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14.129 Mortgage Insurance_Nursing Homes, Intermediate Care Facilities, Board and Care Homes and Assisted Living Facilities
HOUSING, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
National Housing Act, as amended, Section 232; Housing Act of 1959, as amended, Public Law 86-372; Housing and Urban Development Act of 1969, Public Law 91-152, 73 Stat. 654, 83 Stat. 379; Public Laws 95-128, 95-557, 96-153, and 98-181.
To provide mortgage insurance to HUD-approved lenders to facilitate the construction or rehabilitation of nursing homes, intermediate care facilities, board and care homes and assisted living facilities. Section 232/223(f) allows for the purchase or refinancing with or without repairs of projects not requiring substantial rehabilitation. The program also provides mortgage insurance to install fire safety equipment.
TYPES OF ASSISTANCE:
USES AND USE RESTRICTIONS:
HUD insures lenders against loss on mortgage defaults. Insured mortgages may be used to finance construction, renovation, and refinancing of facilities that accommodate 20 or more residents requiring skilled nursing care and related medical services, or those who while not in need of nursing home care, are in need of minimum but continuous care provided by licensed or trained personnel. Insured mortgages may include the cost of major movable equipment for operating health care facilities and for the installation of fire safety equipment. Board and care homes and assisted living facilities are also eligible and must contain a minimum of five accommodations or units and must be licensed by State agency. Nursing home, intermediate care facilities, board and care homes and assisted living facilities may be combined in the same facility covered by an insured mortgage or may be in separate facilities. Contractors for new construction and substantial rehabilitation projects must comply with prevailing wage requirements under the Davis-Bacon Act.
Applicant Eligibility: Eligible mortgagors include investors, builders, developers, public entities, nursing homes and private nonprofit corporations or associations.
Pre-application Coordination: For Traditional Application Processing (TAP) of a mortgage insurance application, the sponsor has an initial conference with the local HUD Multifamily Hub or Program Center to determine the preliminary feasibility for the project before a Site Appraisal and Market Analysis (SAMA) application (for new construction projects), or a feasibility application (for projects requiring renovation) is submitted.
Formula and Matching Requirements: The maximum amount of the loan for new construction and substantial rehabilitation would be equal to 90 percent (95 percent for nonprofit sponsors) of the estimated value of the physical improvements and major movable equipment. For existing projects, the maximum is 85 percent (90 percent for nonprofit sponsors) of the estimated value of the physical improvements and major movable equipment. HUD charges one-half percent of the mortgage amount per annum for mortgage insurance premium. The combined HUD site appraisal and market analysis application and commitment fees are $3 per $1,000 of the mortgaged amount. The HUD inspection fee may not exceed $5 per $1,000 of the mortgage amount for new construction and substantial rehabilitation projects. The inspection fee for existing projects may not exceed one percent of the total cost of repairs.
POST ASSISTANCE REQUIREMENTS:
Reports: Any change of the mortgagor during the period of mortgage insurance must be approved by HUD. Defaults in meeting the mortgage terms must be reported. All mortgagors are required to submit an annual financial statement to HUD. All approved mortgagees at any time upon request by HUD must furnish a copy of their latest financial statement.
Account Identification: 86-4077-0-3-371.
In fiscal year 2001, the Department insured mortgages for 198 health care facilities with 23,120 beds/units, totaling $1.3 billion. The Department expects similar numbers of insured loans in fiscal year 2002.
REGULATIONS, GUIDELINES, AND LITERATURE:
Fact Sheet: Nursing Homes (Mortgage Insurance); Minimum Property Standards for Nursing Homes; (FHA Regulations). Handbook for Nursing Homes and Intermediate Care Facilities; (4600.1); (FHA Regulations 24 CFR 232 and 200).
Regional or Local Office: None. Applications for mortgage insurance are assembled and underwritten by FHA-Approved Lenders before submittable to HUD for processing of the Firm Commitment (there is also a Prue-application process for projects with new units whereby HUD comments on the market). Please see the "General Overview" document posted at www.fha.gov/232lenderprocessing for a list of lenders who work on Section 232 loans.
EXAMPLES OF FUNDED PROJECTS:
CRITERIA FOR SELECTING PROPOSALS: