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U.S. Department of Housing and Urban Development

Originating Organization: Office of Housing

Special Attention of: Interim Notice H 92-3 (HUD)

REGIONAL ADMINISTRATORS

REGIONAL HOUSING DIRECTORS Issued: 4/8/92

REGIONAL AND FIELD COUNSEL Expires: 8/8/92

FIELD OFFICE MANAGERS

DIRECTORS OF HOUSING MANAGEMENT Cross References: H 92-24(HUD)

CHIEFS OF LOAN MANAGEMENT

CHIEF PROPERTY OFFICERS/MULTIFAMILY REALTY SPECIALISTS

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Subject: Section 221(g)(4) Project Mortgage Auction:

Amendment of HUD Notice 92-24

On March 4, 1992, the Department of Housing and Urban

Development (HUD) issued HUD Notice 92-24, Announcement: Section

221(g)(4) Project Mortgage Auction. On the basis of comments

received, the Department would like to offer the following

clarifications. Added or revised language is underlined.

o Page 1, par. 3. "On April 21, 1992, a HUD-approved

mortgagee may submit a bid on a mortgage or pool of

mortgages expressed in basis points (the bid rate) over

or under the 10-year Treasury note yield. The 10-year

Treasury note yield is the semi-annual yield equivalent

of the "on the run" 10-year note at 11:00 a.m. on the

day after the auction to be determined by Chemical

Bank.

o Page 1, add to end of paragraph 3: "If the gross bid

rate is below the note rate for an individual mortgage

or below the weighted average note rate for a pool of

mortgages, the purchasing mortgagee shall pay the

difference between the monthly interest payable on the

mortgage at gross bid rate and the monthly interest

payable on the mortgage at the note rate applied to the

scheduled declining unpaid principal balance to HUD on

a monthly basis."

o Page 2, last par. "Additional information on a project

will be made available by the HUD Field Office

responsible for a project upon request; however, HUD is

prevented by the Trade Secrets Act from releasing a

project's profit and loss report or financial

statement."

o Page 5, last par. "All bids must be submitted by

telephone to an operator at 703-235-9108 or 703-235-9102

on April 21, 1992, between 9:00 a.m. and 12:00

noon eastern time. All telephone calls will be

recorded."

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HMP Distribution: W-3-1, W-2(H), W-3(A)(H)(OGC)(ZAS), W-4(H),R-1,R-2,R-3,

R-3-1,R-3-2,R-3-3,R-6,R-6-1,R-6-2,R-7,R-7-1,R-7-2,R-8

_______________________________________________________________________

2

o Page 10. Add "(10) A copy of the Regulatory

Agreement," to the documents required for delivery by

the selling mortgagee to the purchasing mortgagee at

closing.

o Page 11. Revise first sentence to read: "In cases

where the original mortgage note or other loan

documents (including records for Reserve for

Replacements or other escrows) are missing, the selling

mortgagee must furnish to the purchasing mortgagee an

indemnification for the benefit of HUD (and, in the

case of a lost mortgage note, an Affidavit of Lost

Note), in a form that conforms to the samples in

Attachment D."

o Delete second sentence: "If so requested by the

purchasing mortgagee, the selling mortgagee shall also

provide appropriate indemnifications for the benefit of

the purchasing mortgagee with respect to lost or

missing documents or deficiencies in the accounts or

records for Reserve for Replacement or other escrows."

o Page 11. Add to the last paragraph: "HUD will

consider curtailing the selling mortgagee's stipend in

the event that the selling mortgagee fails to deliver

the above-described documents and indemnifications to

the purchasing mortgagee."

___________________________________

Assistant Secretary for

Housing-Federal Housing Commissioner

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