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Cityscape: Volume 16 Number 1 | Article 20


The goal of Cityscape is to bring high-quality original research on housing and community development issues to scholars, government officials, and practitioners. Cityscape is open to all relevant disciplines, including architecture, consumer research, demography, economics, engineering, ethnography, finance, geography, law, planning, political science, public policy, regional science, sociology, statistics, and urban studies.

Cityscape is published three times a year by the Office of Policy Development and Research (PD&R) of the U.S. Department of Housing and Urban Development.

Housing, Contexts, and the Well-Being of Children and Youth

Volume 16 Number 1

Mark D. Shroder

Michelle P. Matuga

Recovery Ratios in the Savings and Loan Crisis: Evidence From the Resolution Trust Corporation’s Sale of Bank-Owned Real Estate

Daniel Bergstresser
Brandeis University

Richard Peiser
Harvard Graduate School of Design

Policy Briefs
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The sale of bank-owned real estate (REO, or Real Estate Owned) by the Resolution Trust Corporation (RTC) following the savings and loan crisis in the late 1980s presents lessons for sales of REO following the Great Recession of 2007 to 2009. This article examines the sales counts and recovery ratios by property type and by census division in the country for all REO properties sold by the RTC, which assumed control of failed institutions and liquidated assets during the period 1989 to 2005. Recovery ratios (asset sales prices divided by the gross loan balance at foreclosure) reached a nadir of 46 percent in 1990 and 1991. It then quickly stabilized to the mid-70-percent range. We find that sales of single-family residential, industrial, and retail properties enjoyed higher recovery ratios than sales of raw land and office buildings. Nearly one-half of the sales were in the West South Central census division of the United States. Although we are cautious about overstating the results, this study offers support for policies that promote more rapid liquidation of REO portfolios as a means of raising recovery ratios, thereby reducing losses from the sale of REO properties.

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