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Bidder Qualification Application

Frequently Asked Questions

Prospective Bidders should refer to the Application Guidance and Instructions (the “Guidance 

and Instructions”) for definitions of any capitalized terms used in these Frequently Asked 

Questions without separate definition.

Frequently Asked Questions

1. Question: 

Section 1.1: If the Private Owner has not yet been determined, can this be left as “To be determined” for purposes of 

this form? 

Answer: 

If the Private Owner has not been determined or formed at the time of the submission, it would be reasonable to note 

“not yet determined” and provide that information at a later date if requested. The Prospective Bidder must provide 

the information for the Lead Bidder and Investors (e.g., likely stakeholders or investors in, providers of finance to, 

managers of and servicers for, the Private Owner), and the Investors' expected funding contribution percentages, and 

the Servicer, Asset Manager (if different from the Servicer), Key Decision Makers and Key Asset Managers, 

however, at the time of submission. This section is for informational purposes and will not impact scoring.

2. Question: 

Question 1.3.13: If the Prospective Bidder is a pass-through entity for U.S. tax purposes, but the ultimate K-1 

recipients are subject to U.S. tax, how should responses to question 1.3.13 be documented?

Answer: 

Please document in response to Question 1.3.13 that the Prospective Bidder is not subject to US tax and provide in 

the explanation the tax status of the Prospective Bidder and information concerning whether the ultimate recipients 

are subject to US tax.

3. Question: 

Question 1.3.18: What additional information is required if the Servicer has been servicing loans for less than 3 

years?

Answer: 

If the answer to Question 1.3.18 is yes, please document the number of years the Servicer has been continuously 

engaged in the servicing of loans as a principal business and provide any information not captured in Section 2.3 

that would provide additional support for the credentials of the servicing team. This could include details of any 

relationship to an entity that may lend additional experience, and the number of years this entity has been 

continuously engaged in the servicing of loans as a principal business. This could also include additional details of 

the prior servicing/asset management experience of Key Asset Managers on the servicing team.
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4. Question: 

Question 2.1.2: What if a Prospective Bidder does not have audited financial statements? 

Answer: 

If a Prospective Bidder does not have audited financial statements or unaudited CFO-certified financial statements, 

the Prospective Bidder may provide the following supplementary information, if available, as noted below:

• Dunn & Bradstreet score/report complete with a composite risk and financial stress rating for the 

Prospective Bidder 

• A Statement of Net Assets/Financial Position, certified as true, correct and complete by a senior 

officer of the Prospective Bidder

• Parent Company’s Financial Statements with Letter of Corporate Guaranty

5. Question: 

Section 2.2: Regarding the documentation support requested for Section 2.2, is it necessary for a Prospective Bidder 

to provide this if it currently reports into the FDIC with regard to funding/liquidity positions on a daily basis? Is a 

letter from the Prospective Bidder’s investment fund parent stating that it has sufficient funds available to fund the 

structured transaction adequate support or must such a letter be accompanied by the investment fund parent balance 

sheet?

Answer: 

Responses to Section 2.2 should provide an explanation for how the Prospective Bidder intends to fund the purchase 

price and any other required deposits at closing. Responses should include supporting documentation to evidence 

the actual dollar amount of funding available and that funds are readily accessible. Responses should not comment 

on the Prospective Bidder’s general liquidity position, but specifically address the Private Owner’s source of funds 

for the structured transaction. Examples of funding documentary support are copies of bank statements, investment 

statements, intercompany loan agreements, third party loan agreements and audited financial statements (audited 

within the nine months prior to submission of the Application). If the Prospective Bidder intends to raise funds 

through a capital call, the amount of capital available (including the unfunded amount) should be provided, as well 

as a copy of an investor agreement documenting the number of days in which the capital can be called. 

6. Question: 

Section 2.2: Private Equity firms cannot have an open-ended equity funding obligation because they need to call 

capital from investors. Is it satisfactory to describe the ability to call capital from investors in lieu of setting aside 

cash for this potential funding obligation?

Answer: 

Please provide details of the ability to call capital from investors, as required to meet funding obligations. This can 

include an excerpt from a copy of an investor agreement. Please also provide documentation regarding the total 

amount of capital available to be called (including unfunded amounts) and identify any restrictions or contingencies 

on the called capital, as well as the amount of time for the funds to be available. This documentation may include 

audited financial statements. 

7. Question: 

Question 2.3.1: With regard to the “Scoring Methodology,” there is no scoring methodology referenced for the 

Fitch Special Servicer Ratings (RSS1, RSS2, etc.) only the Fitch Primary Servicer Ratings. Should a Prospective 

Bidder include both the primary and special servicer rating for its captive platform?

