81 FR 62165 - Notice of Single Family Loan Sales (SFLS 2016-2)

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Federal Register Volume 81, Issue 174 (September 8, 2016)

This notice announces HUD's intention to competitively sell certain unsubsidized single family mortgage loans, in a sealed bid sale offering called SFLS 2016-2, without Federal Housing Administration (FHA) mortgage insurance. This notice also generally describes the bidding process for the sale and certain persons who are ineligible to bid. This is the second sale offering of its type in Fiscal Year (FY) 2016 and the sale will be held on September 14, 2016.

[Federal Register Volume 81, Number 174 (Thursday, September 8, 2016)]
[Notices]
[Pages 62165-62166]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-21661]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5903-N-02]


Notice of Single Family Loan Sales (SFLS 2016-2)

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

ACTION: Notice of sales of mortgage loans.

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SUMMARY: This notice announces HUD's intention to competitively sell 
certain unsubsidized single family mortgage loans, in a sealed bid sale 
offering called SFLS 2016-2, without Federal Housing Administration 
(FHA) mortgage insurance. This notice also generally describes the 
bidding process for the sale and certain persons who are ineligible to 
bid. This is the second sale offering of its type in Fiscal Year (FY) 
2016 and the sale will be held on September 14, 2016.

DATES: For this sale action, the Bidder's Information Package (BIP) is 
expected to be made available to qualified bidders on or about August 
15, 2016. Bids for the 2016-2 sale will be accepted on the Bid Date of 
September 14, 2016 (Bid Date). HUD anticipates that award(s) will be 
made on or about September 15, 2016 (the Award Date).

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 via the HUD Web site at: http://www.hud.gov/sfloansales or via: http://www.verdiassetsales.com. Please 
mail and fax executed documents to Verdi Consulting, Inc.: Verdi 
Consulting, Inc. 8400 Westpark Drive, 4th Floor, McLean, VA 22102, 
Attention: HUD SFLS Loan Sale Coordinator, Fax: 1-703-584-7790.

FOR FURTHER INFORMATION CONTACT: John Lucey, 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 SFLS 
2016-2 certain unsubsidized non-performing mortgage loans (Mortgage 
Loans) secured by single family properties located throughout the 
United States. A listing of the Mortgage Loans is included in the due 
diligence materials made available to qualified bidders. 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 Loans will be offered in two pool types. The Department will 
offer national loan pools for bid and will also offer regionally-based 
pools, with additional purchaser requirements, that are called the 
Neighborhood Stabilization Outcome pools. Some of these Neighborhood 
Stabilization Outcome pools will be designated for bidding by qualified 
non-profit or unit of local government entities only. These pools will 
be geographically concentrated. Qualified non-profit bidders will also 
have the opportunity to bid on up to 5% of the loans in a designated 
national pool.

The Bidding Process

    The BIP describes in detail the procedure for bidding in SFLS 2016-
2. The BIP also includes a standardized non-negotiable Conveyance, 
Assignment and Assumption Agreement (CAA Agreement). Qualified bidders 
will be required to submit a deposit with their bid. Deposits are 
calculated based upon each qualified bidder's aggregate bid price.
    HUD will evaluate the bids submitted and determine the successful 
bid, in terms of the best value to HUD, in its sole and absolute 
discretion. If a qualified bidder is successful, the qualified bidder's 
deposit will be non-refundable and will be applied toward the purchase 
price. Deposits will be returned to unsuccessful bidders.
    This notice provides some of the basic terms of sale. The CAA 
Agreement, which is included in the BIP, provides comprehensive 
contractual terms and conditions. To ensure a competitive bidding 
process, the terms of the bidding process and the CAA Agreement are not 
subject to negotiation.

Due Diligence Review

    The BIP describes how qualified bidders may access the due 
diligence materials remotely via a high-speed Internet connection.

Mortgage Loan Sale Policy

    HUD reserves the right to remove Mortgage Loans from SFLS 2016-2 at 
any time prior to the Award Date. HUD also reserves the right to reject 
any and all bids, in whole or in part, and include any Mortgage Loans 
in a later sale. Deliveries of Mortgage Loans will occur in at least 
two monthly settlements and the number of Mortgage Loans delivered will 
vary depending upon the number of Mortgage Loans the Participating 
Servicers have submitted for the payment of an FHA insurance claim. The 
Participating Servicers will not be able to submit claims on loans that 
are not included in the Mortgage Loan Portfolio set forth in the BIP. 
There can be no assurance that any Participating Servicer will deliver 
a minimum number of Mortgage Loans to HUD or that a minimum number of 
Mortgage Loans will be delivered to the Purchaser.
    The SFLS 2016-2 Mortgage Loans are assigned to HUD pursuant to 
section 204(a)(1)(A) of the National Housing Act as amended under Title 
VI of the Departments of Veterans Affairs and Housing and Urban 
Development and Independent Agencies Appropriations Act, 1999. The sale 
of the Mortgage Loans is pursuant to section 204(g) of the National 
Housing Act.

