an interlocutory ruling shall file a AUTHORITY: Secs. 369C(5) and 3691, Multimotion with the hearing officer within family Mortgage Foreclosure Act of 1981 (12 ten days of the ruling requesting certi

U.S.C. 3711(5) and 3717); sec. 7(d), Departfication of the ruling for review by the

ment of Housing and Urban Development

Act (42 U.S.C. 3535(d)). Secretary. Certification may be granted if the hearing officer believes that SOURCE: 49 FR 7074, Feb. 24, 1984, unless (1) it involves an important issue of otherwise noted. law or policy as to which there is substantial ground for difference of opin

Subpart A-General ion and (2) an immediate appeal from the order may materially advance the 8 27.1 Purpose. ultimate termination of the litigation.

The purpose of this part is to imple(b) Petition for review. Any party

ment the Multifamily Mortgage Foremay file a petition for review of an in

closure Act of 1981 (the Act) (12 terlocutory ruling within ten days of U.S.C. 3701-3717). The Act creates a the hearing officer's determination re

uniform Federal remedy for foreclogarding certification,

sure of mortgages covering multiunit (c) Secretarial review. The Secre

residential and nonresidential project tary, or designee, shall review a certi

mortgages held by the Secretary of fied ruling. The Secretary, or designee, Housing and Urban Developmemt has the discretion to grant or deny a

under title II of the National Housing petition for review from an uncertified

Act, 12 U.S.C. 1707-17152-11, or under ruling.

section 312 of the Housing Act of 1964, (d) Continuation of hearing. Unless

42 U.S.C. 1452b. Under a delegation of otherwise ordered by the hearing offi.

authority published on February 5, cer or the Secretary, or designee, the

1982 (47 FR 5468), the Secretary has hearing shall proceed pending the de

delegated to the HUD General Coun. termination of any interlocutory

sel his powers under the Act to apappeal and the order or ruling of the point a foreclosure commissioner or hearing officer shall be effective pend- commissioners and to substitute thereing review.

for, to fix the compensation of com

missioners, and to promulgate imple. PART 27-NONJUDICIAL FORECLO


8 27.2 Scope and applicability.

(a) Under this part, the Secretary Subpart A-General

may foreclose on any defaulted Secre Sec.

tary-held multifamily mortgage en27.1 Purpose.

cumbering real estate in any State. 27.2 Scope and applicability.

The Secretary may use the provisions 27.3 Definitions.

of these regulations to foreclose on

any multifamily mortgage regardless Subpart B Procedures

of when the mortgage was executed. 27.5 Prerequisites to foreclosure.

(b) The Secretary may, at the Secre. 27.10 Designation of a foreclosure commis- tary's option, use other procedures to sioner.

foreclose defaulted multifamily mort27.15 Notice of default and foreclosure gages, including judicial foreclosure in sale.

Federal court and nonjudicial foreclo27.20 Conditions of foreclosure sale. 27.25 Termination or adjournment of fore

sure under State law. This part applies closure sale.

only to foreclosure procedures author. 27.30 Conduct of the the sale.

ized by the Act and not to any other 27.35 Foreclosure costs.

foreclosure procedures the Secretary 27.40 Disposition of sale proceeds.

may use. 27.45 Transfer of title and possession. 27.50 Redemption rights.

8 27.3 Definitions. 27.55 Record of foreclosure and sale. 27.60 Management and disposition by the

As used in this part: Secretary.

County means county as defined in 27.65 Computation of time.

section 2 of title I, United States Code;

State law, together with fixtures and other interests subject to the lien of the mortgage under applicable State law; and

State means the several States, the District of Columbia, the Commonwealth of Puerto Rico, the territories and possessions of the United States, and the Trust Territory of the Pacific Islands, and Indian tribes as defined by the Secretary.

