CHAPTER 10. ACQUISITION, MANAGEMENT AND DISPOSITION

10-1. INTRODUCTION. If the mortgagor defaults and the lender and

the mortgagor cannot negotiate a reinstatement plan, the

lender must initiate action to acquire the property. In

addition, if the lender has not already done so, the lender

must determine whether to seek mortgagee-in-possession status

or the appointment of a receiver. The lender must seek one of

these remedies if necessary to assure the proper use of

project funds and the protection of project assets. The

lender must manage the project in accordance with HUD\'s

requirements from the date the lender assumes control of the

project through the date the lender sells the project or the

coinsurance contract is terminated pursuant to Paragraph 11-

21 of this Handbook. The lender may hold the property or

dispose of the property through either competitive bid or a

negotiated sale. Under the coinsurance program, lenders may

not assign defaulted mortgages to HUD or convey title to HUD

in exchange for insurance benefits.

Section 1: Acquisition

10-2. AVAILABLE METHODS OF ACQUISITION. The lender may acquire

title through foreclosure of the mortgage or by accepting the

owner\'s voluntary conveyance - i.e., a deed-in-lieu of

foreclosure. A voluntary conveyance can save a lender

considerable work, legal expenses and receiver\'s fees as well

as avoid long delays in acquiring title. Generally, the

lender should accept a voluntary conveyance only if the owner

has not diverted funds from the project and the lender can

reasonably expect the mortgagor to cooperate and expedite the

conveyance. The lender may accept a deed-in-lieu only if the

following conditions are met:

a\. The mortgage is in default at the time the deed is

executed and delivered.

b\. The credit instrument is cancelled and surrendered to the

mortgagor.

c\. The mortgage is satisfied of record as a part of the

consideration for such conveyance.

d\. The deed from the mortgagor conveys marketable title and

contains a convenant which warrants against the acts of the

grantor and all claiming by, through, or under the grantor.

10-3. NOTIFYING HUD. At specific points in the acquisition

process, the lender must report to HUD. The timing and

content of these reports is discussed below. The lender must

submit two copies of each report to HUD Headquarters\' Office

of Multifamily Housing Management and one copy of each to the

local Field Office\'s Deputy Director for Management. The

lender should mail the Headquarters copies by Certified

Mail - Return Receipt Requested.

5/84

10-1

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

a\. Notice of Election to Acquire and Intent to File a Claim.

Within 75 days after the date of default, the lender must

notify HUD of its election to acquire the property and its

intention to file a claim for insurance benefits. HUD will

consider extending the 75-day deadline if HUD determines

that the lender and the owner are diligently pursuing

reinstatement of the mortgage and that resolution of the

problems that led to the default is feasible. The lender

must submit this notice on Form HUD-92426, Multifamily

Default Status Report.

b\. Notice of Delay in Starting or Completing Acquisition.

The lender must start foreclosure proceedings or actions to

obtain a deed-in-lieu within 30 days after submitting the

notice required by Paragraph 10-3.a. If State laws do not

permit institution of foreclosure within this 30 day

period, the lender must start foreclosure proceedings no

later than 30 days after State law would permit. If the

lender cannot meet these deadlines, the lender must report

this fact to HUD and explain the reason for the delay. The

lender must also report and explain any delays in

completing the acquisition.

c\. Notice of Acquisition. Within 30 days after acquiring

title, the lender must inform HUD of the acquisition.

This report must include the following information:

\(1\) Project name, address and FHA number;

\(2\) Acquisition date and method (i.e., foreclosure, or

deed-in-lieu);

\(3\) Fiscal data, including:

\(a\) unpaid principal balance of the mortgage as of

the date of acquisition;

\(b\) balance in the reserve for replacements and other

reserves and escrows;

\(c\) accrued interest at mortgage rate on the unpaid

principal balance from the date of default to the

acquisition date;

\(d\) appraised values determined in accordance with

Paragraph 10-11 of this Handbook;

\(4\) General condition of project, including:

\(a\) date of last inspection;

\(b\) description of physical condition;

\(c\) number and percentage of units occupied, vacant

and not in rentable condition;

5/84

10-2

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\(5\) Description of how the project will be managed,

including name and address of management agent and

management information required by Paragraph 4-3 of

this Handbook; and

\(6\) Description of plans for selling the project.

