HOUSING,
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
AUTHORIZATION:
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:
Guaranteed/Insured Loans. Place Cursor Here for Definition
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.
ELIGIBILITY
REQUIREMENTS:
Applicant
Eligibility: Eligible mortgagors include investors,
builders, developers, public entities, nursing homes and private
nonprofit corporations or associations.
Beneficiary
Eligibility: Residents requiring skilled nursing,
custodial care, and assistance with activities of daily living
are eligible to live in a structure whose mortgage is insured
under the program.
Credentials/Documentation:
Documentation regarding the characteristics of the property and
the qualifications of the mortgagor are assembled by the mortgagee
and submitted with the application. Certification of need and
inspection and licensing by the State agency designated by the
Public Health Service Act for the State in which the nursing home
or intermediate care facility is to be located is required, or,
if no State Agency exists, an alternative market study is required.
A Certificate of Need may be required for a board and care home
or assisted living facility. A statement from the appropriate
State Agency is required stating that the State is in compliance
with Section 1616 (e) of the Social Security Act. This facility
must be licensed. This program is excluded from coverage under
OMB Circular No. A-87.
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.
Application
Procedure: For Traditional Application Processing
(TAP), the application for Firm commitment is submitted by the
sponsor through a HUD-approved mortgagee, and the application
is processed by the Multifamily Hub or Program Center. For Multifamily
Accelerated Processing (MAP), the Firm Commitment application,
including a full under-writing package, is submitted by the MAP
lender for HUD Field Office review. This program is excluded from
coverage under OMB Circular No. A-110.
Award
Procedure: The local HUD Field Office makes
the final decision to approve, or reject individual projects.
Deadlines:
Deadlines are established on a case-by-case basis by the designated
Multifamily Hub or Program Center and are mutually agreed to at
the pre-commitment conference.
Range
of Approval/Disapproval Time: Processing time
depends upon the degree of preparation by the sponsor and whether
or not Multifamily Accelerated Processing (MAP) or Traditional
Application Processing (TAP) is used.
Appeals:
If an application for mortgage insurance is refused, HUD will
state the reasons for the refusal. If reapplication is desired,
the applicant may modify the application and reapply.
Renewals:
The term of a commitment to insure may be extended when more time
is required to close the loan.
ASSISTANCE
CONSIDERATIONS:
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.
Length
and Time Phasing of Assistance: The maximum
mortgage term is 40 years for new construction and substantial
rehabilitation. The maximum term for existing projects without
substantial rehabilitation is 35 years.
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.
Audits:
The Department of Housing and Urban Development reserves the right
to audit the accounts of either the mortgagee or mortgagor, or
lesser, in order to determine their compliance and conformance
with HUD regulations and standards.
Records:
Mortgagees are required to service and maintain records in accordance
with acceptable mortgage practices of prudent lending institutions
and the FHA regulations.
FINANCIAL
INFORMATION:
Account
Identification: 86-4077-0-3-371.
Obligations:
(Mortgages insured) FY 01 $1,317,289,354; FY 02 est $1,000,000,000;
and FY 03 est $1,300,000,000.
Range
and Average of Financial Assistance:
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.
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).
INFORMATION
CONTACTS:
Regional
or Local Office: Persons are encouraged to communicate
with the Multifamily Hub or Program Center with jurisdiction for
the proposed property. HUD Multifamily Hubs and Program Centers
are listed in the web at http://www.hud.gov/offices/hsg/mfh/mfbroch/hubs_pcs.cfm.
Headquarters
Office: Office of Multifamily Development,
Department of Housing and Urban Development, 451 7th Street, SW.,
Washington, DC 20412. Telephone: (202) 708-1142.
Web
Site Address: http://www.hud.gov/fha/mfh/fhamfbus.html