Subpart B-Procedures

General Counsel means the General Counsel of the Department of Housing and Urban Development;

Mortgage means a deed of trust, mortgage, deed to secure debt, security agreement, or any other form of instrument under which any interest in property, real, personal or mixed, or any interest in property including leaseholds, life estates, reversionary interests, and any other estates under applicable State law, is conveyed in trust, mortgaged, encumbered, pledged, or otherwise rendered subject to a lien, for the purpose of securing the payment of money or the performance of an obligation;

Mortgage agreement means the note or debt instrument and the mortgage instrument, deed of trust instrument, trust deed, or instrument or instruments creating the mortgage, including any instruments incorporated by reference therein (including any applicable regulatory agreement), and any instrument or agreement amending or modifying any of the foregoing;

Mortgagor means the obligor, grantor, or trustor named in the mortgage agreement and, unless the context otherwise indicates, includes the current owner of record of the security property whether or not personally liable on the mortgage debt;

Multifamily mortgage means a mortgage held by the Secretary pursuant to title II of the National Housing Act, 12 U.S.C. 1707-17152-11, including a mortgage taken by the Secretary in connection with the previous sale of the project by the Secretary (purchase money mortgage), or section 312 of the Housing Act of 1964, 42 U.S.C. 1452b, covering any property, except a property on which there is located a one- to four-family residence;

Person includes any individual, group of individuals, association, partnership, corporation, or organization;

Record and recorded include register and registered in the instance of registered land;

Secretary means the Secretary of Housing and Urban Development;

Security property means the property, real, personal or mixed, or an interest in property, including leaseholds, life estates, reversionary interest and any other estates under applicable

8 27.5 Prerequisites to foreclosure.

(a) The Secretary may commence foreclosure under this part upon the breach of a convenant or condition in the mortgage agreement for which foreclosure is authorized under the mortgage. No such foreclosure may be commenced unless any previously pending proceeding, judicial or nonjudicial, separately instituted by the Secretary to foreclose the mortgage in a manner other than under this part, has been withdrawn, dismissed or otherwise terminated. The Secretary shall not instutute any separate foreclosure proceedings, judicial or nonjudicial, during the pendency of a foreclosure pursuant to this part. Nothing in this part shall preclude the Secretary from enforcing any right, other than foreclosure, under applicable State law, including any right to obtain a monetary judgment. Nothing in this part shall preclude the ecretary from foreclosing under this part where the Secretary has obtained or is seeking any other remedy available pursuant to Federal or State law or under the mortgage agreement, including, but not limited to, the appointment of a receiver, mortgagee-in-possession status or relief under an assignment of rents.

(b) Before commencement of a foreclosure under this part, HUD will provide to the mortgagor an opportunity informally to present reasons why the mortgage should not be foreclosed. Such opportunity may be provided before or after the designation of the foreclosure commissioner but before service of the notice of default and foreclosure.

8 27.10 Designation of a foreclosure com- strate acceptance by signing the desigmissioner.

nation and returning a signed copy to (a) When the Secretary determines

the General Counsel. that a multifamily mortgage should be (c) The General Counsel may desigforeclosed under this part, the Gener- nate more than one commissioner to al Counsel will select and designate a foreclose a multifamily mortgage. foreclosure commissioner to conduct (d) The General Counsel may at any the foreclosure and sale. In order to time, with or without cause, designate conduct the foreclosure, the foreclo- a substitute commissioner to replace & sure commissioner has a nonjudicial previously designated commissioner. power of sale. The commissioner, if a Designation of a substitute commisnatural person, shall be a resident of sioner shall be in writing and shall the State in which the security prop- contain the same information and be erty is located. If a natural person is made effective in the same manner as designated as commissioner, he or she the designation of the original comshall be designated by name, except if missioner. Upon designation of a subthe commissioner is designated in his stitute commissioner, the substitute or her capacity as an official or em- commissioner shall serve a copy of the ployee of the State or local govern- written notice of designation upon the ment where the security property is

persons shown in $ 27.15 (cX1) located, the designation may be made

through (3) either by mail, in accordby title or position instead of by name.

ance with $27.15(c) except that the If not a natural person, the commis

time limitations in that section will sioner must be duly authorized to

not apply, or by any other manner transact business under the laws of

which in the substitute commissioner's the State in which the security prop

discretion is conducive to giving timely erty is located. The commissioner shall

notice of substitution. be a person who is determined by the General Counsel to be responsible, fi

