[Federal Register Volume 61, Number 159 (Thursday, August 15, 1996)]
[Notices]
[Pages 42435-42436]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20835]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Office of the Assistant Secretary for Housing-Federal Housing
Commissioner; Notice of Sale of Single Family Mortgage Loans
[Docket No. FR-4121-N-01]
AGENCY: Office of the Assistant Secretary for Housing-Federal Housing
Commissioner, (HUD).
ACTION: Notice of sale of single family mortgage loans.
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SUMMARY: This notice announces the Department's intention to sell
approximately 17,500 Secretary-held single family mortgage loans (the
``loans'') in a sealed bid auction. The loans were insured under
various sections of the National Housing Act (the Act) and thereafter
assigned to the Department pursuant to Section 230 of the Act. The
loans are secured by single family properties located nationwide. This
notice also describes the bidding process for these loans.
DATES: Bid Packages will be available to eligible bidders on or about
July 15, 1996. The auction is currently scheduled for September 4,
1996.
ADDRESSES: Bid packages will be available from FHA's Financial Advisor,
Merrill Lynch & Co. (``Merrill'') 250 Vesey St., New York, NY 10281.
Bid Packages will be made available only to parties who complete a
Confidentiality Agreement and Qualification Statement and are deemed
eligible bidders by Merrill. Interested parties can obtain a
Confidentiality Agreement and Qualification Statement by calling 1-
(800) 363-4704. Merrill will forward Bidding Materials to eligible
bidders via overnight courier. Asset files for the loans included in
the sale are available for review by eligible bidders who visit the due
diligence facility located at 1730 M Street NW., Washington, DC 20036.
To schedule a visit to the due diligence facility or to order
supplemental information on the loans, eligible bidders should contact
Susan Munson at (202) 530-1253. This is not a toll-free number. The due
diligence facility will be open between the hours of 8:00 a.m. and 8:00
p.m., Monday through Saturday. The facility will open on or about July
12, 1996 and will close on or about August 22, 1996. The last telephone
number is not a toll-free number.
FOR FURTHER INFORMATION CONTACT: Joseph McCloskey, Director, Single
Family Servicing Division, Office of Insured Single Family Housing,
Room 9178, Department of Housing and Urban Development, 451 Seventh
Street, SW., Washington, DC 20410; telephone (202) 708-1672. For
hearing or speech-impaired individuals, this number may be accessed via
PT (text telephone) by calling the Federal Information Relay Service at
1-800-877-8339 (this is a toll-free number).
SUPPLEMENTARY INFORMATION: The Department intends to sell approximately
17,500 Single Family loans in this auction. The loans are secured by
single family properties and are performing and non-performing. The
loans will be divided into one million dollar loan blocks, which will
be further arranged into groups. A list of specific loans and loan
block and group descriptions will be contained in the Bid Package. No
loans will be sold individually. The loans will be sold without Federal
Housing Administration (FHA) insurance. The Department will offer
interested parties an opportunity to bid competitively on loan pools
which they may create from combinations of loan blocks, subject to
conditions set forth in the bid package. The Department shall use its
sole discretion to evaluate and determine winning bids.
The Bidding Process
These are the essential terms of sale. The Loan Sale Agreement will
provide additional details. To ensure a competitive bidding process,
the terms of sale are not subject to negotiation.
The Department will describe in detail the procedure for
participating in the Single Family Loan Sale in a Bid Package, which
will include bid forms, a nonnegotiable loan sale agreement prepared by
the Department (Loan Sale Agreement), specific bid instructions, as
well as pertinent information on the loans such as total outstanding
unpaid principal balances and interest rate ranges, maturity rates,
geographic locations and performance. The bid packages also include
computer diskettes containing data on all of the mortgage loans.
Bid Packages will be available approximately 6 weeks prior to the
Bid Date. The Bid Package will also include instructions for Bidder
Registration and will contain procedures for obtaining supplemental
information about the loans. Any interested party may request a copy of
the Bid Package by sending a written request together with a duly
executed Confidentiality Agreement and Qualification Statement to the
address specified in the ADDRESSES section, above, of this notice.
