SF Foreclosure Regulations

Office of the Secretary, HUD

§ 27.1

service of the appeal, then the initial
determination shall be the final agency
action.
(2) Exception for cases brought under
the Program Fraud Civil Remedies Act.
Where a Secretarial appeal has been
timely made in a case brought under
the Program Fraud Civil Remedies Act,
the Secretary, or designee, shall issue a
written determination within 30 days
after receipt of appeal and shall serve
it upon the parties to the hearing. The
written decision of the Secretary shall
be the final agency action. If the Secretary, or designee, does not act upon
the appeal of an initial decision within
30 days of service of the appeal, the initial decision shall become final and the
Respondent will be served with a statement describing the right to seek judicial review, if any.
§ 26.53 Exhaustion
remedies.

of

Judicial review.

Judicial review shall be available in
accordance with applicable statutory
procedures and the procedures of the
appropriate federal court.
§ 26.55 Collection of civil penalties and
assessments.
Collection of civil penalties and assessments shall be in accordance with
applicable statutory provisions.

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§ 26.56

Subpart A—Nonjudicial Foreclosure of
Multifamily Mortgages
Sec.
27.1 Purpose.
27.2 Scope and applicability.
27.3 Definitions.
27.5 Prerequisites to foreclosure.
27.10 Designation of a foreclosure commissioner.
27.15 Notice of default and foreclosure sale.
27.20 Conditions of foreclosure sale.
27.25 Termination or adjournment of foreclosure sale.
27.30 Conduct of the sale.
27.35 Foreclosure costs.
27.40 Disposition of sale proceeds.
27.45 Transfer of title and possession.
27.50 Management and disposition by the
Secretary.

administrative

In order to fulfill the requirement of
exhausting administrative remedies, a
party must seek Secretarial review
under § 26.52 prior to seeking judicial
review of any initial decision issued
under subpart B of this part.
§ 26.54

PART 27—NONJUDICIAL FORECLOSURE OF MULTIFAMILY AND
SINGLE FAMILY MORTGAGES

Subpart B—Nonjudicial Foreclosure of
Single Family Mortgages
27.100 Purpose, scope and applicability.
27.101 Definitions.
27.102 Designation of foreclosure commissioner and substitute commissioner.
27.103 Notice of default and foreclosure sale.
27.105 Service of Notice of Default and Foreclosure Sale.
27.107 Presale reinstatement.
27.109 Conduct of sale.
27.111 Adjournment or cancellation of sale.
27.113 Foreclosure costs.
27.115 Disposition of sales proceeds.
27.117 Transfer of title and possession.
27.119 Redemption rights.
27.121 Record of foreclosure and sale.
27.123 Deficiency judgment.
AUTHORITY: 12 U.S.C. 1715b, 3701–3717, 3751–
3768; 42 U.S.C. 1452b, 3535(d).
SOURCE: 61 FR 48548, Sept. 13, 1996, unless
otherwise noted.

Right to administrative offset.

The amount of any penalty or assessment that has become final under
§ 26.50 or § 26.52, or for which a judgment has been entered after action
under § 26.54 or § 26.55, or agreed upon in
a compromise or settlement among the
parties, may be collected by administrative offset under 31 U.S.C. 3716 or
other applicable law. In Program Fraud
Civil Remedies Act matters, an administrative offset may not be collected
against a refund of an overpayment of
federal taxes then or later owing by the
United States to the Respondent.

Subpart
A—Nonjudicial
Foreclosure of Multifamily Mortgages
§ 27.1 Purpose.
The purpose of this subpart is to implement requirements for the administration of the Multifamily Mortgage
Foreclosure Act of 1981 (the Act) (12
U.S.C. 3701–3717), that clarify, or are in
addition to, the requirements contained in the Act, which are not republished here and must be consulted in
conjunction with the requirements of

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§ 27.2

24 CFR Subtitle A (4–1–15 Edition)

this subpart. The Act creates a uniform
Federal remedy for foreclosure of multifamily mortgages. Under a delegation
of authority published on February 5,
1982 (47 FR 5468), the Secretary has delegated to the HUD General Counsel his
powers under the Act to appoint a foreclosure commissioner or commissioners and to substitute therefor, to
fix the compensation of commissioners,
and to promulgate implementing regulations.
§ 27.2

Scope and applicability.