(e) The Secretary shall be the guar. nancially sound, and competent to

antor of payment of any judgment conduct the foreclosure. The foreclo

against the foreclosure commissioner sure commissioner may be an individ

for damages based on the commissionual, group of individuals, association,

er's failure properly to perform the partnership, corporation or organiza

commissioner's duties. As between the tion. The method of selection and de

Secretary and the mortgagor, the Sectermination of the qualifications of

retary shall bear the risk of any finan. the foreclosure commissioner shall be

cial default by the foreclosure commisat the discretion of the General Coun

sioner. In the event that the Secretary sel, and the execution of a designation paragraph, the Secretary shall be fully

makes any payment pursuant to this pursuant to paragraph (b) of this section shall be conclusive evidence that

subrogated to the rights satisfied by the commissioner selected has been

such payment. determined to be qualified by the Gen

8 27.15 Notice of default and foreclosure eral Counsel.

sale. (b) After selection of a foreclosure commissioner, the General Counsel

(a) Within 45 days after accepting shall designate the commissioner in

his or her designation to act as comwriting to conduct the foreclosure and missioner,

the commissioner shall sale of the particular multifamily commence the foreclosure by serving a mortgage. The written designation

Notice of Default and Foreclosure shall be duly acknowledged and shall

Sale. state the name and business or resi- (b) The Notice of Default and Foredential address of the commissioner closure Sale shall contain the followand any other information the Gener- ing information which, except for al Counsel deems necessary. The desig- paragraphs (b) (2) and (9) of this secnation shall be effective upon execu- tion will be supplied to the commistion by the General Counsel or his sioner by the Secretary. designate. Upon receipt of the designa- (1) Name and address of the foreclotion, the commissioner shall demon- sure commissioner.


(2) Date of the Notice.

(3) Names of the Secretary, the original mortgagor and the original mortgagee.

(4) A description of the location of the security property, portion thereof to be sold, which is sufficient to identify it including, if appropriate, the street address.

(5) The date of the mortgage.

(6) The name of the office or offices in which the mortgage is recorded.

(7) The book and page in which the mortgage was recorded or, if appropriate, the mortgage's document or accession number.

(8) A description of the mortgagor's failure to make payment, including the due date of the earliest installment payment remaining wholly unpaid as of the date of the Notice or, if appropriate, of the other default or defaults upon which foreclosure is based; and a statement that the secured indebtness has been accelerated.

(9) The date, exact time and place of the foreclosure sale. The sale shall not be scheduled for a date less than 30 days after the due date of the earliest unpaid installment or the earliest occurrence of a nonmonetary default. The sale must be scheduled to begin at a time between the hours of 9:00 a.m. and 4:00 p.m. local time on a day other than Sunday or a public holiday as defined by 5 U.S.C. 6103(a) or State law. The sale must be scheduled for (i) a place where real estate foreclosure auctions are customarily held in the county or one of the counties in which the property to be sold is located, or (ii) a courthouse in such a county, or (iii) a site at or on the property to be sold. Sale of property located in more than one county may be held in any one of the counties in which any part of the security property is situated.

(10) A statement that the foreclosure is being conducted in accordance with the Act and this part.

(11) The costs, if any, to be paid by the purchaser upon transfer of title.

(12) The bidding and payment requirements for the foreclosure sale, including the required deposit, the method of deposit, and the time and method of payment for the balance of the purchase price. The Notice shall state that all deposits and the balance

of the purchase price shall be paid by certified or cashier's check. The Notice shall state that no deposit will be required of the Secretary when the Secretary bids at the foreclosure sale.

(13) Any terms and conditions to which the purchaser at the foreclosure sale must agree under $ 27.20. The Notice need not describe at length each and every pertinent term and condition, including any required use agreements and deed covenants, if it describes these terms and conditions in a general way and if it states that the precise terms will be available from the commissioner upon request.

