[Federal Register Volume 60, Number 135 (Friday, July 14, 1995)]
[Notices]
[Pages 36336-36338]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-17284]
[[Page 36335]]
_______________________________________________________________________
Part II
Department of Housing and Urban Development
_______________________________________________________________________
Office of the Assistant Secretary for Housing--Federal Housing
Commissioner
_______________________________________________________________________
Notice of Sale of HUD-Held Mutifamily Mortgage Loans; Notice
Federal Register / Vol. 60, No. 135 / Friday, July 14, 1995 / Notices
[[Page 36336]]
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Office of the Assistant Secretary for Housing--Federal Housing
Commissioner
[Docket No. FR-3931-N-01]
Notice of Sale of HUD-Held Multifamily Mortgage Loans
AGENCY: Office of the Assistant Secretary for Housing--Federal Housing
Commissioner, HUD.
ACTION: Notice of sale of mortgage loans.
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SUMMARY: This notice announces the Department's intention to sell
certain unsubsidized mortgage loans, without Federal Housing
Administration (FHA) insurance, in a competitive auction. This notice
also describes the bidding process for these loans. This notice ensures
compliance with the Department's mortgage sale regulations.
DATES: Bid Packages are currently available.
ADDRESSES: Interested parties may request a Bid Package by contacting
an FHA sales representative at 1-800-877-4814. When the information is
available, it will be forwarded by regular mail. Parties may make
special arrangements to receive the information through expedited
delivery.
Asset review files for all the mortgage loans included in this sale
are currently available to prospective bidders for due diligence at the
Due Diligence Facility located at 733 15th Street NW., Suite 800,
Washington, DC 20005. The facility will be open to the public between
the hours of 9 a.m. and 6 p.m., Monday through Friday. Interested
parties wanting access to the facility may contact Mr. Wayne T.
Thornton, Williams, Adley & Company, in writing at the above address,
or by telephone at (202) 639-9700, to schedule access time. Asset
review files may also be ordered and sent to prospective bidders in the
manner described in the Bid Package.
FOR FURTHER INFORMATION CONTACT: William Richbourg, Office of the
Housing--FHA Comptroller, Management Control Staff, HFFM, Room 5144,
Department of Housing and Urban Development, 451 Seventh Street SW.,
Washington, DC 20410; telephone (202) 401-0577. Hearing- or speech-
impaired individuals may call (202) 708-4594 (TDD). These are not toll-
free numbers.
SUPPLEMENTARY INFORMATION: In accordance with the final rule published
in the Federal Register on September 22, 1994 (59 FR 48726) (Mortgage
Sale Regulations), and specifically with 24 CFR 290.202 of that rule
(59 FR 48731), the Department announces its intention to sell certain
unsubsidized mortgage loans (Mortgage Loans). The Mortgage Loans
comprising this auction encumber properties located throughout the
United States (FHA National Mortgage Auction). A final listing of the
specific properties involved in the FHA National Mortgage Auction will
be included in the Bid Package. The Mortgage Loans will be sold without
FHA insurance. The Department will offer interested parties an
opportunity to bid competitively on the Mortgage Loans. Bids may be
offered for one or all of the Mortgage Loans, as well as for any
combination of Mortgage Loans. More particularly, a bidder may bid on
as many individual Mortgage Loans as the bidder chooses. Further, a
bidder may condition acceptance of its bids for individual Mortgage
Loans upon being the successful bidder of Mortgage Loans with a minimum
aggregate unpaid principal balance. The Department will accept those
bids that optimize the gross proceeds from the sale.
The Bidding Process
The Department will describe in detail the procedure for
participating in the National Mortgage Auction in a Bid Package, which
will include a standardized nonnegotiable loan sale agreement (Loan
Sale Agreement), as well as certain information concerning each of the
Mortgage Loans, such as the unpaid principal balance and interest rate.
The Department will distribute the Bid Package for a period of
approximately 6 weeks prior to the date that bids are due. Bid Packages
are currently available. Interested parties may request a Bid Package
by contacting an FHA sales representative as specified in the ADDRESSES
section, above, of this notice.
Bidders must include a 5 percent initial deposit with their bids.