(a) Under the Act and this subpart,
the Secretary may foreclose on any defaulted Secretary-held multifamily
mortgage encumbering real estate in
any State. The Secretary may use the
provisions of these regulations to foreclose on any multifamily mortgage regardless of when the mortgage was executed.
(b) The Secretary may, at the Secretary’s option, use other procedures to
foreclose defaulted multifamily mortgages, including judicial foreclosure in
Federal court and nonjudicial foreclosure under State law. This subpart
applies only to foreclosure procedures
authorized by the Act and not to any
other foreclosure procedures the Secretary may use.

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§ 27.3

Definitions.

The definitions contained in the Act
(at 12 U.S.C. 3702) shall apply to this
subpart, in addition to and as further
clarified by the following definitions.
As used in this subpart:
General Counsel means the General
Counsel of the Department of Housing
and Urban Development;
Multifamily mortgage does not include
a mortgage covering a property on
which there is located a one- to fourfamily residence, except when the oneto four-family residence is subject to a
mortgage pursuant to section 202 of the
Housing Act of 1959 (12 U.S.C. 1701q), or
section 811 (42 U.S.C. 8013) of the National Affordable Housing Act. The definition of multifamily mortgage also
includes a mortgage taken by the Secretary in connection with the previous
sale of the project by the Secretary
(purchase money mortgage).

§ 27.5 Prerequisites to foreclosure.
Before commencement of a foreclosure under the Act and this subpart,
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.
§ 27.10 Designation of a foreclosure
commissioner.
(a) When the Secretary determines
that a multifamily mortgage should be
foreclosed under the Act and this subpart, the General Counsel will select
and designate one or more foreclosure
commissioners to conduct the foreclosure and sale. The method of selection and determination of the qualifications of the foreclosure commissioner shall be at the discretion of the
General Counsel, and the execution of a
designation pursuant to paragraph (b)
of this section shall be conclusive evidence that the commissioner selected
has been determined to be qualified by
the General Counsel.
(b) After selection of a foreclosure
commissioner, the General Counsel
shall designate the commissioner in
writing to conduct the foreclosure and
sale of the particular multifamily
mortgage. The written designation
shall be duly acknowledged and shall
state the name and business or residential address of the commissioner and
any other information the General
Counsel deems necessary. The designation shall be effective upon execution
by the General Counsel or his designate. Upon receipt of the designation,
the commissioner shall demonstrate
acceptance by signing the designation
and returning a signed copy to the
General Counsel.
(c) The General Counsel may at any
time, with or without cause, designate
a substitute commissioner to replace a
previously designated commissioner.
Designation of a substitute commissioner shall be in writing and shall contain the same information and be made
effective in the same manner as the
designation of the original commissioner. Upon designation of a substitute commissioner, the substitute

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Office of the Secretary, HUD

§ 27.20

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commissioner shall serve a copy of the
written notice of designation upon the
persons listed at sections 369(1) (A)
through (C) of the Act (12 U.S.C. 3708(1)
(A) through (C)) either by mail, in accordance with section 369(1) of the Act
(12 U.S.C. 3708(1)), except that the time
limitations in that section will not
apply, or by any other manner which in
the substitute commissioner’s discretion is conducive to giving timely notice of substitution.
§ 27.15 Notice of default and foreclosure sale.
(a) Within 45 days after accepting his
or her designation to act as commissioner, the commissioner shall commence the foreclosure by serving a Notice of Default and Foreclosure Sale.
(b) The Notice of Default and Foreclosure Sale shall contain the following information:
(1) 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.
(2) 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 Notice need not be mailed to
mortgagors who have been released
from all obligations under the mortgage.
(d) In deciding which newspaper or
newspapers to select as general circulation newspapers for purposes of publication of the required notice, the commissioner need not select the newspaper with the largest circulation.
(e) In addition to Notice posting requirements included in the Act, the
Notice shall also be posted in the
project office and in such other appropriate conspicuous places as the commissioner deems appropriate for providing notice to all tenants. Posting
shall not be required if the commis-

sioner in his or her discretion finds
that the act of posting is likely to lead
to a breach of the peace or may result
in the increased risk of vandalism or
damage to the property. Any such finding will be made in writing. Entry on
the premises by the commissioner for
the purpose of posting shall be privileged as against all other persons.
(f) When service of the Notice of Default and Foreclosure Sale is made by
mail, the commissioner shall at the
same time and in the same manner
serve a copy of the instrument by
which the General Counsel, under
§ 27.10(b), has designated him or her to
act as commissioner.
(g) At least 7 days before the foreclosure sale, the commissioner will
record both the instrument designating
him or her to act as commissioner and
the Notice of Default and Foreclosure
Sale in the same office or offices in
which the mortgage was recorded.
§ 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
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;

