We asked the investors for their opinions on the adequacy and usefulness of the loan data provided through the diskettes and the file reviews. As a result, RTC initially identified and planned to offer for sale over 60,000 nonperforming residential, consumer, and commercial loans with a total book value of about $2.7 billion. About 49,000 loans were dropped from the auction because they (1) did not meet the auction selection criteria, (2) were involved in litigation, (3) had already been designated for other sales initiatives, (4) had already been paid off or sold, or (5) had loan files that could not be located. Loan Servicers Were Not Required to Provide Data Needed to Market Loans

RTC’s loan servicing contracts did not require the loan servicers to provide needed loan data to update the central loan database to ensure that it contained complete and current data needed for marketing purposes.Therefore, current and complete loan data needed to determine whether loans met the loan selection criteria for the August 1993 national auction were not always available. The IG reported that 1,399 performing loans were sold at deep discounts in two nonperforming loan auctions conducted by RTC field offices in 1991 and 1992. Before the auction, RTC offered data about loans to investors in two ways. Our telephone survey indicated that investors who participated in the August 1993 auction generally believed the loan data provided by RTC to be useful, but they found that important data were missing or outdated. Conclusion

The process used by RTC to initially select nonperforming loans for the August 1993 auction was not efficient. As a result of these problems, some investors said they either lowered their bids or did not bid on certain loans in the August 1993 auction. 2. Resolution Trust Corporation: Effectiveness of Auction Sales Should Be Demonstrated (GAO/GGD-92-7, Oct. 31, 1991).
Why GAO Did This Study

GAO reviewed the Resolution Trust Corporation's (RTC) August 1993 national nonperforming loan auction, focusing on the: (1) process RTC used to select loans for the auction; and (2) adequacy and usefulness of loan data provided to investors before the auction.

What GAO Found

GAO found that: (1) RTC efforts to select and dispose of nonperforming loans was hindered by incomplete and outdated loan data; (2) RTC identified over 60,000 nonperforming loans with a total book value of about #2.7 billion for the auction; (3) RTC failed to follow its contracting procedures in modifying loan servicers' contracts to require the submission of monthly standard loan data; (4) the RTC central loan database contained incomplete and outdated data because some loan servicers did not timely submit all relevant data; (5) RTC withdrew about 81 percent of the original 60,000-plus loans selected for auction because they did not meet auction criteria, were in litigation, had been paid off, sold, or designated for other sales; (6) some performing loans were erroneously included in the auction and sold at deep discounts; (7) investors generally believed that RTC loan data was useful, but important data were missing, inadequate, or invalid; (8) some investors lowered their bids or did not participate in the auction because of poor RTC loan data; and (9) RTC has taken actions to correct identified problems in conducting auctions of nonperforming loans.