Prior to the Bid Date a Bid Package Supplement will be mailed to
all eligible bidders. It will contain the final list of loans to be
conveyed to the successful bidder(s).
Each bidder must include with its bid a deposit equal to 10% of the
amount of its bid(s). If a 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 any deposit as liquidated damages.
Due Diligence Facility
An investor due diligence period will take place prior to the Bid
Date. During the investor due diligence period, eligible bidders may,
for a non-refundable fee of $500, review all asset file documents which
have been imaged onto a database by visiting the due diligence facility
located at 1730 M Street N.W., Washington, D.C. 20036 and/or via modem
a limited number of identified asset files. Finally, bidders may
purchase a CD Rom disc containing substantial due diligence materials
such as 36 month payment histories and Brokers' Price Opinions at a
cost of $500.
Specific instructions for ordering information in electronic format
or making an appointment to visit the due diligence facility will be
included in the Bid Package. The Department reserves the right to
charge a reasonable fee to cover its costs in duplicating and
forwarding any information requested by an interested party.
FHA Reservation of Rights
The Department reserves the right to delete loans from the Loan
Sale at any time prior to the bid date for any reason and without
prejudice to its right to include any loans in a later sale. The
Department also reserves the right to terminate this sale at any time
prior to the bid date.
The Department reserves the right to use its sole discretion to
evaluate and determine winning bids. The Department reserves the right
at its sole discretion and for any reason whatsoever to reject any and
all bids.
The Department reserves the right to conduct a ``best and final''
round among top bidders for loan blocks or pools
[[Page 42436]]
which it will select in its sole discretion, wherein bidders will be
given the opportunity to increase their bids. A best and final round
shall not be construed as a rejection of any bid or preclude the
Department from accepting any bid made by a bidder.
Ineligible Bidders
Notwithstanding a bidder's qualification as an eligible investor
and approved servicer the following individuals and entities (either
alone or in combination with others) are ineligible to bid on any one
or combination of the single family Loan pools included in the Sale:
(1) Any employee of the Department or an entity controlled by an
FHA employee or by a member of such employee's household;
(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 this Single Family Loan Auction; or
(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 this Auction.
Number of Bids
A bidder may bid on as many blocks as the bidder chooses.
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
If a tie continues after the best and final offers are submitted or
the bidders 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 pool(s) of single family loans subject to tie bids.
Single Family Loan Sale Procedure
The Department has selected a competitive sealed bid auction as the
method to sell the blocks of Single Family Mortgage Loans. This method
of sale optimizes the Department's return on the sale of these loans
affords the greatest opportunity for all interested investors to bid on
the defaulted loans, and provides the quickest and most efficient
vehicle for the Department to dispose of the blocks of loans.
Single Family Loan Sale Policy
Post Sale Servicing Requirements
The loans will be sold with servicing released by FHA. The loans
must be serviced by a FHA approved mortgagee for the remaining lives of
the loans, unless the Mortgagor consents to a modification or the loan
is refinanced or satisfied of record.
Successful bidders, or purchasers of these Mortgage Loans, and
their successors, will be responsible for servicing the Loans in
accordance with the applicable provisions of the Loan Sale Agreement.
The Department intends to take any and all steps possible to ensure
enforcement of these provisions.
Scope of Notice
This notice applies to the Single Family Loan Sale Number 3, and
does not establish Departmental procedures and policies for the sale of
other mortgage loans. If there are any conflicts between the Notice and
the Bid Package, including the Loan Sale Agreement, the contents of the
Bid Package prevail.
Dated: August 9, 1996.
Nicolas P. Retsinas,
Assistant Secretary for Housing-Federal Housing Commissioner
[FR Doc. 96-20835 Filed 8-14-96; 8:45 am]
BILLING CODE 4210-27-P