U.S. Department of Housing and Urban Development to Auction $56 Million in Healthcare Mortgage Loans Across Nine States
The U.S. Department of Housing and Urban Development (HUD) has announced Healthcare Loan Sale 2027-1 (HLS 2027-1), a sealed-bid auction scheduled for Nov. 17, 2026, offering 11 defaulted healthcare mortgage loans with a combined unpaid principal balance of approximately $56 million.
HUD announced the sale Oct. 15, 2026, from Washington. The loans are due and payable Secretary-held Section 232 healthcare mortgage loans. Each is secured by a first-lien mortgage on one healthcare property.
HUD Healthcare Loan Sale 2027-1 Details
The 11 properties securing the loans are located in California, Connecticut, Florida, Michigan, Missouri, New York, North Carolina, Oklahoma and Pennsylvania. The collateral consists of skilled-nursing and assisted-living facilities.
The loans are unsubsidized, nonperforming healthcare mortgage notes. They will be sold without FHA insurance and with servicing released. On an equal-weighted basis, the roughly $56 million aggregate balance equates to about $5.1 million per loan.
HUD reserves the right to add or remove loans from the sale at its discretion, meaning the final pool could differ from the initial 11-loan offering.
Auction Timeline
Competitive sealed bids are due on or about Nov. 17, 2026. The anticipated award date is on or before Nov. 20, 2026, with closing expected on or about Dec. 9, 2026. The sale is conducted through HUD's Office of Asset Sales.
Entities interested in participating may visit www.falconassetsales.com, call the Office of Asset Sales' Transaction Specialist at 1-844-709-0763, or email HUDSales@falconassetsales.com.
Purpose of HUD's Healthcare Loan Sale Program
Through its Healthcare Loan Sale program, HUD sells defaulted healthcare mortgage notes previously insured by the Federal Housing Administration (FHA). The program seeks to maintain access to healthcare in communities, reduce FHA's claim costs, minimize the cost of holding defaulted notes, and maximize recoveries to the FHA insurance fund.
The headline figure reflects loan balances rather than a property sale price. Because the transaction involves the sale of debt, the eventual winning bids will not necessarily equal the market value of the underlying real estate. Selling the notes transfers workout responsibility to private investors, who may pursue restructurings, foreclosures or property acquisitions.
Context in the Healthcare Real Estate Market
The 2027-1 offering follows another HUD healthcare sale, HLS 2026-2, which involved 14 mortgage loans secured by 13 healthcare properties in eight states.
Operators and lenders in parts of the skilled-nursing and assisted-living sectors face higher labor, insurance and operating costs, and property-level performance can vary by reimbursement environment, staffing conditions and local demand.
Other healthcare property types have shown different conditions. A 2026 Cresa sector report indicated average medical office building occupancy of approximately 91.5%, with rents and leasing activity supported by healthcare demand, even as high construction and financing costs constrain new supply. Medical office buildings generally have different tenants, operating models and credit characteristics than facilities whose value depends heavily on healthcare operations and government reimbursement.
What to Watch
Prospective bidders will likely focus on collateral schedules, borrower and operator information, payment histories, regulatory status, operating statements, census, payer mix, liens and foreclosure or workout status. The results of the Nov. 17 auction, including award and closing, will indicate investor appetite for distressed healthcare debt secured by skilled-nursing and assisted-living properties.