| Outline |
- Description of Process
- Marketing Strategy
- Marketing Materials
|
|
Exhibits
|
6-A. Advertisement - General
6-B. Advertisement - Targeted
6-C. Bidders' Information Package
6-D1. Announcement - General "Front"
6-D2. Announcement - General "Back"
6-E1. Announcement - Targeted "Front"
6-E2. Announcement - Targeted "Back"
6-F. General Information Package (See Exhibit 6-F of Printed Document)
6-G. Update, an FHA Quarterly Publication
6-H. Updates to the Bidder's Information Package
6-H1a. Updates to the Bidder's Information Package 1a
6-H1b. Updates to the Bidder's Information Package 1b
6-H2a. Updates to the Bidder's Information Package 2a
6-H2b. Updates to the Bidder's Information Package 2b
6-H3a. Updates to the Bidder's Information Package 3a
6-H3b. Updates to the Bidder's Information Package 3b
6-H3c. Updates to the Bidder's Information Package 3c
6-H4. Updates to the Bidder's Information Package 4
6-H5. Updates to the Bidder's Information Package 5
6-H6. Updates to the Bidder's Information Package 6
6-H7a. Updates to the Bidder's Information Package 7a
6-H7b. Updates to the Bidder's Information Package 7b
6-H7c. Updates to the Bidder's Information Package 7c
|
PROJECT TIMELINE
1995 1996
Oct. Nov. Dec. Jan. Feb. Mar. April.
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|Marketing|
(2/5-3/19)
1. DESCRIPTION OF PROCESS
The goals of the marketing strategy for the FHA Single Family
Mortgage Loan Sale #2 were to:
- Maximize the number of bidders and therefore the competitiveness
of the sale;
- Facilitate access to quality information;
- Insure a fair and equitable sale by FHA;
- Lay the groundwork for future FHA sales; and,
- Foster a positive image for FHA in the marketplace.
A thorough marketing effort accomplishes these goals with the
least amount of resistance from the market. Maximizing the number
of bidders and the quality of information directly and positively
affects the proceeds to FHA. Access to quality information and
continual communication with the markets minimize the perceived
risk to bidding. Potential investors need to feel comfortable
with the auction guidelines and the completeness of the information.
Above all, they must be confident that the auction process treats
each potential bidder fairly, with no preference for either small
or large investors.
2. MARKETING STRATEGY
The marketing of FHA single family mortgage loan sales is generally
divided into five focal points:
- General and targeted advertising
- General and targeted announcement mailings
- Follow-up calling campaign
- Strategic communications
- Web sites
General Advertising
Sherman Advertising Associates was retained to handle the advertising
efforts associated with the sale. Advertisements were developed
to reach both a general and a targeted audience. A general advertisement
(Exhibit 6-A) was placed in the following national publications
with basic sale information:
Wall Street Journal
Problem Asset Reporter
The Bond Buyer
National Mortgage News
Liquidation Alert
Targeted Advertising
A targeted advertisement (Exhibit 6-B), placed two months
prior to the sale date in various regional newspapers, invited
a wide range of investors, financial institutions and mortgage
bankers of all sizes to participate in SF Mortgage Loan Sale #2.
The advertisement ran in the following newspapers:
Chicago Tribune
Arizona Golden Triangle Group
Los Angeles Times
San Francisco Chronicle
New York Times
Miami Herald
Dallas Morning News
Houston Chronicle
Washington Post
Detroit News
Atlanta Journal Constitution
Birmingham News Post
Denver Post
Fresno CA Bee
Kansas City Times/Star
Memphis Commercial Appeal
Nashville Banner/Tennessean
New Orleans Times Picayune
San Antonio Texas Express
St. Louis Post Dispatch
Follow-Up Calling Campaign
As part of the effort to develop a retail market for the sale,
the financial advisor made follow-up telephone calls to a targeted
list of approximately 600 regional investors (including banks,
mortgage banks, thrifts, small investors) and previous sales participants.
Phase 1 of the follow-up campaign encouraged participation in
the sale and offered additional information as necessary. Phase
2 of the campaign provided those requesting bid packages with
assistance completing the required information. The financial
advisor used a relational database to track the extent of interest
in the sale by region and by type of loan. The relational database
forecasts developments in the market, indicating problem areas
and provides a mechanism for assessing the expected outcome of
the sale.
Strategic Communications
Generating interest in the sale through the media is a critical
part of the marketing campaign. Key activities include:
- An initial press release from HUD announcing the sale;
- Weekly telephone calls during the marketing period to key
reporters in the financial trade press;
- Freelance articles and op-editorials written by the sales
team and placed in key financial publications such as the American
Banker newsletters, Bond Buyer, and Real Estate Investment
Journal;
- Placement of information about the sale on such media newswires
and networks as PR Newswire and Bloomberg; and
- A press release at the conclusion of the sale accompanied
by follow-up phone calls reviewing the auction result and implications.
FHA Web Site
An FHA website provides detailed information about current and
past sales, including answers to frequently asked questions.
Bidders can ask their own questions and to receive responses by
e-mail. Placed-based survey materials (discussed further in
section 3 of this chapter) are included in the website, including
detailed maps displaying the location of the properties. A work
center for qualified bidders (those having completed a confidentiality
agreement and qualification statement) provides the latest loan
sale information. Recent newspaper and trade articles on FHA
sales are also uploaded to the website.
3. MARKETING MATERIALS
The marketing materials for FHA Single Family Mortgage Loan Sale
#2 consist of a Bidders' Information Package and supplements,
general and targeted announcements, placed-based bidding material,
an FHA General Information Package, and Update Newsletters.