10-4. ACCOUNTING FOR ACQUISITION COSTS. If the lender submits a

claim for insurance benefits, the lender will be required to

submit copies of invoices and ledger records for all costs

incurred in acquiring the property. Hence, the lender must:

\(a\) retain receipts or paid invoices, showing check number

and date paid, as costs are incurred; and

\(b\) account for costs in such a way that the lender can

easily produce the information required by Paragraph 11-11

of this Handbook. Acquisition costs include reasonable

attorney\'s fees, foreclosure costs, title policy, surveys,

taxes on deeds, and recording fees.

Section 2: Interim Management

10-5. GENERAL. The Mortgagee\'s Certificate requires the lender to

comply with HUD\'s requirements for project operation and

management from the time the lender obtains control of the

project as mortgagee-in-possession or owner until the earlier

of the date the lender sells the project, files a claim, or

the contract of insurance is terminated as provided in

Paragraph 11-21 of this Handbook.

10-6. SECURING COMPETENT MANAGEMENT. The lender must assure that

the project is managed by a competent management agent. The

lender must require the agent to submit the information

required in Paragraph 4-3 of this Handbook, and the lender

must comply with the review and 2530 clearance procedures in

Paragraph 4-4. Until the lender has obtained 2530 clearance

for the proposed management agent, it may not execute a

management contract of more than 60 days duration. To

expedite the previous participation clearance process, the

lender should submit the Form HUD-2530 before actually

acquiring title or control of the project.

a\. Agent Selection. If the lender wants to self-manage the

project, the lender must obtain approval from the HUD Field

Office, just as a new owner-manager would need to do. The

lender may retain the existing management agent if the

lender concludes that the agent did not cause the default

and that the agent can effectively manage the project.

b\. Management Fees. Fees paid for interim management

services must meet the criteria for reasonableness

established in Chapter 4. Fees paid to a management firm

which has an identity-of-interest with the lender may not

exceed fees paid for the management of comparable projects

in the same market area.

5/84

10-3

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

c\. Management Agreements. Any management agreement executed

by the lender and its management agent must bind the agent

to comply with the requirements of this Section and HUD\'s

administrative procedures.

10-7. ACCOUNTING AND RECORDKEEPING. The lender and its agent

must comply with the accounting and recordkeeping requirements

of Paragraphs 3-2 and 3-3 of this Handbook.

a\. Project Funds. The lender must deposit in the name of the

project all rents and other income collected from the

operation of the project. Project funds may not be

commingled with those of other projects or with other

funds of the lender.

b\. Lender Advances. If the lender advances funds for escrow

items, repairs or other expenses, the lender must not pass

these funds through the project account. The lender must

disburse such advances directly to the payee and must

maintain a separate ledger for these expenses. This

separation of accounts will facilitate the preparation of

the claims forms required by Chapter 11.

c\. Documentation. To claim insurance benefits, a lender will

need to submit evidence of payment for all costs incurred

in operating or repairing the project. Hence, the lender

must: (1) retain receipts or paid invoices, showing check

number and date paid as costs are incurred; and (2) account

for all costs in such a way that the lender can easily

produce the information required by Paragraph 11-10 of this

Handbook.

10-8. USE OF FUNDS. The lender must comply with Chapter 3,

Section 3\'s requirements on use of project funds. Since the

project is in default, distributions are not permitted.

10-9. REPORTING ON PROJECT OPERATIONS. The lender must require

the management agent or the project manager, if the lender\'s

staff is managing the project, to submit monthly accounting

reports on the project\'s operations. The management agent

should prepare these reports according to the instructions in

Paragraph 3-6.b. of this Handbook. However, to avoid

un-necessary transcribing of information when preparing a

claim, the management agent may use Form HUD-2744C,

Mortgagee\'s Report of Project Disbursements, (shown in

Appendix 31c) as a substitute for the Schedule of

Disbursements, (Form HUD-93480), that is discussed in

Chapter 3. The lender must review these reports and use

them to monitor the management agent\'s compliance with

Paragraph 10-7\'s and 10-8\'s requirements. HUD reserves

the right to audit the lender\'s and project\'s records or

to require the lender to submit copies of these monthly

reports.

