Sale of HUD-Held Multifamily Mortgages

This rule adds two provisions which conform the mortgage sale regulations to Departmental policy statements made in the preamble to the proposed and final rule.<SUP>1 First, in the sale of delinquent mortgages on partially-assisted and subsidized projects, HUD will require the assumption of federal rental subsidy contracts by project purchasers, including foreclosure purchasers. In addition, mortgage purchasers may not foreclose in a manner that would terminate such assisted tenants' leases. Second, owners of partially-assisted and subsidized projects will continue to be subject to a prohibition against discriminating against certificate and voucher holders after a mortgage sale without insurance. In addition, owners of both subsidized and unsubsidized projects with mortgages that are delinquent when sold by HUD must agree to record a covenant running with the land to continue this obligation through the maturity date of the mortgage, as part of the consideration of a loan restructuring or compromise of the mortgage indebtedness with the mortgage purchaser. Alternatively, if the mortgage purchaser forecloses, this nondiscrimination obligation would become applicable to the project purchaser at foreclosure.