83 FR 34860 - Notice of HUD-Held Multifamily and Healthcare Loan Sale (MHLS 2018-2)

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Federal Register Volume 83, Issue 141 (July 23, 2018)

This notice announces HUD's intention to sell three unsubsidized multifamily and fifteen unsubsidized healthcare mortgage loans, without Federal Housing Administration (FHA) insurance, in a competitive, sealed bid sale on or about August 15, 2018 (MHLS 2018-2 or Loan Sale). This notice also describes generally the bidding process for the sale and certain persons who are ineligible to bid.

[Federal Register Volume 83, Number 141 (Monday, July 23, 2018)]
[Notices]
[Pages 34860-34861]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-15630]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-6089-N-02]


Notice of HUD-Held Multifamily and Healthcare Loan Sale (MHLS 
2018-2)

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

ACTION: Notice of sale of three multifamily and fifteen healthcare 
mortgage loans.

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SUMMARY: This notice announces HUD's intention to sell three 
unsubsidized multifamily and fifteen unsubsidized healthcare mortgage 
loans, without Federal Housing Administration (FHA) insurance, in a 
competitive, sealed bid sale on or about August 15, 2018 (MHLS 2018-2 
or Loan Sale). This notice also describes generally 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 July 18, 2018. Bids for the loans must be submitted on the bid 
date, which is currently scheduled for August 15, 2018 between certain 
specified hours. HUD anticipates that an award or awards will be made 
on or before August 16, 2018. Closing is expected to take place between 
August 27th and August 31st, 2018.

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 website at 
www.hud.gov/fhaloansales. Please fax or email as well as mail executed 
original documents to JS Watkins Realty Partners, LLC: JS Watkins 
Realty Partners, LLC, c/o The Debt Exchange, 133 Federal Street, 10th 
Floor, Boston, MA 02111, Attention: MHLS 2018-2 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 MHLS 
2018-2, eighteen (18) unsubsidized first lien mortgage loans (Mortgage 
Loans), consisting of fifteen (15) first lien healthcare notes secured 
by assisted living facilities located in various locations within 
Arizona, Illinois, Indiana, Kansas, Texas, and three first lien 
multifamily notes secured by multifamily properties located in Utah and 
Alabama. 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. Qualified bidders may submit bids 
on one or more of the Mortgage Loans.
    The Mortgage Loans will be stratified for bidding purposes into 
several mortgage loan pools. 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 pools of Mortgage Loans or may bid on individual 
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 an 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; and a 
limited partner, nonmanaging member, investor and/or shareholder who 
owns a 1% or less interest in one or more of the Mortgage Loans, or in 
the project securing one or more of 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 MHLS 2018-
2. 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 One Hundred Thousand Dollars ($100,000) or ten percent 
(10%) of the aggregate bid prices for all of such Bidder's bids. In the 
event the Bidder's aggregate bid is less than One Hundred Thousand 
Dollars ($100,000), the minimum deposit shall be not less than fifty 
percent (50%) of the Bidder's aggregate bid. 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 after notification to 
successful bidders on or before August 20, 2018. Closings are expected 
to take place between August 27, 2018 and August 30, 2018.
    These are the essential terms of sale. The Loan Sale Agreement, 
which is 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 MHLS 2018-2. 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 is 
provided in the BIP.

[[Page 34861]]

Mortgage Loan Sale Policy

    HUD reserves the right to add Mortgage Loans to or delete Mortgage 
Loans from MHLS 2018-2 at any time prior to the Award Date. HUD also 
reserves the right to reject any and all bids, in whole or in part, 
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 
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 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 MHLS 
2018-2:
    1. A mortgagor, including its principals, affiliates, family 
members, and assigns, with respect to one or more of 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 
August 1, 2018;
    3. Any individual or entity that is debarred, suspended, or 
excluded from doing business with HUD pursuant to Title 2 of the Code 
of Federal Regulations, 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 MHLS 2018-2;
    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 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 or 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 August 1, 2018, 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 August 1, 2018, had access to information with respect 
to the Mortgage Loan on behalf of HUD; and/or
    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 
August 1, 2018, 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 MHLS 2018-2.

Freedom of Information Act Requests

    HUD reserves the right, in its sole and absolute discretion, to 
disclose information regarding MHLS 2018-2, 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 MHLS 2018-2, 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 2018-2 and does not establish HUD's 
policy for the sale of other mortgage loans.

    Dated: July 17, 2018.
Brian D. Montgomery,
Assistant Secretary for Housing--FHA Commissioner.
[FR Doc. 2018-15630 Filed 7-20-18; 8:45 am]
 BILLING CODE 4210-67-P