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§ 27.20

24 CFR Subtitle A (4–1–15 Edition)

(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 moderateincome persons;
(6) The availability of or need for
rental housing for low- and moderateincome 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
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 § 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 § 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]

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Office of the Secretary, HUD

§ 27.40

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§ 27.25 Termination or adjournment of
foreclosure sale.
(a) Before withdrawing the security
property from foreclosure under section 369A(a) of the Act (12 U.S.C.
3709(a)), the commissioner shall notify
the Secretary of the proposed withdrawal by telephone or telegram and
shall provide the Secretary with a
written statement of the reasons for
the proposed withdrawal along with all
documents submitted by the mortgagor
in support of the proposed withdrawal.
Upon receipt of this statement, the
Secretary shall have 10 days within
which to demonstrate orally or in writing why the security property should
not be withdrawn from foreclosure. The
Secretary shall provide the mortgagor
with a copy of any statement prepared
by the Secretary in opposition to the
proposed withdrawal at the same time
the statement is submitted to the commissioner. If the Secretary receives the
commissioner’s written statement less
than 10 days before the scheduled foreclosure sale, the sale shall automatically be postponed for 14 days. Under
these circumstances, notice of the rescheduled sale shall be served as described in section 369B(c) of the Act (12
U.S.C. 3710(c)).
(b) The commissioner may not withdraw the security property from foreclosure under section 369A(a) of the Act
(12 U.S.C. 3709(a)) more than once unless the Secretary consents in writing
to such withdrawal.
(c) The commissioner shall, in the
case of a sale adjourned to a later date,
mail a copy of the revised Notice of Default and Foreclosure Sale to the Secretary at least seven days before the
date to which the sale has been adjourned.
(d) If upon application by the mortgagor, the commissioner refuses to
withdraw the property from foreclosure
under section 369A(a) of the Act (12
U.S.C. 3709(a)), the commissioner shall
provide the mortgagor and the Secretary with a written statement of the
reasons for the refusal.
§ 27.30 Conduct of the sale.
(a) The commissioner shall accept
written one-price sealed bids from any
party including the Secretary so long
as those bids conform to the require-

ments described in the Notice of Default and Foreclosure Sale. The commissioner shall announce the name of
each such bidder and the amount of the
bid. The commissioner shall accept
oral bids from any party, including
parties who submitted one-price sealed
bids, if those oral bids conform to the
requirements described in the Notice of
Default and Foreclosure Sale. The
commissioner
will
announce
the
amount of the high bid and the name of
the successful bidder before the close of
the sale.
(b) Relatives of the commissioner
who may not bid at the foreclosure sale
include parents, siblings, spouses and
children. Related business entities
which may not bid include entities or
concerns whose relationship with the
commissioner at the time the commissioner is designated is such that, directly or indirectly, one concern or individual formulates, directs, or controls the other concern; or has the
power to formulate, direct, or control
the other concern; or has the responsibility and authority either to prevent
in the first instance, or promptly to
correct, the offensive conduct of the
other concern. Business concerns are
also affiliates of each other when a
third party is similarly situated with
respect to both concerns.
(c) If the commissioner employs an
auctioneer to conduct the foreclosure
sale, the auctioneer must be a licensed
auctioneer, an officer of State or local
government, or any other person who
commonly conducts foreclosure sales
in the area in which the security property is located.
§ 27.35 Foreclosure costs.
Pursuant to section 369C(5) of the Act
(12 U.S.C. 3711(5)), a commission to the
foreclosure commissioner for the conduct of the foreclosure will be paid in
an amount to be determined by the
General Counsel. A commission may be
allowed to the commissioner notwithstanding termination of the sale or appointment of a substitute commissioner before the sale takes place.
§ 27.40 Disposition of sale proceeds.
(a) The priority of the Secretary’s
lien shall be determined by the Federal
first-in-time first-in-right rule. State

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§ 27.45

24 CFR Subtitle A (4–1–15 Edition)

laws affording priority to liens recorded after the mortgage are preempted.
(b) If there is more than one party
holding a lien or assessment payable
from sales proceeds, the claim of each
party holding the same kind of lien or
assessment will be given the relative
priority to which it would be entitled
under the law of the State in which the
security property is located.
(c) The commissioner will keep such
records as will permit the Secretary to
verify the costs claimed under section
369C of the Act (12 U.S.C. 3711), and otherwise to audit the commissioner’s disposition of the sale proceeds.
§ 27.45

Transfer of title and possession.

