81 FR 44892 - Notice of HUD-Held Healthcare Loan Sale (HLS 2016-1)

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Federal Register Volume 81, Issue 132 (July 11, 2016)

This notice announces HUD's intention to sell eight (8) unsubsidized healthcare mortgage loans, without Federal Housing Administration (FHA) insurance, in a competitive auction (HLS 2016-1 or Loan Sale) on or about July 20, 2016. This notice also generally describes the bidding process for the sale and certain persons who are ineligible to bid.

[Federal Register Volume 81, Number 132 (Monday, July 11, 2016)]
[Notices]
[Pages 44892-44893]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-16258]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5956-N-01]


Notice of HUD-Held Healthcare Loan Sale (HLS 2016-1)

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

ACTION: Notice.

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SUMMARY: This notice announces HUD's intention to sell eight (8) 
unsubsidized healthcare mortgage loans, without Federal Housing 
Administration (FHA) insurance, in a competitive auction (HLS 2016-1 or 
Loan Sale) on or about July 20, 2016. This notice also generally 
describes the bidding process for the sale and certain persons who are 
ineligible to bid.

DATES: A Bidder's Information Package (BIP) will be made available on 
or about June 22, 2016. Bids for the loans must be submitted on the bid 
date of July 20, 2016 between certain specified hours. HUD anticipates 
that an award or awards will be made on or before July 22, 2016. 
Closing is expected to take place between August 1, 2016 and August 3, 
2016.

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 will be available on the HUD Web site at 
www.hud.gov/fhaloansales. Please fax or email as well as mail executed 
original documents to JS Watkins Realty Partners, LLC: J.S. Watkins 
Realty Partners, LLC, c/o The Debt Exchange, 133 Federal Street, 10th 
Floor, Boston, MA 02111, Attention: HLS 2016-1 Sale Coordinator, Fax: 
1-978-967-8607, Email: [email protected].

FOR FURTHER INFORMATION CONTACT: John Lucey, Director, Asset Sales 
Office, Room 3136, U.S. Department of Housing and Urban Development, 
451 Seventh Street SW., Washington, DC 20410-8000; telephone 202-402-
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 HLS 
2016-1, eight (8) unsubsidized healthcare mortgage loans (Mortgage 
Loans) consisting of four first lien notes and four associated 2nd lien 
notes secured by four nursing home facilities located in Bloomfield, 
Enfield, Windham, and Hartford, Connecticut. The Mortgage Loans are 
non-performing mortgage loans. The listing of the Mortgage Loans is 
included in the BIP. The Mortgage Loans will be sold without FHA 
insurance and with HUD servicing released. HUD will offer qualified 
bidders an opportunity to bid competitively on the Mortgage Loans.
    The Qualification Statement describes the entities/individuals that 
may be qualified to bid on the Mortgage Loans if they meet certain 
requirements as detailed in the Qualification Statement. Some entities/
individuals must meet additional requirements in order to be qualified 
to bid, including but not limited to:
    Any mortgagee/servicer who originated one or more of the Mortgage 
Loans; a mortgagor or a operator, with respect to any HUD insured or 
subsidized mortgage loan (excluding the Mortgage Loans being offered in 
the Loan Sale) who is currently in default, violation, or noncompliance 
with one or more of HUD's requirements or business agreements; a 
limited partner, nonmanaging member, investor and/or shareholder who 
owns a 1 percent or less interest in one or more the Mortgage Loans, or 
in the project securing one or more the Mortgage Loans; and any of the 
aforementioned entities'/individuals' principals, affiliates, family 
members, and assigns.
    Interested entities/individuals who fall into one of these 
categories should review the Qualification Statement to determine 
whether they may be eligible to qualify to submit a bid on the Mortgage 
Loans. Other entities/individuals not described herein may also be 
restricted from bidding on the Mortgage Loans, as fully detailed in the 
Qualification Statement.

The Bidding Process

    The BIP describes in detail the procedure for bidding in HLS 2016-
1. The BIP also includes a standardized non-negotiable loan sale 
agreement (Loan Sale Agreement).
    As part of its bid, each bidder must submit a minimum deposit of 
the greater of 10 percent of the total bid or $100,000. HUD will 
evaluate the bids submitted and determine the successful bid(s) 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, with any amount beyond the purchase price being returned to the 
bidder. Deposits will be returned to unsuccessful bidders. Closings are 
expected to take place between August 1, 2016 and August 3, 2016.
    These are the essential terms of sale. The Loan Sale Agreement, 
which is

[[Page 44893]]

included in the BIP, contains 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 describes the due diligence process for reviewing loan 
files in HLS 2016-1. 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 is 
provided in the BIP.

