S&L; Property Price Slashes OKd : Real Estate Sales Would Speed Cleanup of Savings Industry

Banking regulators voted today to slash the price of certain real estate the government inherited from the nation’s failed thrifts by as much as 20% to accelerate the cleanup of the savings and loan industry.

“This won’t be a fire sale,” said William Seidman, chairman of the Federal Deposit Insurance Corp. “This won’t apply to every property.”

The government has been obliged to take over an estimated $16 billion worth of real estate from failed thrifts because of the federal guarantee on deposits in the institutions.

The real estate is reported to range from desert acreage in Arizona and condominiums in Florida to an office building in Dallas and housing developments in Denver.

Despite warnings the price cutting could hurt private property values, the Resolution Trust Corp. board, which Seidman also heads and which oversees the mammoth thrift bailout, voted 4-0 for the plan.

“The time is for us to move out this property as fast as we can,” said C.C. Hope, an RTC board member.

If the strategy works, the government will be able to sell its repossessed real estate faster and reduce the money it must spend to oversee and maintain its vast inventory.

Seidman said the price slashing will apply only to property appraised above its “true market price.”

The price on commercial properties that fall into the category will be lowered by 15% on the market for six months. If there is no sale after an additional three months, the price will be cut another 5% by a total of 20%.

The prices on houses that go unsold for four months also will be be lowered by 15% and then by another 5% if there is no movement on the property after three months.