SUPPLEMENTARY INFORMATION:

HUD is announcing its intention to sell 11 unsubsidized, non-performing healthcare mortgage loans (the “Mortgage Loans”) in Loan Sale HLS 2027-1. The Mortgage Loans will be sold without FHA insurance and with HUD servicing released. The offering includes 11 first-lien mortgage notes secured by 11 healthcare skilled nursing and assisted living facilities located in nine states. Qualified bidders will have the opportunity to submit competitive, sealed bids for the Mortgage Loans. For bidding purposes, HUD will stratify the loans into pools, grouping them by characteristics such as loan performance, property type, geographic location, and lien position. Pools may contain single or multiple loans. Bidders may submit offers on one or more pools.

Bidder Eligibility

Eligibility requirements are detailed in the Qualification Statement, which outlines HUD's restrictions on bidding based on prior involvement with the Mortgage Loans. Certain entities and individuals are prohibited from participating in the sale, as described in the Qualification Statement.

The full loan listing and additional sale details are included in the Bidder's Information Package (BIP), available to qualified bidders upon submission of an acceptable Confidentiality Agreement and Qualification Statement via the bidding platform.

Bidding Process

The BIP provides detailed instructions on bidding procedures for HLS 2027-1. It will also include a standardized, non-negotiable Loan Sale Agreement that governs the terms of the sale. For access to the BIP and to register for the sale, qualified bidders must submit an executed Confidentiality Agreement and a completed Qualification Statement via the bidding platform.

As part of its bid, each bidder must submit a minimum deposit of the greater of $100,000 or 10 percent of the aggregate price of all their bids. If a bidder's total bid is less than $100,000, the minimum deposit shall be not less than 50 percent of the bidder's aggregate bid. HUD will evaluate all bids and select the successful bid(s) in its sole and absolute discretion. For any winning bidder, the bid deposit becomes non-refundable and will be credited toward the final purchase price. Any deposit amount exceeding the purchase price will be refunded. Deposits submitted by unsuccessful bidders will be returned after notification of the winning bid(s). Closings are expected to occur on or about December 9, 2026.

The Loan Sale Agreement, included in the BIP, sets forth additional terms and conditions of the sale. To maintain a fair and competitive auction process, neither the bidding procedures nor the Loan Sale Agreement are subject to negotiation.

Due Diligence Review

The BIP describes the due diligence process for reviewing loan files in HLS 2027-1. Qualified bidders will be able to access loan information electronically. Further information on performing a due diligence review of the Mortgage Loans is provided in the BIP.

Mortgage Loan Sale Policy

HUD reserves the right to add Mortgage Loans to or delete Mortgage Loans from HLS 2027-1 at any time prior to the award date. HUD also reserves the right to reject bids, in whole or in part, without prejudice against 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 auction 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

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 2027-1:

1. A mortgagor or healthcare operator, 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. With respect to any other HUD multifamily and/or healthcare mortgage loan not offered in the Loan Sale, any mortgagor or healthcare operator, including any Related Party (as such term is defined in the Qualification Statement) of either, 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 that fails to cure such default or violation by no later than the first day of the month of the Bid Date;

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 HLS 2027-1;

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 ( printed page 60978) 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, employee, contractor, or subcontractor of any person or entity that, within the two-year period prior to the Bid Date, serviced any of the Mortgage Loans or performed other services for or on behalf of HUD with respect to any of the Mortgage Loans; and/or

10. Any employee, officer, director or any other person that provides or will provide services to the prospective bidder with respect to the Mortgage Loans that, within the two-year period prior to the Bid Date, serviced any of the Mortgage Loans or performed other services for or on behalf of HUD with respect to any of 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 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 2027-1.

Freedom of Information Act Requests

HUD reserves the right, in its sole and absolute discretion, to disclose information regarding HLS 2027-1, 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 2027-1, HUD may be required to disclose information relating to HLS 2027-1 pursuant to the Freedom of Information Act and all regulations promulgated thereunder.

Scope of Notice

This notice applies to HLS 2027-1 and does not establish HUD's policy for the sale of other mortgage loans.

91 FR 60976