[Federal Register Volume 59, Number 180 (Monday, September 19, 1994)]
[Unknown Section]
[Page 0]
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