NCUA's Asset Management Assistance Center could have recovered $1.26 million more on real estate properties assumed from the failed Huron River Area Credit Union, according to an audit released by the agency's Office of Inspector General.
The smaller recovery amount is the result of AMAC's decision to liquidate the properties rather than accept a December 2007 bulk bid for 100 properties located in southwest Florida.
The highest bid was for 32% of the remaining balances on the mortgages; actual liquation performance averages 27.3% and is falling, the audit found.
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At the time, AMAC rejected the bid because it estimated it could recover 59% of member value, nearly twice the value of the highest bid. Additionally, AMAC was concerned that many of the properties were located in the same real estate market, and a bulk sale would further drive down home values, hurting both AMAC's real estate portfolio, and real estate loans owned by nearby credit unions.
Additionally, the OIG found that 73% of properties tested lacked proper appraisal documentation, and AMAC had no document appraisal review process for properties valued more than $250,000. AMAC's Division of Asset Recovery estimated the values, because a large number of properties were similar.
"AMAC believes that the cost of obtaining individual appraisals or BPOs for each REO property … outweighs the benefit of the information contained within the appraisals," said the audit, released on March 19.
As reported by Credit Union Times, at the end of 2006 AMAC had fewer than 100 homes in its portfolio. By April 2008, that number had swelled to more than 1,000, thanks to the failures of Norlarco and New Horizons Community credit unions in Colorado and Michigan's Huron River Area CU.
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