With billions of dollars in real estate from failed thrifts to sell, federal regulators must be more flexible in putting together financing schemes for prospective buyers.
That is the message that Michael Meyer, managing partner of Kenneth Leventhal & Co.'s Orange County office, delivered recently to a regional advisory board for the Resolution Trust Corp., the agency charged with managing failed thrifts and liquidating their assets.
“Without available financing, real estate companies and private investors interested in (failed thrift) assets simply have their hands tied,” he said.
“The recent thrift industry problems, coupled with the stricter capital requirements for healthy S&Ls;, banks and other commercial lenders, has served to effectively dry up much of the real estate industry’s traditional financing resources, which is the major reason many investors are balking at RTC properties.”
Meyer said that existing RTC policies on seller financing are too restrictive and that the agency should offer incentives to qualified buyers, such as participating loans. Such loans would enhance the RTC’s cash flow as well getting the properties off thrift books.
Much like the automobile industry, which uses seller financing and incentives to help move large volumes of vehicles during sluggish market periods, he suggested that the federal agency needs to create loan packages that attract buyers.