(a) If the Secretary is the successful
bidder, the foreclosure commissioner
shall issue a deed to the Secretary
upon receipt of the amount needed to
pay the costs listed in sections 369D (1)
through (3) of the Act (12 U.S.C. 3712(1)
through (3)). If the Secretary is not the
successful bidder, the foreclosure commissioner shall issue a deed to the purchaser upon receipt of the entire purchase price and execution by the Secretary and the purchaser of any use
agreement referred to in § 27.20(e). Any
covenants reflecting terms required by
§ 27.20 shall be contained in the commissioner’s deed.
(b) Subject to any terms required to
be agreed to by § 27.20, any commercial
tenant and any residential tenant remaining in possession after the expiration of his or her lease or after the passage of one year, whichever event occurs first, shall be deemed a tenant at
sufferance and may be evicted in accordance with applicable State or local
law.

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§ 27.50 Management and disposition by
the Secretary.
When the Secretary is the purchaser
of the security property, the Secretary
shall manage and dispose of it in accordance with section 203 of the Housing and Community Development
Amendments of 1978, as amended, 12
U.S.C. 1701z–11, and in accordance with
24 CFR part 290.

Subpart
B—Nonjudicial
Foreclosure of Single Family Mortgages
§ 27.100 Purpose, scope and applicability.
(a) Purpose. The purpose of this subpart is to implement requirements for
the administration of the Single Family Mortgage Foreclosure Act of 1994
(the Statute), 12 U.S.C. 3751–3768, that
clarify, or are in addition to, the requirements contained in the Statute,
which are not republished here and
must be consulted in conjunction with
the requirements of this subpart.
(b) Scope. The Secretary may foreclose on any defaulted single family
mortgage described in the Statute regardless of when the mortgage was executed.
(c) Applicability. The Secretary may,
at the Secretary’s option, use other
procedures to foreclose defaulted single
family mortgages, including judicial
foreclosure in State or Federal Court,
and nonjudicial foreclosures under
State law or any other Federal law.
This subpart applies only to foreclosure procedures authorized by the
Statute and not to any other foreclosure procedures the Secretary may
use.
§ 27.101

Definitions.

The definitions contained in the
Statute (at 12 U.S.C. 3752) shall apply
to this subpart, in addition to and as
further clarified by the following definitions. As used in this subpart:
County means a political subdivision
of a State or Territory of the United
States, created to aid in the administration of State law for the purpose of
local self government, and includes a
parish or any other equivalent subdivision.
Mortgage is as defined in the Statute
except that the reference to property
as ‘‘(real, personal or mixed)’’ means
‘‘any property (real or mixed real and
personal).’’
Mortgage agreement is as defined in
the Statute, and also means any other
similar instrument or instruments creating the security interest in the real
estate for the repayment of the note or
debt instrument.

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Office of the Secretary, HUD

§ 27.107

Mortgagor is as defined in the Statute, except that the reference to
‘‘trustee’’ means ‘‘trustor.’’
Record; Recorded means to enter or
entered in public land record systems
established under State statutes for
the purpose of imparting constructive
notice to purchasers of real property
for value and without knowledge, and
includes ‘‘register’’ and ‘‘registered’’ in
the instance of registered land, and
‘‘file’’ and its variants in the context of
entering documents in public land
records.
Secretary means the Secretary of
Housing and Urban Development, acting by and through any authorized designee exclusive of the foreclosure commissioner.
Security Property is as defined in the
statute except that the reference to
property as ‘‘(real, personal or mixed)’’
means ‘‘any property (real or mixed
real and personal).’’

