TRANSMITTED BY FAX PRIVATE
Date: March 19, 1996
To: Prospective Bidders
Re: FHA Single Family Mortgage Loan Sale #2
This is a Supplement to the Bid Package dated February 5, 1996 ("Bid Package") relating to the referenced offering of Mortgage Loans by the Federal Housing Administration, an organizational unit in the United States Department of Housing and Urban Development. This Supplement contains certain general information that amends, supplements and updates the information contained in the Bid Package (including earlier Supplements).
For those bidders that are sending bids by Federal Express the following phone number should be submitted on the Fed Ex Air Bill
(202) 429-2400 - Hotel Main Number
2. Addendum to Addendum to Question 15 of Question and Answer Package #2
Q. 15. Given that FHA will not close with anyone other than the Purchaser, will FHA allow the Purchaser to execute Transfer Documents in favor of entities other than the Purchaser?
A.15. Section 5.2 and Section 12.4 of the Loan Sale Agreement would prohibit the execution of Transfer Documents by the Purchaser in favor of any entity other than the Purchaser. HUD will, however, make a limited exception to these provisions, subject to satisfaction of the condition set forth in this answer.
If a bidder intends to execute Transfer Documents in favor of any entity other than itself, it must advise HUD thereof in writing at the time that the bidder submits its Bid, and submit the following additional documents with its Bid: (a) a Special Qualification Statement in the form contained under Tab 1 of this Supplement; (b) a Qualification Statement in the form contained under Tab 2 of this Supplement executed by each entity in favor of which the bidder intends to execute Transfer Documents (a "Designated Transferee"); and (c) the power of attorney required pursuant to the seventh paragraph of this answer, in form contained under Tab 3 of this Supplement, executed by each Designated Transferee.
If the Purchaser has complied with the requirements, it may execute the Transfer Documents for one or more Mortgage Loans in favor of a Designated Transferee. This would be done by appropriately completing the Transfer Documents for the relevant Mortgage Loans with the name of the relevant Designated Transferee, instead of the name of the Purchaser. Each individual Mortgage Loan may be assigned to only one Designated Transferee. The Transfer Documents, including both those which are executed in favor of the Purchaser and those which are executed in favor of Designated Transferees, must be executed within the time period set forth in Section 5.1 of the Loan Sale Agreement.
Notwithstanding the foregoing, the Purchaser must purchase at least a portion of the Mortgage Loans for its own account and not for transfer to a Designated Transferee.
If the Purchaser executes any Transfer Documents in favor of a Designated Transferee, the Purchaser must also comply with the requirements of Section 12.4(b)(ii), (iii), (iv) and (v) of the Loan Sale Agreement. Specifically, (a) the Designated Transferee must be a Permitted Transferee; (b) the Purchaser must have delivered a complete and accurate copy of the Loan Sale Agreement to the Designated Transferee prior to the execution of the Transfer Documents; (c) there must be a written assignment and assumption agreement between the Purchaser and the Designated Transferee and it must expressly state that the assignee assumes all of the Purchaser's liabilities and obligations under the Loan Sale Agreement from and after the assignment; and (d) promptly following the execution of the Transfer Documents in favor of a Designated Transferee, the Purchaser must deliver to HUD a complete and accurate copy of the assignment, together with the following: (i) the name, address, telephone number and fax number of an employee of the Designated Transferee who will act as the contact person with HUD; (ii) the name, address, telephone number and fax number of an employee of the Designated Transferee's servicer who will act as the contact person with HUD; and (iii) evidence that the Designated Transferee is a Permitted Transferee.
The Purchaser, not the Designated Transferees, must sign the Bid Form, the Special Qualification Statement, and the Loan Sale Agreement. Notwithstanding the provisions of Section 12.4(c) of the Loan Sale Agreement, the execution of the Transfer Documents in favor of the Designated Transferees will not release, relieve or otherwise affect any liabilities or obligations of the Purchaser arising or accruing prior to the Servicing Transfer Date, including without limitation the obligation to make the Closing Date Payment.
During the period prior to the Servicing Transfer Date, HUD will work only with the Purchaser on all matters relating to the Mortgage Loans, and will deal with the Purchaser as if it were the owner of the Mortgage Loans for all purposes. This includes, without limitation, retrieval of the Mortgage Loan Documents and the Servicing Files, negotiation and payment of post-Closing Date adjustments and remittances, payment of real estate taxes, giving Mortgagor Notifications, delivery of the Servicing Tape and Standard Conversion Reports, and addressing of issues related to breaches of representations and warranties. Each Designated Transferee must execute an irrevocable power of attorney in favor of the Purchaser granting the Purchaser the right to take all such actions, and all other actions related to the Mortgage Loans, prior to the Servicing Transfer Date, which shall be in the form contained under Tab 3 of this Supplement.
This Question and Answer #15 is intended to interpret the provisions of the Loan Sale Agreement and shall replace and supersede (a) all prior Questions and Answers #15, and (b) any interpretation of the Loan Sale Agreement which is inconsistent with this answer.