Bidders' Information Package
This package (Exhibit 6-C) contains an introduction to
the FHA Single Family Mortgage Loan Sale #2, an executive summary,
bid instructions, background on HUD programs, information on CRA
eligibility, servicing requirements post sale, an introduction
to the due diligence process, closing instructions, statistics
on the mortgage loans, due diligence exception reports, description
of the data fields on the mortgage loan information diskette (Dbase
file included on disk), background on credit scores, and a loan
sale agreement.
General Announcement
A brochure (Exhibit 6-D) announcing the sale is distributed
to the mailing list of the financial advisor with general information
including the number of mortgages for sale and their UPB, a description
of the bid packages, disclaimers, and contacts for further information.
Targeted Announcement
A targeted announcement (Exhibit 6-E) is sent to selected
bidders in each state, to banks with a CRA rating, and to participants
in previous sales. The targeted announcement describes how the
due diligence process associated with the sale is designed to
be of especially low cost to the bidder by using the latest technology
to obtain complete information for use on a PC. A specially designed
CD-ROM package provides broker's price opinions (BPOs) for the
loans in the sale, pictures of the subject properties, credit
reports, and payment histories over the last 36 months. A sample
loan document library is also included. The targeted announcement
also provides key dates for the bid process and other information.
To encourage participation, the announcement indicates that the
loans are pre-approved for CRA acceptability. In addition, the
loan portfolio is pre-packaged in blocks based on performance
and location to allow for pooling by investors.
Placed-Based Bidding Material
One innovation introduced in FHA Single Family Mortgage Loan Sale
#2 was encouraging bidders on selected mortgage blocks in three
cities to voluntarily describe what they intend to do with the
loans if they are the successful bidder. The request is part
of FHA's efforts to explore potential "place- based"
disposition strategies for its assets. In the past, property
dispositions and mortgage sales typically focused only on maximizing
the return on individual properties or mortgage portfolios. The
placed-based strategy includes competitive offerings of multiple
asset types in a particular place (a geographic area where the
economics of the individual properties are tightly linked). The
placed-based approach assesses the extent to which disposition
strategies for a particular set of assets impact other assets
in FHA's portfolio in a designated community. FHA is further
considering whether a placed-based strategy will offer an opportunity
to improve its overall portfolio performance in a particular sale.
Materials describing the placed-based strategy and soliciting
bidder participation are included in the bidders package. Special
pools of property are designated in three areas. Bidders on property
in one or more of the designated areas are asked to supply information
for at least one area regarding:
- How the bidder intends to manage and liquidate the portfolio;
- The anticipated impact of the liquidation activities on the
community where the pool is located;
- The expected impact of the bidder's plan on the entire FHA
portfolio in the immediate location of the specific pool; and
- A description of alternative disposition methods, if any,
that might provide a better return on the overall FHA portfolio
in the designated area.
Bidder responses are deemed voluntary, and pools are awarded solely
on a financial basis.
Supplemental community maps and spreadsheets on each property
are distributed with the placed-based information. The supplemental
materials illustrate HUD's investment of multifamily and single
family assets in the designated communities. Spreadsheets are
included that list addresses for the FHA properties and indicate
whether the property or collateral receives HUD subsidies.
General Information Package
A general information package is included in the materials regarding
the sale. This publication was prepared by the financial advisor
at the outset of the mortgage loan sale program in late 1994 (Exhibit
6-F). The package describes FHA and provides an overview of
the loan sale program, as well as an explanation of the agency's
insurance programs. Also included is an analysis of the FHA portfolio,
subsidy type, and performance status. A preliminary schedule
of loan sales and procedures is also included.
Update Newsletter
Update, a quarterly publication of FHA and its financial
advisor, informs bidders and other interested parties about FHA
mortgage loan sales (Exhibit 6-G). Update provides
a description and highlights of each sale, emphasizing any new
features.
Updates to the Bidders' Information Package
Additions and modifications are expected as a sale date draws
closer. Supplements to the Bidders' Information Package provide
clarification, additional information, and amendments as required
during the bidding process. The supplements contain detailed
answers to questions that typically arise during the bidding process
or during the follow-up calling campaign conducted by the financial
advisor.
The supplements also contain copies of the letters from the appropriate
agencies certifying CRA approval. Clarification of the optimization
model is included in a supplement. For the convenience of the
bidders, a list of potential financing sources is provided based
on written expressions of interest from financial service firms.
The supplements also contain updates on the loans including recent
broker's price opinions and deleted loans. Additional supplements
provide further bid instructions, forms, and a bid diskette.
Supplements to the Bidders' Information Package are provided at
Exhibit 6-H.
Post-Auction Marketing Survey
The financial advisor conducted a post-auction survey to secure
market feedback on how the auction process could be improved.
The respondents indicated that, on the whole, FHA Single Family
Mortgage Loan Sale #2 was successful from a marketing perspective.
The financial advisor's report on the market comments appears
as Exhibit 6-I.
6-A. Advertisement - General
6-B. Advertisement - Targeted
6-C. Bidders' Information Package
6-D1. Announcement - General "Front"
6-D2. Announcement - General "Back"
6-E1. Announcement - Targeted "Front"
6-E2. Announcement - Targeted "Back"
6-F. General Information Package (See Exhibit 6-F of Printed Document)
6-G. Update, an FHA Quarterly Publication
6-H. Updates to the Bidder's Information Package 1a