(4) Identification of the failure to
make payment, including the entire
amount delinquent as of a date specified, a statement generally describing
the other costs that must be paid if the
mortgage is to be reinstated, the due
date of the earliest principal installment payment remaining wholly unpaid as of the date on which the notice
is issued upon which the foreclosure is
based, or a description of any other default or defaults upon which foreclosure is based, and the acceleration
of the secured indebtedness; and
(5) The bidding and payment requirements for the foreclosure sale, including the time and method of payment of
the balance of the foreclosure purchase
price, that all deposits and the balance
of the purchase price shall be paid by
certified or cashier’s check, and that
no deposit will be required of the Secretary when the Secretary bids at the
foreclosure sale.

§ 27.102 Designation
of
foreclosure
commissioner and substitute commissioner.

§ 27.105 Service of Notice of Default
and Foreclosure Sale.

(a) The Secretary may designate
foreclosure commissioners, including
substitute commissioners, as set forth
in the Statute.
(b) The method of selection and determination of the qualifications of the
foreclosure commissioner shall be at
the discretion of the Secretary. The
execution of a designation pursuant to
this section shall be conclusive evidence that the commissioner selected
has been determined to be qualified by
the Secretary. The designation is effective upon execution.

(a) The Notice of Default and Foreclosure Sale shall be served in accordance with the provisions of the Statute. When notice is sent by mail, multiple mailings are not required to be
sent to any party with multiple capacities, e.g., an original mortgagor who is
the security property owner and lives
in one of the units. The date of the receipt for the postage paid for the mailing may serve as proof of the date of
mailing of the notice.
(b) Notice need not be mailed to any
mortgagors who have been released
from all obligations under the mortgage.

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§ 27.103 Notice of default and foreclosure sale.
(a) The foreclosure commissioner
shall commence the foreclosure under
the procedures set forth in the Statute.
(b) The Notice of Default and Foreclosure Sale (Notice) shall include, in
addition to the provisions as required
by the Statute:
(1) The foreclosure commissioner’s
telephone number;
(2) A description of the security property sufficient to identify the property
to be sold;
(3) The date the mortgage was recorded;

§ 27.107

Presale reinstatement.

(a) The foreclosure commissioner
shall withdraw the security property
from foreclosure and cancel the foreclosure sale only in accordance with
the provisions of the Statute and as
more fully provided in paragraphs (b)
and (c) of this section in regard to
presale reinstatements.
(b) To obtain a presale reinstatement
in cases involving a monetary default,
there must be tendered to the foreclosure commissioner before public
auction is completed all amounts

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§ 27.109

24 CFR Subtitle A (4–1–15 Edition)

which would be due under the mortgage agreement if payments under the
mortgage had not been accelerated and
all costs of foreclosure incurred for
which payment from the proceeds of
foreclosure is provided in the Statute,
and the foreclosure commissioner must
find that there are no nonmonetary defaults; provided, however, that the Secretary may refuse to cancel a foreclosure sale pursuant to this subparagraph if the current mortgagor or
owner of record has, on one or more
previous occasions, caused a foreclosure of the mortgage, commenced
pursuant to the Statute and this subpart or otherwise, to be canceled by
curing a default.
(c) To obtain a presale reinstatement
in cases involving a nonmonetary default:
(1) The foreclosure commissioner,
upon application of the mortgagor before the date of foreclosure sale, must
find that all nonmonetary defaults are
cured and that there are no monetary
defaults; and
(2) There must be tendered to the
foreclosure commissioner before public
auction is completed all amounts due
under the mortgage agreement (excluding all amounts which would be due
under the mortgage agreement if the
mortgage payments had been accelerated), including all amounts of expenditures secured by the mortgage and all
costs of foreclosure incurred for which
payment would be made from the proceeds of foreclosure as provided in the
Statute.
(d) Before withdrawing the security
property from foreclosure, the foreclosure commissioner shall notify the
Secretary of the proposed withdrawal
by telephone or other telecommunication device and shall also provide the
Secretary with a written statement of
the reasons for the proposed withdrawal along with all documents submitted by the mortgagor in support of
the proposed withdrawal. Upon receipt
of this statement, the Secretary shall
have ten (10) days in which to demonstrate why the security property
should not be withdrawn from foreclosure, and if the Secretary makes
this demonstration, the property shall
not be withdrawn from foreclosure. The
Secretary shall provide the mortgagor

with a copy of any statement prepared
by the Secretary in opposition to the
proposed withdrawal at the same time
the statement is submitted to the foreclosure commissioner. If the Secretary
receives
the
foreclosure
commissioner’s written statement less than 10
days before the scheduled foreclosure
sale, the sale shall automatically be
adjourned for 14 days, during which
time it may be cancelled. Notice of the
re-scheduled sale, if any, shall be
served as described in § 27.111.
§ 27.109

Conduct of sale.

