[Federal Register Volume 75, Number 174 (Thursday, September 9, 2010)]
[Notices]
[Pages 54900-54902]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-22399]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5407-N-02]


Notice of HUD-Held Multifamily and Healthcare Loan Sale (MHLS 
2010-2)

AGENCY: Office of the Assistant Secretary for Housing--Federal Housing 
Commissioner, HUD.

ACTION: Notice of sale of mortgage loans.

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SUMMARY: This notice announces HUD's intention to sell certain 
unsubsidized multifamily and healthcare mortgage loans, without Federal 
Housing Administration (FHA) insurance, in a competitive, sealed bid 
sale (MHLS 2010-2). Additionally, HUD may extend the sale to include a 
supplementary pool of unsubsidized multifamily mortgage loan(s), 
without FHA insurance, limited to not-for-profit organizations and 
units of State and Local Government. This notice also describes 
generally the bidding process for the sale and certain persons who are 
ineligible to bid.
    The Qualification Statement in connection with the sale has the 
following new provisions and revisions: (1) Part II, Number 7 was 
revised to reflect that the Purchaser must also meet the requirements 
in Paragraph I of the Qualification Statement to become a qualified 
bidder with respect to the relevant Mortgage Loans; (2) Part II, Number 
8 and Paragraph M were added to allow a limited partner or non-managing 
member (which may include a tax credit investor) to qualify to bid on a 
Mortgage Loan(s) in which Purchaser has made a financial investment; 
(3) paragraph K was revised to allow Purchaser the option to provide a 
complete listing or organizational chart of known Related Parties or 
affiliates which HUD will review, pursuant to its 2530 Previous 
Participation process, to determine whether a Purchaser is a Qualified 
Bidder; and (4) Paragraph L was added to descibe the status of, and 
limitations on bidding for, a Purchaser who has selected box 8.
    The Department has notified units of Local Governments of this 
planned sale and has provided each jurisdiction with the opportunity to 
purchase assets directly from the Department. It is anticipated that 
any direct sales of these notes to units of local governments would be 
offered and closed in the same timeframe as the competitive sale.
    The Department is also in the process of working with the 
California Housing Finance Agency for the direct sale of The Winery, a 
multifamily loan. It is anticipated that the sale of this asset will 
take place in the same timeframe as the competitive sale.

DATES: The Bidder's Information Package (BIP) was made available to 
qualified bidders on August 11, 2010. Bids will only be accepted during 
the period from 1 p.m. EDT on September 8, 2010 to 1 p.m. EDT on 
September 9, 2010. HUD anticipates that awards will be made on or 
before September 10, 2010. Closings are expected to take place between 
September 15, 2010 and September 22, 2010.

ADDRESSES: To become a qualified bidder and receive the BIP, 
prospective bidders must complete, execute, and submit a 
Confidentiality Agreement and a Qualification Statement acceptable to 
HUD. Both documents are available on the HUD Web site at http://www.hud.gov/offices/hsg/comp/asset/mfam/mhls.cfm. Please mail and fax 
executed documents to KDX Ventures:

KDX Ventures, c/o The Debt Exchange, 133 Federal Street, 10th Floor, 
Boston, MA 02111, Attention: MHLS 2010-2 Sale Coordinator, Fax: 1-617-
531-3499.


FOR FURTHER INFORMATION CONTACT: John Lucey, Deputy Director, Asset 
Sales Office, Room 3136, Department of Housing and Urban Development, 
451 Seventh Street, SW., Washington, DC 20410-8000; telephone 202-708-
2625, extension 3927. Hearing- or speech-impaired individuals may call 
202-708-4594 (TTY). These are not toll-free numbers.

