RTC Said to Be Near Pact To Computerize Inventory
The Resolution Trust Corp. is reportedly poised to sign a contract that will create a computerized inventory of its $58 billion in mortgages.
The electronic archive is expected to be a shot in the arm for the agency's fledgling program to securitize home loans. The agency, which has been faulted for not selling assets quickly, just sold its first bundles of mortgages, with a face value of about $1 billion, in the secondary market.
The new system will help the RTC ferret out and package similar loans from the numerous thrift portfolios overseen by its field offices, said Ric E. Tomlinson, president of Univest Financial Group. The Marietta, Ga., company expects to receive the agency's contract for the archive.
Monthly Volume of $1 Billion or More
A spokesman for the agency said he was unfamiliar with the contract but confirmed that the RTC's objective is to improve data and make the loans more readily marketable. The RTC intends to securitize $1 billion to $2 billion each month, he said.
Other agency officials familiar with the securitization program were not available for comment.
The RTC has found it a daunting task to package mortgages from failed S&Ls into pools with predictable characteristics. It oversees more than 600 institutions and $58 billion in mortgages - $37 billion of which are performing loans backed by single-family properties.
Many of these institutions engaged in adjustable-rate mortgage promotions in the 1980s that spawned literally thousands of variations on the standard home loan.
A portfolio review at just one defunct thrift turned up 2,300 distinct types of single-family mortgages, according to Univest. That number refers to all the combinations of adjustment schedules, starter rates, conversion features, and other characteristics, Mr. Tomlinson said.
"Imagine going through the notes, one by one, and saying, |OK, which of these 2,300 different stacks does this go into? Or is it stack 2,301?" Mr. Tomlinson said. Univest and the other contractors did just that in performing due diligence on the RTC portfolios to get the agency's securitization program off the ground.
Because of that work, two RTC issues involving a total of $1 billion of adjustable-rate loans originated by some big West Coast thrifts were successfully placed with investors in recent weeks. Several more issues are in the works.
Once the contract is signed, a Univest spokesman said, the RTC will begin delivering information on the loan portfolios of various thrifts under RTC control to Univest's computer center in Little Rock, Ark. The architecture already exists, and the loan information will be fed in gradually, the spokesman said.
The initial contract for six months probably would be worth less than $500,000, industry sources said, assuming 10 institutions with 10,000 loans apiece could be brought on-line. Univest would only say the cost would depend on the scope of service provided.
The computers will identify which loans qualify for sale to the secondary market agencies, which are suited for sale as whole loans, and which are suited for packaging into securities under RTC's own securitization program.
The RTC has been criticized in its first two years for bureaucratic logjams that have slowed the disposition of assets and increased costs to taxpayers, Mr. Tomlinson noted.
But he said the slow start in mortgage securitization was not the agency's fault. "What's happened is we've seen the RTC learning curve," he said. "And as they've climbed the learning curve, they've created efficiencies."