[Code of Federal Regulations]

[Title 24, Volume 1]

[Revised as of April 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 24CFR27.20]



[Page 296-298]

 

                 TITLE 24--HOUSING AND URBAN DEVELOPMENT

 

PART 27_NONJUDICIAL FORECLOSURE OF MULTIFAMILY AND SINGLE FAMILY MORTGAGES

--Table of Contents

 

       Subpart A_Nonjudicial Foreclosure of Multifamily Mortgages

 

Sec.  27.20  Conditions of foreclosure sale.



    (a) The requirements of section 367(b)(2)(A) of the Act (12 U.S.C. 

3706(b)(2)(A)) apply if a majority of the residential units in a 

property subject to foreclosure sale pursuant to the Act



[[Page 297]]



and this subpart are occupied by residential tenants either on the date 

of the foreclosure sale or on the date on which the General Counsel 

designates the foreclosure commissioner.

    (b) Terms which the Secretary may find appropriate to require 

pursuant to section 367(b) of the Act (12 U.S.C. 3706(b)), and such 

other provisions of law as may be applicable, may include provisions 

relating to use and ownership of the project property, tenant admission 

standards and procedures, rent schedules and increases, and project 

operation and maintenance. In determining terms which may be appropriate 

to require, the Secretary shall consider:

    (1) The history of the project, including the purposes of the 

program under which the mortgage insurance or assistance was provided, 

and any other program of HUD under which the project was developed or 

otherwise assisted and the probable causes of project failure resulting 

in its default;

    (2) A financial analysis of the project, including an appraisal of 

the fair market value of the property for its highest and best use;

    (3) A physical analysis of the project, including the condition of 

the structure and grounds, the need for rehabilitation or repairs, and 

the estimated costs of any such rehabilitation or repairs;

    (4) The income levels of the occupants of the project;

    (5) Characteristics, including rental levels, of comparable housing 

in the area, with particular reference to whether current conditions and 

discernible trends in the area fairly indicate a likelihood that, for 

the foreseeable future after foreclosure and sale, the project will 

continue to provide rental or cooperative housing and market rentals 

obtainable in the project will be affordable by low- or moderate-income 

persons;

    (6) The availability of or need for rental housing for low- and 

moderate-income persons in the area, including actions being taken or 

projected to be taken to address such needs and the impact of such 

actions on the project;

    (7) An assessment of the number of occupants who might be displaced 

as a result of the manner of disposition;

    (8) The eligibility of the occupants of the property for rental 

assistance under any program administered by HUD and the availability of 

funding for such assistance if necessary in order that the units 

occupied by such occupants will remain available to and affordable by 

such persons, or if necessary in order to assure the financial 

feasibility of the project after foreclosure and sale subject to the 

terms to be required by the Secretary; and

    (9) Such other factors relating to the project as the Secretary 

shall consider appropriate.

    (c) Terms which the Secretary may require to be agreed to by the 

purchaser pursuant to section 367(b) of the Act (12 U.S.C. 3706(b)) 

shall generally not be more restrictive, or binding for a longer 

duration, than the terms by which the mortgagor was bound prior to the 

foreclosure. For example: If the mortgage being foreclosed was held by 

the Secretary under section 312 of the Housing Act of 1964 (42 U.S.C. 

1452b), any terms required by the Secretary pursuant to this section 

shall be in effect no longer than five years after the completion of the 

rehabilitation work funded by the section 312 loan. No terms shall be 

required pursuant to this section if the foreclosure sale occurs more 

than five years after the completion of such rehabilitation work 

(signified by the due date for commencement of amortization payments in 

the section 312 loan note).

    (d) The limitation contained in paragraph (c) of this section 

applies only to such terms as the Secretary may require the purchaser to 

agree to, as a condition and term of the sale, under paragraph (a) of 

this section. Nothing contained in paragraph (c) of this section shall 

prevent the Secretary and the purchaser from entering into a subsidy 

agreement under any program administered by the Secretary containing 

terms binding upon either party which are longer in duration than would 

be permitted to be required by paragraph (c) of this section.

    (e) Any terms required by the Secretary to be agreed to by the 

purchaser as a condition and term of sale under this section and section 

367(b) of the



[[Page 298]]



Act (12 U.S.C. 3706(b)) shall be embodied in a use agreement to be 

executed by the Secretary and the purchaser. Such terms also may be 

included, or referred to, in appropriate covenants contained in the deed 

to be delivered by the foreclosure commissioner under Sec.  27.45. Terms 

required by the Secretary pursuant to this section shall be stated or 

described in the Notice of Default and Foreclosure Sale under Sec.  

27.15.

    (f) The defaulting mortgagor, or any principal, successor, 

affiliate, or assignee thereof, on the multifamily mortgage being 

foreclosed, shall not be eligible to bid on, or otherwise acquire, the 

property being foreclosed by the Department under this subpart or any 

other provision of law. A ``principal'' and an ``affiliate'' are defined 

as provided at 24 CFR 24.105.



[61 FR 48548, Sept. 13, 1996, as amended at 66 FR 35847, July 9, 2001]