Program Descriptions
Program Number
14.129
Title
Mortgage Insurance-Nursing Homes, Intermediate CARE Facilities, Board And CARE Homes And Assisted Living Facilities
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.
Status
Active
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, to allow purchase or refinancing with or without repairs of projects not requiring substantial rehabilitation, and to provide loan insurance to install fire safety equipment.
Types of Assistance
Guaranteed/Insured Loans.
Uses and Use Restrictions
Section 232 insures lenders against loss on mortgage defaults. Insured mortgages may be used to finance construction or renovation of facilities to accommodate 20 or more patients 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. Board and care homes and assisted living facilities are also eligible and must contain a minimum of five accommodations or units. Nursing homes, 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. Nursing homes, intermediate care facilities, board and care homes and assisted living facilities must be licensed or regulated by the appropriate state agency, municipality, or other political subdivision where located. 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.
Application and Award Process
Preapplication Coordination
For Traditional Application Processing (TAP) of a mortgage insurance application, the sponsor will have 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 application, or a firm commitment application, is submitted. For Multifamily Accelerated Processing (MAP) for new construction or substantial rehabilitation loans, the sponsor works with a MAP-approved lender who submits certain required exhibits for the preapplication stage. For refinance or purchase of an existing health care project, under Section 232/223(f), there is no preapplication stage under MAP. This program is excluded from coverage under OMB Circular No. A-102. An environmental assessment is required for this program. This program is eligible for coverage under E.O. 12372, "Intergovernmental Review of Federal Programs." An applicant should consult the State office or official designated as the single point of contact additional information.
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 application for a Firm Commitment, 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
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 file, electronically, an annual financial statement to HUD audited and prepared in accordance with Generally Accepted Accounting Principals and Generally Accepted Auditing Standards. 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 07 $1,219,476,400; FY 08 est $1,237,500,000; and FY 09 est $1,762,500,000.
Range and Average of Financial Assistance
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.
Program Accomplishments
In Fiscal Year 2007, the Department insured mortgages for 174 health care facilities with 18,910 beds/units, totaling $1.1 billion. It is estimated that approximately the same number of projects will be insured during fiscal year 2008.
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), available on HUDCLIPS at http://www.hudclips.org
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, S.W., Washington, DC 20412. Telephone: (202) 708-1142.
Web Site Address
http://www.hud.gov/offices/hsg/hsgmulti.cfm
Related Programs
14.128, Mortgage Insurance-Hospitals
14.151, Supplemental Loan Insurancemultifamily Rental Housing
Examples of Funded Projects
Not applicable.
Criteria for Selecting Proposals
Not applicable.
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