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June 22, 2001
HUD'S FIRST INTERNET LOAN SALE WAS A HUGE SUCCESS
WASHINGTON - The U.S. Department of Housing and Urban Development today announced the closing of its first loan sale conducted entirely on the Internet.
The $109 million auction was the largest such online transaction by the federal government. The auctioned loans were originated under HUD's Section 312 loan program, which provided first and junior lien financing at below-market interest rates for the rehabilitation of homes in low-income neighborhoods.
"This is a powerful example of how HUD is using leveraging technology to become more efficient," HUD Secretary Mel Martinez said. "By empowering bidders with an advanced loan trading system, HUD increased bidder interest, maximized the sale proceeds and increased the savings to the taxpayers."
The Section 312 Program ceased originating new loans over 10 years ago. More than 100,000 loans were made since the authorization of the program in the Housing Act of 1964. Since Congress terminated the program, the remaining portfolio dwindled to less than 6,000 active loans. Selling the balance of the loans to the private sector helps HUD to refocus its efforts toward its active programs.
The sale attracted significant bidder interest. Registered bidders had the ability to perform due diligence, review images and create customized reports online, and HUD was able to receive and confirm bids electronically. Bayview Financial Trading Group, L.P., Miami, FL, and The Cadle Company, Newton Falls, OH, were the successful bidders. The 5,693 single-family and multifamily loans were sold without any government insurance.
Hanover Capital Partners Ltd., a New Jersey-based loan sale advisory firm, assisted HUD in this sales effort. As the Transaction Financial Advisor, they were responsible for the portfolio analysis, due diligence, stratification and marketing. The online sale was conducted through its affiliate, HanoverTrade.com.