[Federal Register Volume 61, Number 243 (Tuesday, December 17, 1996)]
[Notices]
[Pages 66524-66525]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-31894]



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Part IV





Department of Housing and Urban Development





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Sale of Single Family Mortgage Loans; Notice

  Federal Register / Vol. 61, No. 243 / Tuesday, December 17, 1996 /  
Notices  

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-4188-N-01]


Notice of Sale of Single Family Mortgage Loans

AGENCY: Office of the Assistant Secretary for Housing-Federal Housing 
Commissioner, Department of Housing and Urban Development.

ACTION: Notice of sale of single family mortgage loans.

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SUMMARY: This notice announces the Department's intention to sell 
approximately 19,100 Secretary-held single family mortgage loans (the 
``loans'') in a sealed bid auction. The majority of loans were insured 
under various sections of the National Housing Act, 12 U.S.C. 1701 et. 
seq. (the ``Act'') and thereafter assigned to the Department pursuant 
to Section 230 of the Act (12 U.S.C. 1715u). 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 
November 27, 1996. The auction is currently scheduled for January 28, 
1997.

ADDRESSES: Bid Packages will be available from FHA's Financial Advisor, 
Merrill Lynch Mortgage Capital Inc. (``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 determined to be eligible bidders. Interested parties can obtain a 
Confidentiality Agreement and Qualification Statement by calling 1-800-
363-4704. This is a toll free number. Merrill will forward Bid Packages 
to eligible bidders via overnight courier. Imaged asset files for the 
loans included in the sale are available for review by eligible bidders 
who visit the due diligence facility located at 1140 Connecticut Ave, 
N.W., Suite 302, Washington, D.C. 20036. To schedule a visit to the due 
diligence facility or to order supplemental information on the loans, 
eligible bidders should contact Henry Kiema at 202-496-1170. 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 Friday and 8:00 
a.m. to 5:00 p.m. on Saturday. The facility will open on or about 
December 2, 1996 and will close on or about January 24, 1997.

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. This is not 
a toll free number. Hearing or speech-impaired individuals may access 
this number 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 
19,100 single family loans in this auction. The loans are secured by 
single family properties. Some of the loans are performing and some are 
non-performing. The loans will be divided into one million dollar 
($1,000,000) mortgage loan blocks, which will be further arranged into 
groups. A list of specific loans, mortgage loan blocks and group 
descriptions will be contained in the Bid Package. No loans will be 
sold individually. Prior to assignment to HUD, the loans were insured 
by the Federal Housing Administration (FHA). The loans are not now 
insured and will be sold without FHA insurance. In the case of most of 
the loans, HUD has agreed to forbear, under certain conditions, from 
enforcement of its rights upon default and, for those loans that are 
within the initial 36-month period of forbearance, mortgagors' payments 
may be reduced or suspended under the terms of the forbearance 
agreements. This sale contains loans from both inside and outside of 
the 36-month period. 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. 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 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, 
interest rate ranges, maturity terms, geographic locations and 
performance. The Bid Packages also include computer diskettes 
containing data on all of the loans.
    Bid Packages will be available approximately 8 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 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 highest bid. 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 any deposit as liquidated damages.

Due Diligence Facility

    A bidder due diligence period will take place beginning on or about 
December 2, 1996. During the bidder 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 1140 Connecticut Ave., N.W., Suite 302, 
Washington, D.C. 20036 and/or via modem. Finally, bidders may purchase 
at a cost of $500 CD Rom discs containing substantial due diligence 
materials such as approximately 34 month payment histories and Brokers' 
Price Opinions.
    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 remove loans from the 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

[[Page 66525]]

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 tied bidders, 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 bidder 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 loans included in the sale:

    (1) Any employee of the Department, and any member of any such 
employee's household and any entity controlled by an FHA employee or 
by a member of such employee's household;
    (2) Any individual or entity that is debarred or suspended from 
doing business with the Department pursuant to 24 CFR part 24;
    (3) Any contractor, subcontractor, consultant, and/or advisor 
(or any agent, employee, partner, director, principal, or affiliate 
of any of the foregoing) who performed services for, or on behalf 
of, the Department in connection with this sale;
    (4) Any individual that was an employee, partner, director, 
agent, or principal 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 sale; and
    (5) Any bidder that uses the services, whether directly or 
indirectly, of anyone who is deemed to be ineligible under any of 
paragraphs 1-4 above.

Number of Bids

    Bidders may bid on any or all of the mortgage loan blocks and/or 
create their own pools of one or more mortgage loan blocks within a 
mortgage loan group.

Ties for High Bidder

    If a tie continues after the best and final offers are 
submitted, the successful bidder will be determined by lottery.

Single Family Loan Sale Procedure

    The Department has selected a competitive sealed bid auction as the 
method to sell the blocks of loans. Historically, this method of sale 
optimizes the Department's return on the sale of loans, affords the 
greatest opportunity for all interested parties to bid on the defaulted 
loans, and provides the quickest and most efficient vehicle for the 
Department to dispose of the 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 an FHA approved mortgagee for the remaining lives 
of the loans, unless a loan is modified, refinanced or satisfied of 
record.
    Successful bidders, or purchasers of these loans, and their 
successors and assigns, will be required to service 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 4, and 
does not establish Departmental procedures and policies for the sale of 
other mortgage loans. If there are any conflicts between this Notice 
and the Bid Package, the contents of the Bid Package prevail.

    Dated: December 10, 1996.
Nicolas P. Retsinas,
Assistant Secretary for Housing-Federal Housing Commissioner.
[FR Doc. 96-31894 Filed 12-16-96; 8:45 am]
BILLING CODE 4210-27-P