More specifically, if a bidder submits multiple bids, the initial
deposit will be limited to 5 percent of the bidder's single largest bid
amount. Similarly, the initial deposit for a bidder who has created a
pool or a number of pools is limited to 5 percent of the single largest
bid amount of the bidder's pool bids. The successful bidders will be
notified within 2 business days (Award Date) after the Bid Date. An
additional deposit is required from each successful bidder within 2
business days after the Award Date. This additional deposit when added
to the initial deposit must total 10 percent of the bidder's successful
bids. More specifically, if a bidder submits multiple individual bids,
the additional deposit when added to the initial deposit must total 10
percent of the aggregate unpaid principal of all of the bidder's
successful bids. Similarly, if a bidder submits a pool bid or multiple
pool bids, the additional deposit must total 10 percent of the
aggregate unpaid principal of all of the bidder's successful pool bids.
The Department will assign its interest in a Mortgage Loan to a
successful bidder no more than 45 days after the Award Date. If the
successful bidder fails to abide by the terms of the Loan Sale
Agreement, including paying the Department any remaining sums due
pursuant to the Loan Sale Agreement and closing within the time period
provided by the Loan Sale Agreement, the Department shall retain and
accept as liquidated damages the initial and additional deposit (plus
interest) from the successful bidder.
These are the essential terms of sale. The Loan Sale Agreement,
which is included in the Bid Package, will provide additional details.
TO ENSURE A COMPETITIVE BIDDING PROCESS, THE TERMS OF SALE ARE NOT
SUBJECT TO NEGOTIATION.
Due Diligence Facility
During the 6 week distribution period for Bid Packages, a due
diligence facility will be available to interested parties, at which
the Department will provide information such as environmental and title
reports and market data. The address of the facility is specified in
the ADDRESSES section, above. The Department anticipates that
information will be available in both electronic and hard copy forms.
The Department reserves the right to charge a reasonable fee to recover
its costs in duplicating and forwarding any information requested by an
interested party, as well as an access fee to the due diligence
facility, which will be credited to the purchase of any asset review
files.
Mortgage Sale Policy
The Department reserves the right to add or delete Mortgage Loans
to the FHA National Mortgage Auction at any time prior to the Bid Date.
The Department also reserves the right to reject any and all bids,
without prejudice to the Department's right to include any Mortgage
Loans in a later sale.
This notice is to ensure compliance with the Mortgage Sale
Regulations. These regulations were promulgated in consideration of the
settlement that the Department entered into in Walker v. Kemp, No. C 87
2628 RFP (N.D. Cal.). In settling the matter, the Department agreed,
with regard to specific mortgages, to consider, prior to the sale
[[Page 36337]]
of such mortgages, certain factors pertaining to the protection of
tenant interests in subsidized projects with HUD-held mortgage loans.
By following the Mortgage Sale Regulations, the Department is in
compliance with the terms of the settlement.
This is a sale of unsubsidized mortgage loans. Therefore, the
Department has determined that pursuant to the Mortgage Sale
Regulations, the Mortgage Loans may be sold without FHA insurance. At
this time, the Department knows of no Mortgage Loans securing projects
(1) for which foreclosure appears unavoidable, and (2) in which reside
very low-income tenants who are not receiving housing assistance and
would be likely to pay rent in excess of 30 percent of their adjusted
monthly income if HUD sold the mortgage (24 CFR 290.202, see 59 FR
48731, September 22, 1994). If the Department determines that there are
any such Mortgage Loans, they will be removed from this sale.
Mortgage Loan Sale Procedure
The Department selected a competitive auction as the method to sell
the Mortgage Loans primarily to satisfy the Mortgage Sale Regulations.
These regulations require that, except under certain limited
circumstances, mortgages must be sold on a competitive basis (24 CFR
290.200(a), see 59 FR 48730, September 22, 1994). This method of sale
optimizes the Department's return on the sale of these Mortgage Loans,
affords the greatest opportunity for all interested parties to bid on
the Mortgage Loans, and provides the quickest and most efficient
vehicle for the Department to dispose of the Mortgage Loans.
At one time, the Department considered and discussed with industry
participants a loan sale procedure that afforded the borrowers the
opportunity to acquire their Mortgage Loans on a noncompetitive basis
prior to offering the Mortgage Loans for sale to all other interested
parties (Borrower Settlement Option). For the reason set forth above,
however, the Department decided to dispose of these Mortgage Loans
through a competitive auction.
Application Of Replacement Reserve To Indebtedness
If a Mortgage Loan is in arrears at the time of closing, the
Department will apply the funds in the replacement reserve account to
the amount due the Department under the Mortgage Loan and, thereafter,
the balance in the replacement reserve account, if any, will be
transferred to the mortgagor. If a Mortgage Loan is current at the time
of closing, the funds in the replacement reserve account will be
returned to the mortgagor in accordance with such terms and conditions
as may be established by the Department.
