HUD is selling reverse mortgages on 1,500 occupied houses whose borrowers are dead, and the contract now carries the first look requirement January said it would not
Two notices describe the same sale of the same reverse mortgages, and one sentence in them says the opposite thing.
In January the Department of Housing and Urban Development wrote that the sale contract "will NOT contain first look requirements or mission outcome goals", with the negative capitalised in the original. In the second notice, filed on Friday morning, the same contract will contain first look requirements. Nothing in the new document explains the change.
What is being sold
About 1,500 home equity conversion mortgages, better known as reverse mortgages, with a loan balance of roughly $465m. Every one is a first lien on a property that is occupied. On every one the borrower is dead, along with any borrowing or non-borrowing spouse, and no heir has come forward in the time since.
They are due and payable, held by the Secretary, and they will be sold without FHA insurance and with servicing released. HUD says the sale reduces financial risk to the Mutual Mortgage Insurance Fund and disposes of defaulted assets efficiently. Bids run from 10 a.m. to 1 p.m. Eastern on 1 September, and awards are expected around 3 September.
The pool shrank and the date moved
January put the offering at approximately 2,500 loans and approximately $730m, with a bid date of 10 February and awards around 13 February. August puts it at approximately 1,500 loans and approximately $465m, with a bid date of 1 September.
That is about a thousand fewer loans, about $265m less, and a delay of nearly seven months. The notice accounts for none of it. The whole of the explanation is four words, "Because the sale was delayed", which is why the second notice exists at all.
The new attestation
One requirement in the August notice has no counterpart in January. Prospective bidders must now attest that no mortgage loan they purchase will result in an acquisition of the security property in circumstances that would be prohibited by Title X of the 21st Century ROAD to Housing Act, Public Law 119-101. HUD ties the attestation to Executive Order 14376, titled Stopping Wall Street From Competing With Main Street Homebuyers, and to what it calls subsequent congressional action.
It sits alongside the older bar list, which is long and unchanged in substance: anybody debarred or suspended by a federal, state or local body, anybody whose Ginnie Mae issuer rights have been terminated, anybody in breach of neighborhood stabilising obligations from a previous sale, employees of HUD's Office of Housing and their relatives down to first cousins, contractors who worked on the sale, and anybody who has acquired material non-public information about the loans on offer. A servicer or holder of any loan in the pool within the six months before the bid is out too, along with its principals, employees and subcontractors.
Where the terms actually live
Not in this notice. HUD says the bidder package and the sale contract carry the detail, and the package went to qualified bidders around 4 August, a week before this notice publishes. Falcon Capital Advisors is running the transaction. HUD picks the winning bids on best value, in what the notice calls its sole and absolute discretion, and reserves the right to name the buyer and the price once the sale closes.