10-10. DEVELOPING A MANAGEMENT STRATEGY. The lender must develop

a marketing and repair strategy that is consistent with its

disposition plans and the limitations noted below. To

maximize income and minimize any claim, the lender must

aggressively collect rents on all occupied units; assure

5/84

10-4

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

that operating expenses are reasonable; market units that are

in rentable condition; and, as cost effective, repair or

improve vacant units to make them marketable.

a\. Repairs and Maintenance. The lender may make repairs up to

a cumulative average of \$500 per unit and complete routine

maintenance without prior HUD approval. The lender must

obtain the HUD Field Office\'s written approval before

making any repairs or replacements that will exceed a

cumulative average of \$500 per unit. The lender\'s request

for HUD approval must include:

\(1\) An explanation of why the repair is needed (e.g., to

meet local codes or HUD Minimum Property Standards;

tenant safety; routine replacement; to improve

occupancy or increase potential sales price); and

\(2\) A description of the proposed repairs, including a

work write-up, cost estimates and a schedule for

completion.

b\. Rents. If the project has a subsidy contract, the lender

must contact the HUD Field Office to determine what rents

can be charged. For unsubsidized units the lender must

charge market rent unless the HUD Field Office authorizes

the lender to collect a lower amount. HUD will approve the

lender\'s request to charge less than market rents if the

lender demonstrates to HUD\'s satisfaction that such lower

rents will increase occupancy and total rent collections.

c\. Special Note on Subsidized Projects. If the project has a

subsidy contract, the lender must check with the HUD Field

Office to determine if there are any other special

requirements relating to project operations, management and

repairs.

Section 3. Disposition

10-11. REQUIRED APPRAISALS. Within 30 days after acquiring

marketable title to the property, the lender must obtain two

appraisals of the property. The appraisals must be performed

by independent appraisers selected from a panel of fee

appraisers approved by HUD. The appraisals must reflect the

market value of the property as of the date of acquisition,

for its highest and best use. The appraisals must also

reflect whatever financing the lender intends to make

available in conjunction with the sale of the property. The

appraisers may use Form HUD-92264, Property Income Analysis

and Appraisal, or their own form or format for preparing the

required appraisals. Appraisal fees may not exceed those

customarily paid for appraisals of projects of similar type

and size in the market area where the project is located. If

the lender subsequently files a claim for insurance benefits,

the lender must include complete copies of both appraisals.

5/84

10-5

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

10-12. METHODS OF DISPOSITION. The lender may dispose of the

property through either a competitive bid procedure or a

negotiated sale. The lender should use the disposition method

it believes will minimize its coinsurance loss and claim for

insurance benefits.

a\. HUD will consider a sale to be by competitive bid if the

lender complies with all the requirements listed in

Paragraph 10-15 and the lender executes the Certification

for Sale by Competitive Bid shown in Appendix 32. If the

lender does not comply with the prescribed competitive bid

procedures or does not execute this Certification, HUD

will consider the disposition to be a negotiated sale in

computing insurance benefits.

b\. If the lender disposes of the project through a negotiated

sale, HUD will use the higher of the two appraised values

determined in accordance with Paragraph 10-11 when

computing net sales proceeds in the calculation of

insurance benefits. If the lender disposes of the project

through a competitive bid procedure, HUD will use the

sales price, even though it may be lower than the higher

of the two appraised values.

10-13. SPECIAL REQUIREMENTS FOR PROJECTS SOLD WITH COINSURED

FINANCING OR WITH A SUBSIDY CONTRACT. If the lender offers

coinsured financing, or if the project has a subsidy contract

with HUD and that contract will continue after the sale, the

sales contract must require the prospective buyer to comply

with the applicable HUD coinsurance and/or subsidy program

requirements. All principals of the purchaser entity must

receive Previous Participation Clearance before the lender

consummates the sale. Such transactions are subject to the

following additional requirements.

a\. Restricted Purchasers. The following persons and entities

may not bid on, purchase, or participate in the purchase

of the project:

\(1\) Temporarily suspended or debarred individuals or

firms;

\(2\) HUD employees; and

\(3\) Members of Congress.

b\. Coinsured Projects. The prospective purchaser must

satisfactorily complete all of the coinsurance loan

application requirements set forth in HUD Handbook 4566.1.

