HUD No. 04-067
July 12, 2004
HUD SAVES $50 MILLION WITH PUBLIC-PRIVATE JOINT VENTURE
WASHINGTON - Housing and Urban Development Assistant Secretary John C. Weicher today announced the third sale of defaulted mortgage loans in the Accelerated Claim and Disposition (ACD) Demonstration. HUD estimates that the initial sale of these mortgages could save the Government approximately $50 million.
Under the terms of this Single-Family Joint Venture Loan Sale, the Department sold a 60 percent interest in a public-private joint venture, formed to acquire, service and dispose of defaulted mortgage loans secured by single-family properties. HUD sold an initial commitment of 4,250 mortgages representing approximately $411 million in unpaid principal balance.
The sealed bid auction took place June 22, 2004 via HUD's electronic bid site. Six bidders, representing global investment banking firms, commercial banks and private investment funds, participated in the auction. This third sale, was the first conducted entirely electronically via HUD's website.
The winning bidder, Citigroup Global Markets Realty, will acquire a 60 percent equity share in a public-private joint venture formed to acquire, service and dispose of a portfolio of defaulted single family loans. The loans are secured by properties located nationwide.
Under the terms of the sale, a joint venture will be formed as a Delaware limited
company (LLC) in which HUD and Citigroup Global Markets Realty will be the members. Citigroup Global Markets Realty will serve as the LLC manager, and will be responsible for servicing and disposing of the assets. They will determine the most financially viable options of either disposing of the loans or restructuring them.
Congress authorized the Accelerated Claims and Asset Disposition program in 1999 to provide HUD with greater flexibility to pay insurance claims and to dispose of acquired mortgage notes and properties.
The Demonstration is managed by FHA's Office of Asset Sales. Its goals are to align private sector interests with FHA, to increase the value of these single-family assets and to keep the homeowners in their homes. The sales have provided HUD with greater flexibility for modifying the single-family claim and property disposition process and has maximized recoveries on claims paid.
HUD is the nation's housing agency committed to increasing homeownership, particularly among minorities; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development as well as enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet and espanol.hud.gov.