Mortgage Loan Sale Policy

    HUD reserves the right to reject any and all bids, in whole or in 
part, without prejudice to HUD's right to include the Mortgage Loans in 
a later sale. The Mortgage Loans will not be withdrawn after the award 
date except as is specifically provided for 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 
Loan. 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.

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. The following individuals and entities are 
among those ineligible to bid on the Mortgage Loans being sold in HLS 
2016-1:
    1. A mortgagor or operator with respect to one or more the Mortgage 
Loans being offered in the Loan Sale, or an Active Shareholder (as such 
term is defined in the Qualification Statement);
    2. 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 or operator with respect to any of HUD's 
multifamily and/or healthcare programs (excluding the Mortgage Loans 
being offered in the Loan Sale) and that has failed to file financial 
statements or is otherwise in default under such mortgage loan or is in 
violation or noncompliance of any regulatory or business agreements 
with HUD and fails to cure such default or violation by no later than 
July 6, 2016;
    3. Any individual or entity that is debarred, suspended, or 
excluded from doing business with HUD pursuant to 2 CFR part 2424;
    4. 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 HLS 2016-1;
    5. Any employee of HUD, a member of such employee's family, or an 
entity owned or controlled by any such employee or member of such an 
employee's family;
    6. Any individual or entity that uses the services, directly or 
indirectly, of any person or entity ineligible under provisions (3) 
through (5) above to assist in preparing its bid on any Mortgage Loan.
    7. An FHA-approved mortgagee, including any principals, affiliates, 
or assigns thereof, that has received FHA insurance benefits for the 
one or more of the Mortgage Loans being offered in the Loan Sale;
    8. An FHA-approved mortgagee and/or loan servicer, including any 
principals, affiliates, or assigns thereof, that originated one ore 
more of the Mortgage Loans being offered in the Loan Sale if the 
Mortgage Loan defaulted within two years of origination and resulted in 
the payment of an FHA insurance claim;
    9. Any affiliate, principal or employee of any person or entity 
that, within the two-year period prior to July 1, 2016, serviced any 
Mortgage Loan or performed other services for or on behalf of HUD;
    10. Any contractor or subcontractor to HUD that otherwise had 
access to information concerning any Mortgage Loan on behalf of HUD or 
provided services to any person or entity which, within the two-year 
period prior to July 1, 2016, had access to information with respect to 
the Mortgage Loan on behalf of HUD;
    11. Any employee, officer, director or any other person that 
provides or will provide services to the prospective bidder with 
respect to the Mortgage Loans during any warranty period established 
for the Loan Sale, that serviced the Mortgage Loans or performed other 
services for or on behalf of HUD or within the two-year period prior to 
July 1, 2016, provided services to any person or entity which serviced, 
performed services or otherwise had access to information with respect 
to any Mortgage Loan for or on behalf of HUD.
    Other entities/individuals not described herein may also be 
restricted from bidding on the Mortgage Loans, as fully detailed in the 
Qualification Statement.
    The Qualification Statement provides further details pertaining to 
eligibility requirements. Prospective bidders should carefully review 
the Qualification Statement to determine whether they are eligible to 
submit bids on the Mortgage Loans in HLS 2016-1.

Freedom of Information Act Requests

    HUD reserves the right, in its sole and absolute discretion, to 
disclose information regarding HLS 2016-1, including, but not limited 
to, the identity of any successful bidder and its bid price or bid 
percentage for the Mortgage Loans, upon the closing of the sale of the 
Mortgage Loans. Even if HUD elects not to publicly disclose any 
information relating to HLS 2016-1, 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 HLS 2016-1 and does not establish HUD's 
policy for the sale of other mortgage loans.

    Dated: June 29, 2016.
Edward L. Golding,
Principal Deputy Assistant Secretary for Housing.
[FR Doc. 2016-16258 Filed 7-8-16; 8:45 am]
 BILLING CODE 4210-67-P