Resolution Trust Shaping Up Its Costa Mesa Office

The federal agency charged with cleaning up the savings and loan disaster has been patching up its own West Coast office, which has been mired in bureaucratic red tape and inaction since it opened 19 months ago.

The Resolution Trust Corp. is beefing up its coastal consolidated office in Costa Mesa, straightening out its operating procedures and starting to show improved results in disposing of loans, securities, real estate and other assets from failed thrifts.

The coastal office sold $8.1 billion in loans, securities and real estate from failed California thrifts during the first nine months of the year, said RTC officials who gathered Wednesday in Los Angeles for an update on the agency’s efforts in the western region.

The sales figure exceeds a $5.6-billion goal set for the fast-growing coastal office, but that goal seemed unattainable for much of the period. Most of the sales--$6.6 billion--came in August and September, RTC officials said.

“Things are beginning to move,” said Frederick D. Smith, deputy director in charge of the agency’s sales center in Costa Mesa.

Even in the face of California’s sagging real estate market, the West Coast office projects sales of $500 million worth of real estate in the next 12 months as part of its sales effort, Smith said.

“Despite the recession, the California real estate market is still perceived as a strong market,” said Sherwin Koopmans, director of RTC’s western region office in Denver. The regional headquarters also oversees consolidated offices in Denver and Phoenix.

Overall, the coastal office has a remaining inventory of $21.1 billion in assets from 55 failed California thrifts. Six of those S&Ls; are still open and are being operated by RTC agents because the agency does not have sufficient funds to close them.

More thrift failures are expected, and the coastal office, which will move its headquarters to Newport Beach by the year’s end, is getting ready.

The office has 359 employees and 210 more jobs to fill. More than 6,000 applicants, mainly from thrifts and real estate companies, have applied for the positions, said Joseph G. Honescko, director of the coastal office. Honescko, who was hired in mid-August, is the fifth leader of the coastal office since it opened 19 months ago.

In selling assets, the coastal office is recouping 81% to 101% of the designated value, Smith said. He acknowledged, though, that there have been some exceptions. A $100-million package of bad auto loans, for instance, sold for 12 cents on the dollar.

Most of the assets held by the coastal office are performing loans on homes and apartment buildings. The RTC is using those loans in a new program in which the mortgages are packaged and sold to underwriters, who use the pool to back securities that they, in turn, sell to investors.

The agency has sold $5.1 billion in such mortgage-backed securities, relying primarily on loans at failed California thrifts. Nearly all of the mortgages were at Columbia Savings & Loan, Santa Barbara Savings & Loan, FarWest Savings & Loan and other failed thrifts in the state.

TONY BARNARD / Los Angeles Times