(a) The foreclosure sale shall be conducted in a manner and at a time and
place as identified in the Notice of Default and Foreclosure Sale and in accordance with the provisions of the
Statute.
(b) In addition to bids made in person
at the sale, the foreclosure commissioner shall accept written one-price
sealed bids from any party, including
the Secretary, for entry by announcement at the sale so long as those bids
conform to the requirements described
in the Notice of Default and Foreclosure Sale. The foreclosure commissioner shall announce the name of each
such bidder and the amount of the bid.
The commissioner shall accept oral
bids from any party, including parties
who submitted one-price sealed bids, if
those oral bids conform to the requirements in the Notice of Default and
Foreclosure Sale. Before the close of
the sale the commissioner shall announce the amount of the high bid and
the name of the successful bidder. If
the successful bidder fails to comply
with the terms of the sale, the HUD
Field Office representative will provide
instructions to the commissioner about
offering the property to the second
highest bidder, or having a new sale, or
other instruction at the discretion of
the HUD representative.
(c) Prohibited participants. Relatives
of the foreclosure commissioner who
may not bid include parents, siblings,
spouses and children. A related business entity that may not bid or whose
employees may not bid is one whose relationship (at the time the foreclosure
commissioner is designated and during

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Office of the Secretary, HUD

§ 27.117

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the term of service as foreclosure commissioner) with the entity of the foreclosure commissioner is such that, directly or indirectly, one entity formulates, directs, or controls the other entity; or has the power to formulate, direct, or control the other entity; or has
the responsibility and authority to prevent, or promptly to correct, the offensive conduct of the other entity.
(d) Auctioneers. If the commissioner
employs an auctioneer to conduct the
foreclosure sale, the auctioneer must
be a licensed auctioneer, an officer of
State or local government, or any
other person who commonly conducts
foreclosure sales in the area in which
the security property is located.
§ 27.111 Adjournment or cancellation
of sale.
(a) The foreclosure commissioner
may, before or at the time of the foreclosure sale, adjourn or cancel the foreclosure sale in accordance with the
provisions of the Statute. The publication of the Notice of Default and Foreclosure Sale, revised pursuant to the
Statute, may be made on any of three
separate days before the revised date of
foreclosure sale. If there is no newspaper of general circulation that would
permit publication on any of three separate days before the revised date of
foreclosure sale, the Notice of Default
and Foreclosure Sale must be posted,
not less than nine days before the date
to which the sale has been adjourned,
at the courthouse of any county or
counties in which the property is located, and at the place where the sale
is to be held. The commissioner must
also, in the case of a sale adjourned to
a later date, mail a copy of the revised
Notice of Default and Foreclosure Sale
to the Secretary at least seven days before the date to which the sale has been
adjourned.
(b) When a substitute commissioner
is designated by the Secretary to replace a previously designated foreclosure commissioner, the sale shall
continue without prejudice unless the
substitute commissioner finds, in that
commissioner’s sole discretion, that
continuation of the foreclosure sale
will unfairly affect the interests of the
mortgagor. Any such finding shall be
in writing. If the substitute commis-

sioner makes such a finding, the substitute commissioner shall cancel or
adjourn the sale.
§ 27.113

Foreclosure costs.

A commission may be allowed to the
foreclosure
commissioner
notwithstanding termination of the sale or appointment of a substitute commissioner before the sale takes place.
§ 27.115

Disposition of sales proceeds.