Mortgage Loan Sale Procedure

    HUD selected an open competitive whole-loan sale as the method to 
sell the Mortgage Loans for this specific sale transaction. For SFLS 
2016-2, HUD has determined that 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 Ineligibility

    In order to bid in SFLS 2016-2 as a qualified bidder, a prospective 
bidder must complete, execute and submit both a Confidentiality 
Agreement and a Qualification Statement acceptable to HUD and 
applicable to the loan pool being purchased. In the Qualification 
Statement, the prospective bidder must provide certain representations 
and warranties regarding (i) a prospective bidder, (ii) a prospective 
bidder's board of directors, (iii) a prospective bidder's direct 
parent, (iii) a prospective bidder's

[[Page 62166]]

subsidiaries, and (iv) any related entity with which the prospective 
bidder shares a common officer, director, subcontractor or sub-
contractor who has access to Confidential Information as defined in the 
Confidentiality Agreement or is involved in the formation of a bid 
transaction (``Related Entities''), and (v) a prospective bidder's 
repurchase lenders. The prospective bidder is ineligible to bid on any 
of the Mortgage Loans included in SFLS if the prospective bidder, its 
Related Entities or its repurchase lenders, is any of the following, 
unless other exceptions apply as provided for the in Qualification 
Statement.
    1. An individual or entity that is currently debarred, suspended, 
or excluded from doing business with HUD pursuant to the Governmentwide 
Suspension and Debarment regulations at 2 CFR parts 180 and 2424;
    2. An individual or entity that is currently suspended, debarred or 
otherwise restricted by any department or agency of the federal 
government or of a state government from doing business with such 
department or agency;
    3. An individual or entity that is currently debarred, suspended, 
or excluded from doing mortgage related business, including having a 
business license suspended, surrendered or revoked, by any federal, 
state or local government agency, division or department;
    4. An entity that has had its right to act as a Government National 
Mortgage Association (``Ginnie Mae'') issuer terminated and its 
interest in mortgages backing Ginnie Mae mortgage-backed securities 
extinguished by Ginnie Mae;
    5. An individual or entity that is in violation of its neighborhood 
stabilizing outcome obligations or post-sale reporting requirements 
under a Conveyance, Assignment and Assumption Agreement executed for a 
past sale;
    6. An employee of HUD's Office of Housing, 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 with household to be 
inclusive of the employee's father, mother, stepfather, stepmother, 
brother, sister, stepbrother, stepsister, son, daughter, stepson, 
stepdaughter, grandparent, grandson, granddaughter, father-in-law, 
mother-in-law, brother-in-law, sister-in-law, son-in-law, daughter-in-
law, first cousin, the spouse of any of the foregoing, and the 
employee's spouse;
    7. A contractor, subcontractor and/or consultant or advisor 
(including any agent, employee, partner, director, or principal of any 
of the foregoing) who performed services for or on behalf of HUD in 
connection with the sale;
    8. An individual or entity that knowingly acquired or will acquire 
prior to the sale date material non-public information, other than that 
information which is made available to Bidder by HUD pursuant to the 
terms of this Qualification Statement, about Mortgage Loans offered in 
the sale;
    9. An individual or entity that knowingly uses the services, 
directly or indirectly, of any person or entity ineligible under 1 
through 11 to assist in preparing any of its bids on the Mortgage 
Loans;
    10. An individual or entity which knowingly employs or uses the 
services of an employee of HUD's Office of Housing (other than in such 
employee's official capacity); or
    11. A Participating Servicer that contributed Mortgage Loans to a 
pool on which the Bidder is placing a bid.
    The Qualification Statement has additional representations and 
warranties which the prospective bidder must make, including but not 
limited to the representation and warranty that the prospective bidder 
or its Related Entities are not and will not knowingly use the 
services, directly or indirectly, of any person or entity that is, any 
of the following (and to the extent that any such individual or entity 
would prevent Bidder from making the following representations, such 
individual or entity has been removed from participation in all 
activities related to this sale and has no ability to influence or 
control individuals involved in formation of a bid for this sale):
    (1) An entity or individual is ineligible to bid on any included 
Mortgage Loan or on the pool containing such Mortgage Loan because it 
is an entity or individual that:
    (a) Serviced or held any Mortgage Loan at any time during the two-
year period prior to the bid, or
    (b) is any principal of any entity or individual described in the 
preceding sentence;
    (c) any employee or subcontractor of such entity or individual 
during that two-year period; or
    (d) 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.

Freedom of Information Act Requests

    HUD reserves the right, in its sole and absolute discretion, to 
disclose information regarding SFLS 2016-2, including, but not limited 
to, the identity of any successful qualified 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 SFLS 2016-2, HUD will 
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 SFLS 2016-2 and does not establish HUD's 
policy for the sale of other mortgage loans.

    Dated: September 1, 2016.
Edward L. Golding,
Principal Deputy Assistant Secretary for Housing.
[FR Doc. 2016-21661 Filed 9-7-16; 8:45 am]
 BILLING CODE 4210-67-P