Bankruptcy Sale Free of Liens Held by FDIC or RTC.
There is doubt whether a bankruptcy sale free and clear of a lien held by the
RTC or FDIC in corporate or receivership capacity will be effective without
consent of the RTC or FDIC.
If a bankruptcy court order sells free and clear of a lien held by RTC or FDIC
in corporate or receiver capacity, require a recordable release of the lien.
Consent to Foreclosure.
Both the Federal Deposit Insurance Corporation (FDIC) and Resolution Trust
Corporation (RTC) have now issued Statements of Policy on foreclosure. RTC and
FDIC previously asserted a right to consent to the foreclosure of a prior lien
under 12 U.S.C. §1825(b)(2). The current RTC and FDIC policies differ from
their prior positions.
RTC and FDIC Consent.
The new RTC Interim Statement of Policy dated May 7, 1992, and FDIC Statement
of Policy dated July 7, 1992:
Failed Institution Mortgages - RTC and FDIC consent to all previous and future
foreclosures of superior mortgages where RTC or FDIC, in corporate capacity
or receivership capacity, holds an inferior mortgage of a failed depository
institution. You do not need to require consent by RTC or FDIC to a superior
mortgage foreclosure if RTC or FDIC is the owner of a mortgage of a failed institution.
- RTC Ownership: If the RTC owns the land, then it requires notice of the
foreclosure of all superior mortgages to be delivered at least 30 days before
the foreclosure. Notice must state the time, date, place and manner of sale
and name of failed institution. Notice must be sent by certified mail or overnight
courier service. The address for notice is Resolution Trust Corporation, Foreclosure
Consent Notice Clearance Center, 3500 Maple Avenue, Lock Box Number 42, Dallas,
Texas 75219. RTC has 60 days after the notice to respond. If RTC does not
respond, it is deemed to consent. RTC has granted consent if the land is a
single-family residence and the prior mortgage is a FHA, FMHA, HUD owned or
VA loan. Please call our underwriting personnel if the mortgage (other than
a FHA, FMHA, HUD owned, or VA single-family loan) will foreclose title held
- FDIC Ownership: If FDIC owns the land, it automatically consents to all
previous and future foreclosures of superior mortgages where FDIC, in its
corporate capacity or receivership capacity, owns title. You do not need to
require consent by FDIC to a mortgage foreclosure if FDIC owns the title.
- RTC: If RTC sells land and retains subordinate purchase money financing,
it must consent to a foreclosure of a superior lien unless its Deed contains
an express consent to foreclose. If a mortgage is given to RTC where RTC sells
the property, you must require RTC consent to foreclose a superior lien.
- FDIC: FDIC consents to foreclosures of superior mortgages if FDIC retains
subordinate purchase money financing. You do not need to require consent by
FDIC to a superior mortgage foreclosure if FDIC retains purchase money financing.
Prior Statutory (Involuntary) Lien Foreclosure - RTC and FDIC require that
they consent to a foreclosure of a prior statutory (involuntary) lien if they
hold title or an inferior lien (e.g., where they take over a failed savings
and loan). If a superior mechanics' lien, judgment lien, tax lien or other involuntary
lien is foreclosed, you must require RTC or FDIC consent to the foreclosure.
Otherwise, the foreclosure does not extinguish the RTC or FDIC lien or title.
RTC or FDIC Conservator or Subsidiary - RTC and FDIC will not assert right
to consent if the interest is held by RTC or FDIC as conservator or by a subsidiary
of a lender in RTC or FDIC receivership or conservatorship.
Judgment Liens Held by RTC or FDIC - RTC and FDIC policies do not expressly
grant consent to foreclosure of superior mortgages if FDIC or RTC, in corporate
capacity or receivership capacity, holds a judgment lien in favor of a failed
depository institution. You do not need to require consent by RTC or FDIC to
a superior mortgage foreclosure if RTC or FDIC is the owner of a judgment lien
of a failed institution.
State Law - If state law requires notice to RTC or FDIC as holder of a lien,
require compliance with state law.
Retroactive - These policies are retroactive.
- Effect of Consent.
- Consent to foreclosure does not waive redemption rights that state or federal
The RTC and FDIC will not assert a right of redemption in their conservatorship,
receivership, or corporate capacity. You do not need to except to right of redemption
by the RTC or FDIC except to the extent that state law provides for right of
RTC Special Warranty Deeds.
The RTC has agreed to issue Special Warranty Deeds if it sells property. You
should always require a Special Warranty Deed from the RTC.
Statutory (Involuntary) Liens Against Failed Lending Institutions.
RTC and FDIC assert that statutory (involuntary) liens such as judgment liens
against failed institutions do not attach to the institution's property if recorded
after RTC or FDIC becomes receiver. They rely on 12 U.S.C. §1825(b)(2).
We do not rely on this provision. Require a release of all statutory (involuntary)
liens recorded before a deed from RTC or FDIC to a new institution or a third-party
purchaser is recorded. Require a release of all later filed mechanics' liens.
List of Failed Institutions
A list of each bank and savings institution that has been controlled by the
FDIC or RTC is available through the National Legal Department in Houston. If
an inferior lien is held by this institution, you should assume that the FDIC
or RTC owns that lien as of the noted date unless you confirm otherwise with
the successor institution or with FDIC or RTC.
Deed Versus Copy of Purchase and Assumption Agreement.
The RTC or FDIC often transfers the assets of a Failed Institution to a New
Institution by a Purchase and Assumption Agreement.
If the RTC or FDIC offers to record only the Agreement and not a Deed transferring
its title, please call our Underwriting Personnel. Also check for statutory
liens (such as judgment and tax liens) recorded against the Failed Institution
after the recording of the Agreement in your local records.
If the Record Title was vested in XYZ Savings and Loan Association, and
the Deed or other transfer is being executed by XYZ FSB, you should assume that
the RTC transferred the assets of the first institution to a new institution
with a similar name. You should then require recordable documentation (such
as a Master Deed, Appointment as Receiver, and Power of Attorney or Purchase
and Assumption Agreement).