treated as a single asset because the loans have
at least one common characteristic, including cross default provisions,
cross-collateralization and other similar characteristics;
(i) Single real property asset shall mean--
(1) A legally separate and distinct real property asset, with a
book value of more than $400,000, as determined by the RTC, in which
the RTC holds an undivided or controlling interest; or
(2) Two or more legally separate and distinct real property assets,
each with a book value of more than $400,000, as determined by the RTC,
in which the RTC holds an undivided or controlling interest, which may
be logically treated as a single asset because the assets have at least
two common characteristics, including contiguity, economic integration,
shared utility systems, former common ownership, former common
operation, common infrastructure improvements, common recreational
facilities and other similar characteristics; and
(j) Undivided interest, with respect to a real estate-related
asset, shall mean an interest which gives the RTC complete ownership
and control of the disposition of such asset.
Sec. 1640.13 Procedure for disposition of real estate-related assets.
The RTC shall not sell or otherwise dispose of a real estate-
related asset unless:
(a) The RTC has assigned the responsibility for the management and
disposition of the asset to a qualified person or entity to:
(1) Analyze such asset on an asset-by-asset basis and consider
alternative disposition strategies for such asset;
(2) Develop a written management and disposition plan; and
(3) Implement that plan for a reasonable period of time; or
(b) The RTC has made a determination in writing that a bulk
transaction would maximize net recovery to the RTC, while providing
broad participation by qualified bidders, including minority- and
women-owned businesses.
Sec. 1640.14 Exceptions.
This subpart shall not apply to:
(a) Real estate-related assets that are:
(1) Sold simultaneously with a resolution in which a buyer
purchases a significant proportion of the assets and either assumes a
significant proportion of the liabilities or acts as agent of the RTC
for purposes of paying insured deposits of an institution described in
section 21A(b)(3)(A) of the Federal Home Loan Bank Act. (This exemption
applies to any real estate-related asset for which the RTC has granted
the buyer an option to purchase; provided, however, if at the
expiration of such option the asset remains the property of the RTC,
then the provisions of this subpart and section 21A(w)(3) of the
Federal Home Loan Bank Act shall then apply to such asset.); or
(2) Transferred by the RTC to a new insured depository institution
organized by the RTC pursuant to section 11(d)(2)(F) of the Federal
Deposit Insurance Act or section 21A(b)(10)(A)(iv) of the Federal Home
Loan Bank Act;
(b) Any assets which are not real estate-related assets, as defined
in this subpart;
(c) Any real estate-related asset for which the RTC determines in
writing that a disposition not in conformity with this subpart and
section 21A(w)(3)(A) of the Federal Home Loan Bank Act will bring a
greater return to the RTC.
Sec. 1640.15 Coordination with subpart A of this part and section
21A(w)(2) of the Federal Home Loan Bank Act.
Nothing contained in this subpart B shall supersede the
requirements of subpart A of this part or section 21A(w)(2) of the
Federal Home Loan Bank Act.
By order of the Deputy and Acting Chief Executive Officer.
Dated at Washington, D.C., this 14th day of September, 1994.
Resolution Trust Corporation
John M. Buckley, Jr.,
Secretary.
[FR Doc. 94-23125 Filed 9-16-94; 8:45 am]
BILLING CODE 6714-01-M
