FHA SALE OF MULTIFAMILY AND HEALTHCARE MORTGAGE LOANS YIELDS $94 MILLION IN BUDGET SAVINGS

WASHINGTON - The Federal Housing Administration's mortgage sales program recently reached a milestone when it completed the Multifamily and Healthcare Loan Sale (MHLS 2000-1). The auction generated proceeds of approximately $432 million or nearly 70 percent of the mortgages' unpaid principal balance. This represents approximately $94 million in budget savings. The total budget savings from mortgage loan sales held since 1994 now surpasses $2.35 billion.

The sales program is part of the U.S. Department of Housing and Urban Development's strategy to manage FHA's $400 billion insurance program. The sales enable HUD to transfer mortgages to the private sector and realize a strong return for taxpayers. Selling the mortgages also helps HUD to focus on its core mission of providing affordable housing.

The sale drew bids from approximately 75 different bidders, including financial institutions, real estate companies, investment funds and individuals. Some 25 were awarded loans.

The sales, the last of which closed January 31, consisted of 139 mortgage loans on multifamily and healthcare properties, totaling approximately $623 million in unpaid principal balance. The mortgages were secured by unsubsidized apartment properties, health care facilities and hospitals located throughout the U.S. Bidders were permitted to submit bids on individual loans, pools of loans, combinations of pools, and/or, on the entire portfolio.

The sales were managed by FHA's Asset Sales Office, which was created to develop an effective and rigorous standard for the sales.

Three private sector firms assisted HUD in the sales. Secured Capital Corp., a Los Angeles-based investment bank, was the Transaction Specialist responsible for the marketing and sale of the portfolio. Williams, Adley & Company, LLP, a management consulting and certified public accounting firm with offices in Washington DC, provided Due Diligence service. Federal Asset Advisory Company, LLC, Program Financial Advisor, a joint venture real estate investment banking firm with offices in New York and New Jersey, provided program oversight.