[Federal Register Volume 60, Number 9 (Friday, January 13, 1995)]
[Notices]
[Pages 3255-3256]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-957]



-----------------------------------------------------------------------


DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Office of the Assistant Secretary for Housing-Federal Housing 
Commissioner
[Docket No. N-95-3866; FR-3850-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.

-----------------------------------------------------------------------

SUMMARY: This notice announces the Department's intention to sell 
nonperforming, 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 will be available in February 1995.

ADDRESSES: Interested parties may request a Bid Package by sending a 
written notice to Hamilton Securities Group, Inc., 1410 Q Street, NW., 
Washington, DC 20009, Attention: Mr. Richard Karsch. When the 
information is available, it will be forwarded by regular mail. Parties 
may make special arrangements to receive the information through the 
post office's next- or second-day services.
    A due diligence facility will be 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 must contact Mr. Ron 
Hughes at (202) 639-9700, to schedule access time.

FOR FURTHER INFORMATION CONTACT:
William Richbourg, Office of the Housing-FHA Comptroller, 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 Sec. 290.202 of that rule (59 
FR 48731), the Department announces its intention to sell 
nonperforming, unsubsidized mortgage loans (Mortgage Loans). The first 
of these Mortgage Loans encumber properties located in the southeastern 
United States (Southeast Mortgage Sale). A final listing of the 
specific properties involved in the Southeast Mortgage Sale will be 
included in the Bid Package. The Mortgage Loans will be sold without 
Federal Housing Administration (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. The Department 
will accept those bids that optimize the gross proceeds from the sale.

The Bidding Process

    The Department will describe the procedure for participating in the 
Southeast Mortgage Sale in a Bid Package, which will include a 
standardized nonnegotiable loan sale agreement (Sales Agreement), as 
well as pertinent 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 6 weeks prior to the 
date that bids are due (Bid Date). Bid Packages will be available in 
February 1995. Interested parties may request a Bid Package by sending 
a written notice to the address specified in the Addresses section, 
above, of this notice.
    Bidders must include a 5 percent deposit with their bids. If a 
bidder submits multiple bids, the deposit will be limited to 5 percent 
of the bidder's largest bid amount. The successful bidders will be 
notified within 3 business days after the Bid Date (Award Date). An 
additional 5 percent deposit is required from each successful bidder 
within 2 business days after the Award Date. If a bidder submits 
multiple bids, the additional deposit will be limited to 5 percent of 
the bidder's largest bid amount. The Department will assign its 
interest in a Mortgage Loan to a successful bidder 60 days after the 
Award Date. If the successful bidder fails to abide by the terms of the 
Sales Agreement, including paying the Department any remaining sums due 
pursuant to the Sales Agreement and closing within the time period 
provided by the Sales Agreement, the Department shall retain and accept 
as liquidated damages any deposit from the successful bidder.

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 facility will be located at the address 
specified in the ADDRESSES section, above, of this notice. 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.

Mortgage Sale Policy

    The Department reserves the right to add or delete Mortgage Loans 
to the Southeast Mortgage Sale at any time prior to the sale. 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.
    Persons or entities that are debarred from doing business with the 
Department, pursuant to 24 CFR part 24, may not participate in this 
sale.
    These are the essential terms of sale; the Sales Agreement will 
provide additional details. To ensure a competitive bidding process, 
the terms of sale are not subject to negotiation.
    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 of 
such mortgages, certain factors pertaining to the protection of tenant 
interests in subsidized projects with [[Page 3256]] 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 nonperforming, unsubsidized mortgage loans. 
Therefore, the Department has determined that pursuant to the Mortgage 
Sale Regulations, these 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 (59 FR 48731, Sec. 290.202). 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 (59 FR 
48730, Sec. 290.200(a)). 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.
    The Department previously 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

    Before a Mortgage Loan is assigned to a successful bidder, the 
Department will apply the funds in the replacement reserve account to 
the amount due the Department under the mortgage. The Department 
decided to take this action because it is selling the Mortgage Loans 
without insurance, and thus the regulatory agreements terminate when 
the Department assigns the Mortgage Loans to the successful bidders.

Scope of Notice

    This notice applies to the Southeast Mortgage Sale, and odes not 
establish the Department's policy for the sale of other mortgage loans.

    Dated: January 9, 1995.
Nicolas P. Retsinas,
Assistant Secretary for Housing-Federal Housing Commissioner.
[FR Doc. 95-957 Filed 1-12-95; 8:45 am]
BILLING CODE 4210-27-M