The lender must process and underwrite the loan according

to the requirements of that Handbook. Prior to issuing a

firm commitment, the lender must submit the loan

application to HUD\'s Office of Insured Multifamily Housing

Development for review and approval as required by that

Handbook.

c\. Subsidized Projects. The lender must consult with HUD

Headquarters\' Office of Multifamily Housing Management to

determine if HUD statutes, regulations or administrative

procedures impose any special requirements on the

disposition or operation of the project.

5/84

10-6

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

10-14. SPECIAL REQUIREMENTS IF THE BUYER HAS AN IDENTITY-OF-INTEREST

WITH THE LENDER. If the prospective buyer has an

indentity-of-interest with the lender, as defined in

Paragraph 10-14.a., and the lender intends to file a claim,

the lender must follow the requirements in Paragraph 10-14.b.

These requirements apply to both negotiated and competitive

bid sales.

a\. Definition of Identity-of-Interest. HUD construes an

identity-of-interest to exist between the purchaser

and the lender/seller when (1) the proposed purchaser;

or (2) any officer or director of the proposed

purchaser; or (3) any person who directly or

indirectly controls 10 percent or more of the

purchaser\'s voting rights or or directly or indirectly

owns 10 percent or more of the purchaser; is also (1)

an officer or director of the lender/seller; or (2) a

person who directly or indirectly controls 10 percent

or more of the lender/seller\'s voting rights or

directly or indirectly owns 10 percent or more of the

lender/seller. For purposes of this definition, the

term \"person\" includes any individual, partnership,

corporation, or other business entity. Any ownership,

control or interest held or possessed by a person\'s

spouse, parent, child, grandchild, brother or sister

is attributed to that person.

b\. Requirements for HUD Approval of Identity-of-Interest

Sales. The lender must include in any bid acceptance

notice or sales contract a clause making the sale

contingent upon HUD\'s approval, unless the lender has

notified HUD that it will not file a claim for insurance

benefits. Before consummating an identity-of-interest

sale, the lender must obtain the approval of the Office of

Multifamily Housing Management in HUD Headquarters. The

lender\'s request must include the information listed in

Paragraph 10-14.b.(1) or 1014.b.(2) below. Paragraph b.

\(1\) relates to negotiated sales; paragraph b.(2) relates

to sales by competitive bid.

\(1\) Negotiated Sale:

\(a\) copies of the two required appraisals;

\(b\) name of the prospective buyer and description

of the identity-of-interest relationship;

\(c\) proposed or contract sales price;

\(d\) lender\'s estimate of public interest in

the project;

\(e\) explanation of why the lender chose not

to sell by competitive bid; and

\(f\) explanation of how use of a negotiated sale

would benefit HUD and the lender.

5/84

10-7

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\(2\) Competitive Bid Sale:

\(a\) items (a) and (b) above;

\(b\) certified copies of advertising;

\(c\) complete Prospectus and Bid Kit;

\(d\) the control log required by Paragraph 10-15.e.(9);

and

\(e\) explanation of why any higher bids were

rejected.

10-15. SALE BY COMPETITIVE BID. If the lender chooses this

disposition method, the lender must comply with each of the

requirements in this Paragraph. If the lender fails to meet

any of these requirements, HUD will consider the disposition

to be a negotiated sale.

a\. Prepare a Prospectus. The lender must prepare a Prospectus

which describes the property and summarizes the terms and

conditions of the sale. The Prospectus must include, at a

minimum, the information listed in Exhibit 10-1.

b\. Prepare a Bid Kit. The lender must also prepare a Bid Kit

which contains, at a minimum, the items listed in Exhibit

10-2. The Bid Kit\'s instructions for submitting bids must:

\(1\) explain the lender\'s earnest money deposit

requirements.