Answer: 

Yes, please provide the primary and special servicer ratings, where applicable, in response to Section 2.3.1. The 

servicer rating will be scored in a manner consistent with the rating agency definitions for the rating and rating type.
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8. Question: 

Multiple Servicers and Investors may be bidding jointly on the Private Owner Interests and servicing and are 

wondering how to respond to certain questions when multiple entities are involved. For example, how would a 

Prospective Bidder answer question 2.3.1 if one bidder in the group is rated and one is not rated. Does the 

Prospective Bidder pick one member of the group to base the answer on or does the Prospective Bidder look at it as 

a group (i.e., one of the parties is not rated; therefore the answer is “Not Rated”)?

Answer: 

The appropriate way for an Investor (i.e., all investors in the Private Owner providing more than twenty-five percent 

of the initial capital or ongoing funding to the Private Owner or any of its affiliates) and Servicer to complete the 

Application depends on the role each party will take in the structured transaction and post closing. Each party 

providing servicing of the Assets should complete a separate Section 2.3 response, noting to which party each 

response relates. Each Investor in the structured transaction should provide a complete Application (i.e., Level 1 

Questionnaire, Audited or CFO-certified Financial Statements, and third-party funding support). 

For example, in instances where a Lead Bidder is not providing any servicing but is outsourcing to a third-party 

servicing provider and that Servicer does not have a financial interest in the structured transaction, then all Sections 

other than Section 2.3 should be completed by the Lead Bidder. Likewise, an Investor with the Lead Bidder that has 

a financial interest in the structured transaction but is not providing any servicing should complete and submit all 

sections of an Application other than Section 2.3 and Section 2.4. Application Section 2.3 should be completed for 

the Servicer, and the name of the Servicer should be indicated. 

In instances where the Lead Bidder or an Investor will be providing some servicing or asset management of the 

Assets and also using a sub-servicer, and the sub-servicer does not have a financial interest in the structured 

transaction, then all sections other than Section 2.3 should be completed by the Lead Bidder or the Investor. Section 

2.3 would need to be completed for the Lead Bidder or the Investor who acts as a Servicer or Asset Manager and a 

separate Section 2.3 completed for the sub-servicer (please submit two separate Section 2.3 responses indicating the 

party to which each relates). If the Servicer, Asset Manager or sub-servicer also is an Investor, then the Servicer, 

Asset Manager or sub-servicer/Investor would need to complete all sections of the Application, including Section 

2.3.

9. Question: 

Section 2.4: In the event that a Prospective Bidder owns a Servicer, should both the Prospective Bidder and the 

Servicer fill out section 2.4 as separate entities?

Answer: 

Components of the response to Section 2.4 will relate directly to the servicing, while other components relate more 

to the strategic investment plan. As detailed in the Application, the Portfolio Management Plan provided in 

response to Section 2.4 should address the following three areas: 1) Operational Capacity, 2) Overall Project 

Strategy, including asset management, and 3) Exit Strategy. The second and third areas relate to the strategic 

investment plan and will likely be answered by the Prospective Bidder; the first area is more specifically related to 

the servicing of the Assets over the investment period. 

10. Question: 

A Prospective Bidder has submitted all prior paperwork and has had it signed by the parent company. They are now 

preparing the bidder/servicer qualification document and have prepared it for a subsidiary of the parent company. 

The subsidiary company plans to be the “bidder” and “owner” of the Private Owner. Does this present a problem?

Answer: 

The definition of the term “Prospective Bidder” in the Guidance and Instructions includes the Lead Bidder (i.e., the 

entity or individual authorized to enter a bid on behalf of a Prospective Bidder in accordance with the terms and 

conditions of the structured transaction) and the Investors (i.e., all investors in the Private Owner providing more 

than twenty-five percent of the initial capital or ongoing funding to the Private Owner), who may be affiliates of the 

Lead Bidder. The entities designated as the “Specified Parent” on the Bid Form (who are expected to be the Lead 
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Bidder and the Investors) collectively must control or collectively own, either directly or indirectly, at least 50.1% in 

value of the Private Owner Interest. Therefore, responses to more general questions (such as Level 1 and Level 2, 

Section 2.1 and Section 2.2) are expected to include any details specific to the Specified Parent and Private Owner 

(if already formed) and their ability to fund the structured transaction and ongoing obligations. Sections specific to 

providing servicing and asset management of the Portfolio (Section 2.3 and Section 2.4) should refer to the 

experience of the Servicer and Asset Manager (if different from the Servicer).