(c) The commissioner shall serve the Notice of Default and Foreclosure Sale upon the following persons in the following manner, and no additional notice shall be required to be served notwithstanding any notice requirements of State or local law:

(1) By certified or registered mail, return receipt requested, sent, at least 21 days before the original scheduled date of the foreclosure sale, to the owner of record of the security property as of 45 days before the original scheduled date of the foreclosure sale. The Notice shall be mailed to the owner at the address shown in the mortgage or to the address of the security property, or, in the commissioner's discretion, to any address believed to be that of the owner; and

(2) By certified or registered mail, return receipt requested, sent, at least 21 days before the original scheduled date of the foreclosure sale, to the original mortgagor and all subsequent mortgagors of record and all other persons who appear on the public record or in the mortgage agreement to be liable for all or part of the mortgage debt. The Notice need not be mailed to mortgagors who have been released from all obligations under the mortgage. The Notice shall be mailed to the mortgagor at the address shown in the mortgage, or to the address of the property, or, in the commissioner's discretion, to any address believed to be that of the mortgagor or mortgagors; and

(3) By certified or registered mail, return receipt requested, sent, at least 10 days before the original scheduled date of the foreclosure sale, to all per

sons having liens of record on the se sioner in his or her discretion finds curity property which were placed on that the act of posting is likely to lead record at least 45 days before the to a breach of the peace or may result scheduled foreclosure sale. The Notice in the increased risk of vandalism or shall be mailed to lien holders at their damage to the property. Any such address of record, or to any address finding will be made in writing. Entry the commissioner believes to be that on the premises by the commissioner of the lien holder, and

for the purpose of posting shall be (4) By publication of a copy of the privileged as against all other persons. Notice of Default and Foreclosure Sale (d) Service made under paragraphs once a week during three successive (c) (1), (2) and (3) of this section is calendar weeks in a newspaper of gen. deemed to have been made upon malleral circulation in the county or coun. ing, whether or not the Notice was reties in which the security property is ceived and whether or not a return relocated. To the extent practicable, the ceipt is received or the letter containnewspaper or newspapers chosen shall ing the Notice is returned. have circulation which is conducive to (e) When service of the Notice of Deachieving notice of foreclosure by pub fault and Foreclosure Sale is made lication. In deciding which newspaper pursuant to paragraph (c) (1), (2) or or newspapers have such circulation, (3) of this section, the commissioner the commissioner need not select the shall at the same time and in the same newspaper with the largest circula- manner serve a copy of the instrument tion. The date of the last publication by which the General Counsel, under shall be not less than four nor more § 27.10(b), has designated him or her than twelve days before the sale date. to act as commissioner. If there is no newspaper of general cir- (f) At least 7 days before the forecloculation in the county or counties in

sure sale, the commissioner will record which the security property is located, both the instrument designating him service shall be made by posting the

or her to act as commissioner and the Notice of Default and Foreclosure Sale Notice of Default and Foreclosure Sale in at least three public places in each in the same office or offices in which such county at least 21 days prior to

the mortgage was recorded. the date of sale. The Notice of Default and Foreclosure Sale which is pub

(49 FR 7074, Feb. 24, 1984, as amended at 50 lished pursuant to this paragraph may

FR 41345, Oct. 10, 1985) omit a description of the default, as otherwise required by paragraph

8 27.20 Conditions of foreclosure sale. (b)(8) of this section, if the commis- (a) If a majority of the residential sioner, in his or her discretion, so de- units in a property subject to foreclotermines; and

sure sale pursuant to this part are oc(5) By posting a copy of the Notice cupied by residential tenants either on of Default and Foreclosure Sale in a the date of the foreclosure sale or on prominent place at or near the securi- the date on which the General County property for at least 15 consecutive sel designates the foreclosure commisdays before the foreclosure sale. If the sioner, the Secretary shall require, as property to be sold consists of two or a condition and term of the sale, that more noncontiguous parcels of land, a the purchaser at a foreclosure sale copy of the Notice shall be posted in a (other than the Secretary) agree to prominent place on each such parcel. continue to operate the property in acIf the property consists of two or more cordance with such terms of the loan separate buildings, a copy of the program under section 312 of the Notice shall be posted in a prominent Housing Act of 1964, the program place on each such building. The under which insurance under title II Notice shall also be posted in the of the National Housing Act was origi. project office and in such other appro- nally provided with respect to such priate conspicuous places as the com- property, or of any applicable regulamissioner deems appropriate for pro- tory or other agreement in effect with viding notice to all tenants. Posting respect to such property immediately shall not be required if the commis- prior to the time of foreclosure sale as

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