[Federal Register Volume 62, Number 156 (Wednesday, August 13, 1997)]
[Notices]
[Pages 43340-43342]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-21302]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-4188-N-02]


Notice of Sale of Single Family Mortgage Loans

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 18,200 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 
August 4, 1997. The auction is currently scheduled for September 9, 
1997.

ADDRESSES: Bid Packages will be available from FHA's Financial Advisor, 
Ernst & Young LLP (E&Y), 1150 18th Street, N.W., Suite 500, Washington, 
DC 20036 and Utendahl Capital Partners, L.P. (``Utendahl''), 30 Broad 
Street, 31st Floor, New York, NY 10004 (jointly ``The FA Team''). Bid 
Packages will be made available only to parties who complete a 
Confidentiality Agreement and Qualification Statement and are 
determined to be eligible bidders. A Confidentiality Agreement and 
Qualification Statement will accompany the announcement brochure that 
will be distributed to prospective bidders. The FA Team will work with 
the Government Printing Office to forward Bid Packages to eligible 
bidders via UPS. 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 1730 M Street, N.W., Suite 610, 
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 Ron Hughes at (202) 496-0170. 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 August 4, 1997 and 
will close on or about September 5, 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, S.W., 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 (800) 877-8339. This is a toll free 
number.

SUPPLEMENTARY INFORMATION: The Department intends to sell approximately 
18,200 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. Loans that were assigned to HUD were insured

[[Page 43341]]

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 bidding procedure 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 6 weeks prior to the 
Bid Date. 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).
    As defined in the bidders information package, each bidder must 
include with its bid a deposit approximately 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 those requiring payment to the 
Department of 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 
August 4, 1997. 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 1730 M Street N.W., Suite 610, 
Washington, D.C., 20036 and/or via modem. Finally, bidders may purchase 
at a cost of $500 CD ROM discs containing due diligence materials such 
as 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 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 tied bidders, wherein bidders will be given the opportunity 
to increase their bids. Conducting 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 in the sale:
    (1) Any employee of the Department, and any member of any such 
employee's household and any entity controlled by a Department 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) 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 to assist in the preparation of any of its bids 
in connection with this sale 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 servicing released. The loans must be 
serviced by an FHA approved mortgagee for the remaining lives of the 
loans, unless a loan is assumed, modified, refinanced or satisfied of 
record in the manner set forth in the servicing requirements contained 
in the Loan Sale Agreement.
    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 5, 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.


[[Page 43342]]


    Dated: August 7, 1997.
Nicolas P. Retsinas,
Assistant Secretary for Housing-Federal Housing Commissioner.
[FR Doc. 97-21302 Filed 8-12-97; 8:45 am]
BILLING CODE 4210-27-P