SUPPLEMENTARY INFORMATION: HUD announces its intention to sell in MHLS 
2010-2 certain unsubsidized mortgage loans (Mortgage Loans) secured by 
multifamily and healthcare properties located throughout the United 
States. The Mortgage Loans are comprised primarily of non-performing 
mortgage loans. A final listing of the Mortgage Loans will be included 
in the BIP. The Mortgage Loans will be sold without FHA insurance and 
with servicing released. HUD will offer qualified bidders an 
opportunity to bid competitively on the Mortgage Loans.
    The Mortgage Loans will be stratified for bidding purposes into 
several mortgage loan pools, which may include a supplementary pool of 
unsubsidized multifamily mortgage loan(s), without Federal Housing 
Administration (FHA) insurance, limited to not-for-profit organizations 
and units of State and Local Government. Each pool will contain 
Mortgage Loans that generally have similar performance, property type, 
geographic location, lien position and other characteristics. Qualified 
bidders may submit bids on one or more

[[Page 54901]]

pools of Mortgage Loans or may bid on individual loans. A mortgagor, or 
related party who is a qualified bidder as set forth in the 
Qualification Statement and whose loan is current may submit an 
individual bid on its own Mortgage Loan. A tax credit investor who is a 
qualified bidder may submit a bid(s) in accordance with the terms set 
forth in the Qualification Statement.
    Interested mortgagors or related parties should review the 
Qualification Statement to determine whether they may also be eligible 
to qualify to submit bids on one or more pools of Mortgage Loans or on 
individual loans in MHLS 2010-2.

The Bidding Process

    The BIP will describe in detail the procedure for bidding in MHLS 
2010-2. The BIP will also include a standardized non-negotiable loan 
sale agreement (Loan Sale Agreement). Deposits are calculated based 
upon each bidder's aggregate bid price. For an aggregate bid price 
greater than or equal to one hundred thousand dollars ($100,000), each 
bidder must submit a deposit equal to the greater of: (1) One hundred 
thousand dollars ($100,000); or (2) ten percent (10%) of its bid price. 
In the event the bidder's aggregate bid price is less than $100,000, 
the minimum deposit shall not be less than fifty percent (50%) of its 
bid price.
    HUD will evaluate the bids submitted and determine the successful 
bids, in terms of the best value to HUD, in its sole and absolute 
discretion. If a bidder is successful, the bidder's deposit will be 
non-refundable and will be applied toward the purchase price. Deposits 
will be returned to unsuccessful bidders. Closings are expected to take 
place between September 15, 2010 and September 22, 2010.
    These are the essential terms of sale. The Loan Sale Agreement, 
which will be included in the BIP, will contain additional terms and 
details. To ensure a competitive bidding process, the terms of the 
bidding process and the Loan Sale Agreement are not subject to 
negotiation.

Due Diligence Review

    The BIP will describe the due diligence process for reviewing loan 
files in MHLS 2010-2. Qualified bidders will be able to access loan 
information remotely via a high-speed Internet connection. Further 
information on performing due diligence review of the Mortgage Loans 
will be provided in the BIP.

Mortgage Loan Sale Policy

    HUD reserves the right to add Mortgage Loans to or remove Mortgage 
Loans from MHLS 2010-2 at any time prior to the Award Date, without 
prejudice to HUD's right to include any Mortgage Loans in a later sale. 
HUD also reserves the right to reject any and all bids, in whole or in 
part. Mortgage Loans will not be withdrawn after the Award Date except 
as is specifically provided in the Loan Sale Agreement.
    This is a sale of unsubsidized mortgage loans, pursuant to Section 
204(a) of the Departments of Veterans Affairs and Housing and Urban 
Development, and Independent Agencies Appropriations Act of 1997, 12 
U.S.C. 1715z-11a(a).

Mortgage Loan Sale Procedure

    HUD selected a competitive sale as the method to sell the Mortgage 
Loans. This method of sale optimizes HUD's return on the sale of these 
Mortgage Loans, affords the greatest opportunity for all qualified 
bidders to bid on the Mortgage Loans, and provides the quickest and 
most efficient vehicle for HUD to dispose of the Mortgage Loans. HUD's 
intention to limit a supplementary pool to not-for-profit organizations 
and units of State and Local Government enables HUD to ensure certain 
projects maintain affordability after the sale.

