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Resolution Trust Corporation: Oversight of Certain Loan Servicers Needs Improvement

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Report Type Reports and Testimonies
Report Date April 24, 1992
Report No. GGD-92-76
Subject
Summary:

Under agreements entered into by failed thrifts, the Resolution Trust Corporation (RTC) relies on thousands of commercial banks, thrifts, and mortgage companies to help service its inventory of mortgages and loans. In December 1991, these institutions--known as inherited third-party servicers--serviced more than 300,000 mortgages and loans, which is more than one-third of RTC's total inventory of mortgages and loans held by thrifts in receivership. These servicers are to collect and remit to RTC millions of dollars in principal and interest payments each month. GAO concludes that the lack of oversight of inherited servicers could jeopardize RTC's recovery of asset values by decreasing loan collections and reducing the market value of loan portfolios. Also, without evaluating servicer performance, RTC cannot identify and take action against servicers that are not performing satisfactorily.

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