\(2\) specify the date and time by which the lender must

receive the bids;

\(3\) state the number of days for which bids must be

continuing offers; and

\(4\) state that bidders may not withdraw or modify their

bids after the submission deadline.

c\. Publicize the Sale. The lender/seller must take the

following steps to make potential bidders aware of the

availability of the property and to announce the sale:

\(1\) Newspaper Advertising. The lender must advertise the

sale in the city or town where the project is located,

even though this may require using a weekly

publication of limited circulation. The lender must

also advertise in the major metropolitan newspapers in

the region in which the property is located. If the

appraised value of the property is \$1,000,000 or more,

the lender must also advertise the sale in at least

one newspaper of national circulation. (HUD

advertises such sales in the Financial Section of the

Sunday New York Times and in the Friday edition of

Wall Street Journal.) The lender must obtain

and retain copies of each published advertisement.

The lender

5/84

10-8

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

must also keep copies of all invoices for

advertising. The lender must submit such invoices

with any claim for insurance benefits.

\(2\) Solicitation/Outreach. The lender must obtain from

HUD\'s Office of Multifamily Housing Management a copy

of HUD\'s national list of potential bidders. After

publicly advertising the property, the lender must

send the Prospectus to at least 20 firms likely to be

interested in this type of property.

d\. Respond to all Inquiries. The lender must promptly

respond to all requests for information on the sale of the

property and must give copies of the Prospectus and Bid Kit

to anyone who requests them.

e\. Comply with the Following Bid Processing Procedures.

\(1\) Keep all bids sealed and secured until the date and

time for bid opening specified in the Prospectus and

Bid Kit.

\(2\) Not disclose, prior to bid opening, any information

on the number, amount, or source of bids received.

\(3\) Not accept any telegraphic or telephone bids.

\(4\) Conduct a bid opening which is open to the public.

\(5\) Consider only bids that meet the requirements of

paragraph 10-15.f. and any other requirements the

lender included in the Prospectus and Bid Kit.

\(6\) Document the reasons for rejecting any bids.

\(7\) Hold all earnest money deposits until issuing a notice

of acceptance to the highest acceptable bidder.

After executing this notice, return all earnest money

deposits except the deposit for the highest

acceptable bid.

\(8\) Execute a contract of sale and purchase with the

highest acceptable bidder within 60 days after bid

opening.

\(9\) Maintain a bid processing control log. Show the

following information for each inquiry: person\'s or

organization\'s name and address and date of inquiry;

date bid kit sent; date bid received.

\(10\) Prepare a tabulation of bids. For each bid received,

show the bidder\'s name; the amount of the bid; whether

the bid was accepted, returned because it was submitted

after the deadline, or rejected; and the reasons why

any bids were rejected.

5/84

10-9

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

f\. Accept only Bids which Meet the Following Requirements.

Bids must meet all of the requirements listed below.

Bids must:

\(1\) Be fixed in one amount (i.e., not include alternative

amounts).

\(2\) Be unconditional (i.e., not modify the terms of sale

set forth in the Prospectus and Bid Kit).

\(3\) Be responsive to the offering.

\(4\) Be submitted by the deadline specified in the

Prospectus and Bid Kit.

\(5\) Be accompanied by the earnest money deposit specified

in the Prospectus and Bid Kit. Bidders must submit the

deposit in the form of a money order, or certified,

cashier\'s or other banker\'s check payable to the

lender.

\(6\) Specify the amount and type of financing the purchaser

will use to complete the sale.

\(7\) Include the bidder\'s statement as to whether or not

there is an identity-of-interest relationship, as

defined in Paragraph 10-14.a., between the bidder and

the lender/seller and a description of the

relationship, if any.

\(8\) Include the bidder\'s certification that the bidder:

\(a\) has the power to bind the buyer;

\(b\) agrees to all terms of the Prospectus and

Bid Kit; and

\(c\) agrees to furnish and execute all documentation

required to complete the sale.