The foreclosure commissioner will
keep such records as will permit the
Secretary to verify the costs claimed,
and otherwise to enable the Secretary
to audit the foreclosure commissioner’s disposition of the sale proceeds.
§ 27.117 Transfer of title and possession.
(a) If the Secretary is the successful
bidder, the foreclosure commissioner
shall issue a deed to the Secretary
upon receipt of the amount needed to
pay the costs of tax liens and prior
liens, as set forth in 12 U.S.C. 3762(a)(2)
and (a)(3). If the Secretary is not the
successful bidder, the foreclosure commissioner shall issue a deed to the purchaser or purchasers upon receipt of
the entire purchase price in accordance
with the terms of the sale as provided
in the Notice of Default and Foreclosure Sale.
(b) The register of deeds or other appropriate official in the county where
the property is located shall, upon tendering of the customary recording fees,
accept all instruments pertaining to
the foreclosure which are submitted by
the foreclosure commissioner for recordation. The instruments to be accepted shall include, but not be limited
to, the foreclosure commissioner’s
deed. If the foreclosure commissioner
elects to include the recitations required under the Statute (12 U.S.C.
3764) in an affidavit or an addendum to
the deed, the affidavit or addendum
shall be accepted along with the deed
for recordation. The Clerk of the Court
or other appropriate official shall cancel all liens as requested by the foreclosure commissioner.

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§ 27.119
§ 27.119

24 CFR Subtitle A (4–1–15 Edition)
Redemption rights.

Only for purposes of redemption
rights under the Statute, a foreclosure
shall be considered completed upon the
date and at the time of the foreclosure
sale.
§ 27.121 Record
sale.

of

foreclosure

and

The statements regarding the foreclosed mortgage required to establish a
sufficient record shall include the date
the mortgage was recorded. The statements regarding the service of the Notice of Default and Foreclosure Sale
shall include the names and addresses
of the persons to whom the Notice was
mailed and the date on which the Notice was mailed, the name of the newspaper in which the Notice was published and the dates of publication, and
the date on which service by posting, if
required, was accomplished.
§ 27.123

Deficiency judgment.

If the price at which the security
property is sold at the foreclosure sale
is less than the unpaid balance of the
debt secured by such property after disposition of sale proceeds in accordance
with the order of priority provided
under the Statute, the Secretary may
refer the matter to the Attorney General who may commence an action or
actions against any and all debtors to
recover the deficiency, unless such an
action is specifically prohibited by the
mortgage.

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PART 28—IMPLEMENTATION OF THE
PROGRAM FRAUD CIVIL REMEDIES ACT OF 1986
Sec.
28.1 Purpose.
28.5 Definitions.
28.10 Basis for civil penalties and assessments.
28.15 Investigation.
28.20 Request for approval by the Department of Justice.
28.25 Complaint.
28.30 Response.
28.35 Statute of limitations.
28.40 Hearings.
28.45 Settlements.
AUTHORITY: 28 U.S.C. 2461 note; 31 U.S.C.
3801–3812; 42 U.S.C. 3535(d).

SOURCE: 61 FR 50213, Sept. 24, 1996, unless
otherwise noted.

§ 28.1 Purpose.
This part:
(a) Establishes administrative procedures for imposing civil penalties and
assessments against persons who make,
submit, or present, or cause to be
made, submitted, or presented, false,
fictitious, or fraudulent claims or written statements to Federal authorities
or to their agents; and
(b) Specifies the hearing and appeal
rights of persons subject to allegations
of liability for such penalties and assessments. Hearings under this part
shall be conducted in accordance with
the Administrative Procedure Act pursuant to part 26, subpart B, of this
chapter.
[61 FR 50213, Sept. 24, 1996, as amended at 73
FR 76831, Dec. 17, 2008]

§ 28.5 Definitions.
(a) The terms ALJ and HUD are defined in 24 CFR part 5.
(b) The terms Claim, Knows or has
reason to know, Person, Reviewing Official, and Statement have the same
meanings as defined in 31 U.S.C. 3801.
(c) Ability to payis determined based
on an assessment of the respondent’s
resources available both presently and
prospectively from which the Department could ultimately recover the
total award, which may be predicted
based on historical evidence.
(d) Benefit means anything of value,
including, but not limited to, any advantage, preference, privilege, license,
permit, favorable decision, ruling, status, or loan insurance or guarantee.
(e) Respondent means any person alleged to be liable for a civil penalty or
assessment under § 28.25.
(f) The reasonable prospect of collecting
an appropriate amount of penalties and
assessments is determined based on a
generalized assessment made by a Reviewing Official based on the limited
information available in the Report of
Investigation for purposes of determining whether the allocation of
HUD’s resources to any particular action is appropriate. This assessment is
not the same as the assessment made
when determining ability to pay, nor is
the reasonable prospect of collecting a

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