Bidder Eligibility

    In order to bid in the sale, a prospective bidder must complete, 
execute and submit both a Confidentiality Agreement and a Qualification 
Statement acceptable to HUD. Not-for-profit organizations and units of 
State and Local Government must complete, execute and submit both a 
Confidentiality Agreement and Qualification Statement for Non-Profits, 
Units of State and Local Government acceptable to HUD. The following 
individuals and entities are ineligible to bid on any of the Mortgage 
Loans included in MHLS 2010-2:
    (1) Any employee of HUD, a member of such employee's household, or 
an entity owned or controlled by any such employee or member of such an 
employee's household;
    (2) any individual or entity that is debarred, suspended, or 
excluded from doing business with HUD pursuant to Title 24 of the Code 
of Federal Regulations, Part 24, and Title 2 of the Code of Federal 
Regulations, Part 2424;
    (3) any contractor, subcontractor and/or consultant or advisor 
(including any agent, employee, partner, director, principal or 
affiliate of any of the foregoing) who performed services for or on 
behalf of HUD in connection with MHLS 2010-2;
    (4) any individual who was a principal, partner, director, agent or 
employee of any entity or individual described in subparagraph 3 above, 
at any time during which the entity or individual performed services 
for or on behalf of HUD in connection with MHLS 2010-2;
    (5) any individual or entity that uses the services, directly or 
indirectly, of any person or entity ineligible under subparagraphs 1 
through 4 above to assist in preparing any of its bids on the Mortgage 
Loans;
    (6) any individual or entity which employs or uses the services of 
an employee of HUD (other than in such employee's official capacity) 
who is involved in MHLS 2010-2;
    (7) any mortgagor (or affiliate of a mortgagor) that failed to 
submit to HUD on or before July 30, 2010, audited financial statements 
for fiscal years 2005 through 2009 for a project securing a Mortgage 
Loan;
    (8) any individual or entity and any Related Party (as such term is 
defined in the Qualification Statement) of such individual or entity 
that is a mortgagor in any of HUD's multifamily housing or healthcare 
programs and that is in default under such mortgage loan or is in 
violation of any regulatory or business agreements with HUD, unless 
such default or violation was cured on or before July 30, 2010. This 
paragraph does not pertain to a tax credit investor;
    (9) any entity or individual that serviced or held any Mortgage 
Loan at any time during the 2-year period prior to July 30, 2010, is 
ineligible to bid on such Mortgage Loan or on the pool containing such 
Mortgage Loan, but may bid on loan pools that do not contain Mortgage 
Loans that they have serviced or held at any time during the 2-year 
period prior to July 30, 2010; and
    (10) also ineligible to bid on any Mortgage Loan are: (a) Any 
affiliate or principal of any entity or individual described in the 
preceding sentence (paragraph 9); (b) any employee or subcontractor of 
such entity or individual during that 2-year period; or (c) any entity 
or individual that employs or uses the services of any other entity or 
individual described in this paragraph in preparing its bid on such 
Mortgage Loan.
    In addition, to be eligible to bid in HUD's supplementary pool of 
unsubsidized multifamily mortgage loan(s) for sale(s) limited to not-
for-profit organizations and units of State and Local Government, a 
prospective

[[Page 54902]]

bidder must qualify as one or more of the following:
    (1) An entity that is a nonprofit organization as described in 
Section 501(c)(3) of the Internal Revenue Code of 1954 (26 U.S.C.A. 
Sec.  501(c)(3)); and/or
    (2) an entity that is unit of general local government or State 
agency.
    Prospective bidders should carefully review the Qualification 
Statement, as revised, to determine whether they are eligible to submit 
bids on the Mortgage Loans in MHLS 2010-2.

Freedom of Information Act Requests

    HUD reserves the right, in its sole and absolute discretion, to 
disclose information regarding MHLS 2010-2, including, but not limited 
to, the identity of any successful bidder and its bid price or bid 
percentage for any pool of loans or individual loan, upon the closing 
of the sale of all the Mortgage Loans. Even if HUD elects not to 
publicly disclose any information relating to MHLS 2010-2, HUD will 
have the right to disclose any information that HUD is obligated to 
disclose pursuant to the Freedom of Information Act and all regulations 
promulgated thereunder.

Scope of Notice

    This notice applies to MHLS 2010-2 and does not establish HUD's 
policy for the sale of other mortgage loans.

    Dated: August 18, 2010.
David H. Stevens,
Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 2010-22399 Filed 9-8-10; 8:45 am]
BILLING CODE 4210-67-P