FEDERAL AGENCY:

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.

OBJECTIVES:

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:  
No Data Available.

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:   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.

Headquarters Office:   Ivy M. Jackson, 451 7th Street, SW Rm 6264 , Washington, District of Columbia 20410 Email: Ivy.M.Jackson@hud.gov Phone: (202) 402-2333.

Web Site Address:  
http://www.hud.gov/healthcare

EXAMPLES OF FUNDED PROJECTS:

Not applicable.

CRITERIA FOR SELECTING PROPOSALS:

Not applicable.