www.hudclips.org U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT WASHINGTON, D. C. 20410-8000 June 18, 1991 OFFICE OF THE ASSISTANT SECRETARY FOR HOUSING-FEDERAL HOUSING COMMISSIONER Mortgagee Letter 91 - 29 MEMORANDUM FOR: All HUD-APPROVED MORTGAGEES SUBJECT: Auction of Section 221(g)(4) Multifamily Mortgages The Department has received approval from the Office of Management and Budget to collect the information required to auction Section 221(g)(4) mortgages. Section 221(g)(4) of the National Housing Act provides that mortgagees with mortgages insured pursuant to a commitment issued under Section 221 prior to November 30, 1983, may assign to HUD any such mortgage in the twenty-first year following the date of final endorsement, provided that the mortgage is not in default. Section 336 of the Cranston-Gonzalez National Affordable Housing Act and Section 2201 of the Omnibus Budget Reconciliation Act of 1990 provide that, when a mortgagee elects to assign a mortgage to HUD under Section 221(g)(4), the Secretary shall, in lieu of accepting the assignment, arrange an auction sale of the mortgage and pay the purchaser monthly interest enhancement payments. HUD will arrange auction sales for all Section 221(g)(4) mortgages for which a notice of election to assign was submitted after December 5, 1990. Mortgagees who submitted notices on or before December 5, 1990, and for which no assignment was recorded, may choose to participate in the first auction or to proceed to assignment. All mortgagees who have submitted notices of election to assign are being notified that they should submit the information on the attached Project Data Summary Sheet format for each mortgage to be included in the first auction. It is not necessary to use the attached form as long as the requested information is provided. In accordance with the statute, an auction will be held between two and six months after HUD receives the requested information. In the future, all mortgagees who elect to assign a mortgage under Section 221(g)(4) should submit their elections to: Audrey Hinton, Acting Director, Office of Multifamily Housing Preservation and Property Disposition U.S. Dept. of Housing and Urban Development 451 - Seventh Street, SW Washington, DC 20410 _____________________________________________________________________ 2 The election should be accompanied by a certified statement that the mortgage was current as of the twentieth anniversary date, a copy of the Deed of Trust Note, including the endorsement panel, and the information requested on the Project Data Summary Sheet format. About three times each year, the Department will schedule a Project Mortgage Auction. For each auction, it will publish an Announcement which will contain the date and procedures for the auction and will describe the mortgages offered for sale. A copy of the Announcement will be sent to every HUD-approved mortgagee. From 60 days after the date of the election to assign until sale of the mortgage (or recordation of assignment in the event there is no sale), HUD will pay the selling mortgagee a stipend of the difference between the note rate on the mortgage and the debenture rate on the date of the election to assign applied to the declining principal balance. Until the sale of the mortgage has been completed, the mortgagee of record will continue to be responsible for protecting the Secretary's interest in the mortgage. The mortgagee must continue to maintain all escrow accounts, pay taxes and insurance, and bill for, and accept, all payments from the mortgagor. Very sincerely yours, _____________________________________ Arthur J. Hill Assistant Secretary for Housing-Federal Housing Commissioner Attachment _____________________________________________________________________ FORMAT FOR PROJECT SUMMARY DATA SHEET Part A - General Information 1. Project Name _____________________________________________________ 2. Project Address __________________________________________________ 3. FHA Project Number _______________________________________________ 4. HUD Field Office with jurisdiction over Project __________________ __________________________________________________________________ 5. Mortgagee ________________________________________________________ Address __________________________________________________________ (Contact person and phone number) ________________________________ __________________________________________________________________ 6. Servicer _________________________________________________________ Address __________________________________________________________ (Contact person and phone number _________________________________ __________________________________________________________________ 7. Management Agent _________________________________________________ Address __________________________________________________________ (Contact person and phone number _________________________________ __________________________________________________________________ _____________________________________________________________________ PART B - MORTGAGE INFORMATION 1. Section of National Housing Act: Section 221(d)(3) BMIR___________ Section 221(d)(3) MR_____________ Section 221(d)(4)________________ 2. Original Mortgage Amount: $________________________________________ 3. Mortgage Balance (on the date of the election to assign) as of______-_____-______: $________________________ 4. Interest Rate: ________% 5. Monthly Payment to P & I: $_______________________________________ 6. Start of Amortization: _____-_______ 7. Mortgage Maturity Date: _____-_______ 8. Date of Final Endorsement: _____-_______ 9. Annual Servicing Fee: $______________________ ________________________% of principal balance _____________________________________________________________________ PART C - MORTGAGOR INFORMATION 1. Mortgagor Entity: Name of Entity________________________________________________ Name of Principal_____________________________________________ Title_________________________________________________________ Address_______________________________________________________ ______________________________________________________________ ______________________________________________________________ 2. Type of Owner: Check all that apply Nonprofit_______________ Individual_______________ Limited Dividend________ Partnership______________ Profit-motivated________ Corporation______________ Cooperative_____________ Other____________________