Timely Bids and Deposits
Each bidder assumes all risks of loss relating to its failure to
deliver, or cause to be delivered, on a timely basis and in the manner
specified by the Department, each bid form, earnest money deposit and
Loan Sale Agreement required to be submitted by the bidder.
Ties for High Bidder
In the event there is a tie for a high bid, the Department, through
its financial advisor, will contact the parties with the tie bid and
afford each of them an opportunity to offer a best and final bid. The
successful bidder will be the one with the highest bid. If a tie
continues after the best and final offers are submitted or the bidders
do not respond, or do not respond within the time period established by
the Department, the successful bidder will be determined by lottery.
Notwithstanding the above, the Department reserves the right to
withdraw any Mortgage Loan(s) subject to a tie bid.
Status of Mortgage Loans
As of May 31, 1995, none of the Mortgage Loans were delinquent by
an amount of more than one monthly payment. One or more of the Mortgage
Loans, however, may become delinquent and one or more of the Mortgage
Loans that are delinquent may become performing, on or before the date
that title to the Mortgage Loan(s) is transferred to the successful
bidder. Mortgage Loans that are delinquent on May 31, 1995 may become
more delinquent prior to closing.
Ineligible Bidders
The following individuals and entities (either alone or in
combination with others) are ineligible to bid on any one or
combination of the Mortgage Loans included in the FHA National Mortgage
Auction:
(1) Any employee of the Department;
(2) Any individual or entity that is debarred from doing business
with the Department pursuant to 24 CFR part 24;
(3) Any contractor, subcontractor and/or consultant (including any
agent of the foregoing) who performed services for, or on behalf of,
the Department in connection with the FHA National Mortgage;
(4) Any individual that was a principal and/or employee of any
entity or individual described in paragraph (3) above at any time
during which the entity or individual performed services for, or on
behalf of, the Department in connection with the FHA National Mortgage.
(5) Any entity or individual that served as a loan servicer or
performed other services for, or on behalf of the Department, with
respect to any of the mortgage loans included in the FHA National
Mortgage Auction at any time during the two-year period prior to August
16, 1995; and
(6) Any individual that was a principal and/or employee of any
entity or individual described in paragraph (5) above at any time
during the two-year period prior to August 16, 1995, except, however,
any entity or individual described in paragraphs (5) and (6) shall be
permitted (subject to the terms and conditions of any agreement the
entity or individual has previously entered into in connection with the
FHA National Mortgage Auction and/or other agreements entered into
with, or on behalf of, the Department), to:
(i) Perform services as a consultant and/or advisor to any bidder
who is eligible to bid at the FHA National Mortgage Auction, provided
that such services do not involve the use of any materials or
information not otherwise available to the general public that were
produced or developed for, or on behalf of, the Department; and
(ii) Bid on any of the Mortgage Loans included in the FHA National
Mortgage Auction that were not serviced by such entity or individual
described in paragraphs (5) or (6) at any time during the two-year
period prior to August 16, 1995.
Freedom of Information Requests
HUD has approved a policy for responding to Freedom of Information
Act requests for sales information on HUD's Multifamily Mortgage Loan
Sales. The purpose of this policy is to clarify for the public and
potential purchasers of HUD-held multifamily project mortgages the
types of sales information that will be disclosed under the
Department's HUD-held multifamily mortgage sales program and to strike
a balance between HUD's policy of disclosing as much information as
possible to the public and the specific mandates of the Multifamily
Housing Property Disposition Reform Act of 1994 to reduce losses to the
FHA fund through mortgage sales. The Department has determined that
Freedom of Information Act requests for certain types of sales
information after the date of the auction but prior to the Department's
closing of the sales would
[[Page 36338]]
have an adverse effect both on the commercial position of the
prospective purchasers and on the integrity of the Department's auction
process. In considering HUD's statutory obligations, HUD has decided
that the sales information to be disclosed following the settlement of
all sales transactions will consist of: (1) The names and addresses of
the parties requesting bidder information packages; (2) the identities
of the purchasers; and (3) the purchase price.
Scope of Notice
This notice applies to this FHA National Mortgage Auction, and does
not establish the Department's policy for the sale of other mortgage
loans.
Dated: July 10, 1995.
Jeanne K. Engel,
General Deputy Assistant Secretary for Housing--Federal Housing
Commissioner.
[FR Doc. 95-17284 Filed 7-13-95; 8:45 am]
BILLING CODE 4210-27-P