The entity that actually bids must be qualified (i.e., has successfully completed the Structured Transaction 

Qualification Request, the Structured Transaction Confidentiality Agreement, the Structured Transaction 

Purchaser Eligibility Certification, the Structured Transaction Security Deposit Agreement and the Bidder 

Qualification Application process). In this circumstance, the Structured Transaction Qualification Request, 

the Structured Transaction Confidentiality Agreement and the Structured Transaction Purchaser Eligibility 

Certification would need to be resubmitted for the Lead Bidder (the subsidiary) as opposed to the parent 

company. At the closing of the structured transaction, the Private Owner will sign the Transaction 

Documents and both the Private Owner and the Specified Parent (in this case, the subsidiary as both Lead 

Bidder and Investor) will sign the Structured Transaction Qualification Request, the Structured Transaction 

Confidentiality Agreement and the Structured Transaction Purchaser Eligibility Certification.

11. Question: 

Why has Section 1.2 MWO Business Participation been included in the application? How will the provided 

information be used? Will this affect the score of the application? 

Answer: 

The FDIC welcomes and encourages participation of MWO Businesses in bidding on portfolios of loans and other 

assets in FDIC structured transactions. As the FDIC is interested in understanding the level of diversity of those 

entities participating in the program, Prospective Bidders are asked to disclose information about being MWO 

Businesses, if applicable. The information provided will be used by FDIC to examine participation levels and 

potential underrepresentation and to identify investor outreach activities to support diversity of participation. This 

information does not impact scoring of an Application.

12. Question: 

Are there organizational requirements with respect to the Private Owner? 

Answer: 

The Private Owner must be organized as a special-purpose entity (an “SPE”). To qualify as an SPE, the Private 

Owner must be a corporation or limited liability company that (a) is organized pursuant to the laws of any state of 

the United States or the District of Columbia, (b) the equity of which is uncertificated (and in the case of a limited 

liability company, does not by its terms expressly provide that such equity shall be governed by Article 8 of the 

uniform commercial code as in effect in the jurisdiction applicable to such entity), (c) has no material assets other 

than cash and cash equivalents and its rights, title and interest in, to and under the Transaction Documents, (d) is not 

engaged in any significant business operations except in connection with the performance of its obligations under 

the Transaction Documents (e) does or causes to be done all things necessary to preserve and keep in full force and 

effect its existence, rights (charter and statutory) and franchises, (f) at all times holds itself out to the public as a 

legal entity separate from any other individual or entity (including any affiliate), (g) except as expressly 

contemplated by the Transaction Documents, does not commingle its assets with assets of any other individual or 

entity, (h) conducts its business in its own name and strictly complies with all organizational formalities to maintain 

its separate existence, (i) maintains an arm’s length relationship with any affiliate upon terms that are commercially 

reasonable and on terms no less favorable to it than could be obtained in a comparable arm’s length transaction with 

an unrelated individual or entity other than as expressly provided otherwise by the Transaction Documents;, (j) has 

no debt, and except as expressly permitted or required pursuant to the Transaction Documents, does not make any 

loans or advances to any other individual or entity, (k) except as otherwise consented to in writing by the FDIC with 

respect to the specific structured transaction, is a pass-through or disregarded entity for income tax purposes, (l) 

maintains its own separate books and records and its own accounts, in each case which are separate and apart from 
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the books and records and accounts of any other individual or entity, (m) maintains separate financial statements, (n) 

allocates fairly and reasonably any shared expenses, including any overhead for shared office space, (o) uses 

separate stationery, invoices and checks in its own name, and (q) includes in its organizational documents applicable 

provisions and limitations requiring compliance with all the foregoing requirements, including an express 

requirement for the written consent of the Company (which consent of the Company in turn shall require the written 

consent of the FDIC) to any amendment or modification that would result in such organizational documents failing 

or ceasing to be in compliance with all of the foregoing requirements. 

DISCLAIMER

THESE BIDDER QUALIFICATION APPLICATION FREQUENTLY ASKED QUESTIONS (“FAQS”)

ARE BEING PROVIDED FOR THE ASSISTANCE AND CONVENIENCE OF PROSPECTIVE BIDDERS. 

NO REPRESENTATION OR WARRANTY, WHETHER EXPRESS, IMPLIED, BY OPERATION OF 

LAW OR OTHERWISE, IS BEING PROVIDED WITH RESPECT TO THE ACCURACY OR 

COMPLETENESS OF ANY INFORMATION CONTAINED IN THESE FAQS. ALL TERMS, 

CONDITIONS AND INFORMATION CONTAINED IN THESE FAQS ARE SUBJECT IN ALL 

RESPECTS TO THE FINAL TRANSACTION DOCUMENTS FOR THE STRUCTURED TRANSACTION.