10-16. RECORDS RETENTION REQUIREMENTS. The lender must maintain

complete documentation on all sales for three years from the

date of the sale. This documentation includes the following:

a\. All Sales:

\(1\) Executed sales contracts

\(2\) Copy of deed conveying the property

\(3\) Settlement sheet

\(4\) Copies of all other documents required for settlement

5/84

10-10

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

b\. Additional Requirements for Competitive Bid Sales:

\(1\) Copies of all advertis1ng

\(2\) Bid Kit

\(3\) Bid processing control log required by Paragraph 10-

15.e.(9)

\(4\) Tabulation of bids required by Paragraph 10-

15.e.(10)

\(5\) Complete copy of highest acceptable bid

10-17. ACCOUNTING FOR DISPOSITION COSTS. To claim insurance

benefits the lender must document all costs incurred in

disposing of the project. Hence, the lender must: (a)

retain receipts or paid invoices showing check number and

date paid as costs are incurred; and (b) account for all

costs in such a way that the lender can easily produce the

information required by paragraph 11-11 of this Handbook.

Disposition costs include:

a\. The cost of the two appraisals required by Paragraph

10-11;

b\. The cost of advertising the property and/or publicizing

the sale (however, the lender may not include any costs

it recovers by charging a fee for the Bid Kit);

c\. Attorney\'s fees for contract preparation and closing;

d\. Closing costs not paid by the purchaser; and

e\. If the disposition is handled by a real estate broker,

a sales commission not to exceed the percentage

customarily paid in the market area for sales of

similar projects.

5/84

10-11

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

EXHIBIT 10-1

INFORMATION THE LENDER MUST INCLUDE IN THE PROSPECTUS

1\. Property Description 2. Inspection of Property and

Project Records

a\. Project name

b\. Project address a. Dates and times property

c\. Date constructed and records will be

d\. Type of project available for inspection

(i.e., walkup, b. Names, addresses and

highrise, garden apts, phone numbers of persons to

town houses) contact to arrange for

e\. Number of buildings inspections

f\. Number of stories

g\. Total units 3. Information on Sale

\(1\) Revenue units

\(2\) Non-revenue units a. Date, time and location of

h\. Land area public bid opening

i\. building area b. Minimum bid price (if any)

j\. Net rentable area c. Earnest money deposit

\(1\) Residential required with bid

\(2\) Commercial d. Description of available

k\. Brief description of construc- financing (if any)

tion(e.g., brick, etc.) e. Where to call or write to

l\. Parking facilities obtain Bid Kit

m\. Tenant services and equip- f. Cost (if any) of Bid Kit

ment included in rent

n\. Current rent schedule 4. Other Information

o\. Gross annual rent potential

p\. Estimated annual expenses a. Zoning

b\. Description of easements,

2\. Occupancy Information covenants or other use

restrictions

a\. Units currently occupied c. Type and duration

b\. Units not rentable of all leases that will

c\. Average occupancy during extend beyond the

past year expected sale date

\(1\) Residential

\(2\) Commercial

d\. Type of subsidy and number

of subsidized units (if

any)

5/84

10-12

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

EXHIBIT 10-2

ITEMS THE LENDER MUST INCLUDE IN THE BID KIT

1\. All public offerings

a\. Prospectus

b\. Instructions for submitting Bids

c\. Contract of Sale and Purchase or other Bid Form

d\. Bidder\'s certification required by Paragraph 10-15.f.(7)

e\. Personal Financial and Credit Statement (Form FHA-24l7) or

similar form

f\. Description of other items required by the lender to

constitute a complete and responsive bid

2\. Additional items for sales of projects offered

with coinsured financing

a\. Previous Participation Certification (Form HUD-2530)

b\. List of applicable regulations and Handbook requirements

c\. Regulatory agreement

d\. Sample mortgage or deed of trust

e\. Sample mortgage or deed of trust note

f\. Conditional Commitment (in the form prescribed in HUD

Handbook 4566.1)

g\. List of all requirements for coinsured financing to be

submitted prior to closing (See HUD Handbook 4566.1)

3\. Additional items for sales of projects for which a subsidy

contract is in force at the time of sale

a\. Previous Participation Certification (Form HUD-2530)

b\. Copy of current subsidy contract

c\. List of applicable HUD regulations

5/84

10-13

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_