Wednesday, March 20, 2013

FHA 242 223F Hospital Refinance Open long term fixed low rate financing

Hospital Facility Refinance Loan Program
FHA Section 242/223(f) Commercial Mortgage Insurance
Refinancing for Acute Care Hospitals - Critical Access Hospitals - Less  than 20% Rehab

Summary: No loan limit, many loans above $100,000,000 - Tax-exempt Bond Replacement Credit
Enhancement AA FHA/HUD Government Mortgage InsuranceInsured mortgages guaranteed by the Federal Housing Administration (FHA), in conjunction with the
Department of Health and Human Services (HHS), provides hospitals access to affordable financing for
capital needs. The program application process was modified to include Critical Access Hospitals in
1998. FHA insurance enables qualified acute care facilities to enhance creditworthiness due to backing
by the full faith and credit of the United States Government. July 2009 program modified for straight
Hospital Refinance under FHA 242 Hospital Facility Loan pursuant to FHA 223(f) refinancing rules.Eligible Borrowers:• Single Asset Entity
• For profit or non-profit owners

(A)  Hospitals with an aggregate operating margin of less than 0.33 when calculated from the three most
recent annual audited financial statements are not eligible for Section 242/223(f) insurance.*

(B)  Hospitals with average debt service coverage ratio of less than 1.80* when calculated from the three
most recent annual audited financial statements are not eligible for Section 242/223(f) insurance.*Under Review - Operating Margin, Debt Service Coverage Ratio and Interest Rate Savings, these
rules may be revised or waivers may be offered - Call Us

(C)  HUD may, at its discretion, use its estimate of projected interest rate in lieu of the historical interest
rate(s) in calculating the operating margin and debt service coverage ratios for prior periods.Use new FHA insured loan rate for calculating DSC

(D) The hospital must have experienced an increase in its interest rate of at least since
January 1, 2008, as a result of the credit crisis, or must demonstrate that such an increase is imminent.*Terms:  • Up to 25 YearsLoan Benefits:• Non-recourse  permanent financing.
• Credit enhancement of Tax-Exempt Housing Bonds providing AA rating
• At HUD’s discretion there may be no requirement for involvement of a certified accounting firm
New! This saves time and money for strong owners with good records. FHA 242 - 223(f) only.Eligible Properties:

• Acute care facilities with proper licensing
• Critical access hospitals are allowed to use 25 beds in any mix of acute and skilled level care with
an additional 10 each for psychiatry, and for acute rehabilitation (total 45 beds)

Mortgage Interest Rates: • Fixed for the length of the mortgageMortgage Loan Limitations:
• Maximum loan term of 25 years
• Maximum loan to Value 90% under § 242.7
• Maximum Repairs 20% of Mortgage Amount - none required
• FHA application fees of 0.3% (0.15% paid at closing)
• Fixed annual insurance premium of 0.5% of remaining balance
• 1.80* average debt service coverage ratio based on average of prior three years
• No limit on insurable amount
• Monthly payments into a mortgage reserve fund equal to one year’s debt service after five years’ debt
service after ten years, accessible for debt service after 15 years
• Lender commitment and placement fee determined by size and scope of project
• One-time FHA inspection fee of 0.1%

Wednesday, March 6, 2013


Owners of multifamily, nursing homes, assisted living facilities, and hospitals have long preferred traditional bank lenders over FHA-based financing.  The usual reason is the difficulty and frustration of dealing with FHA versus the relative ease of dealing with sophisticated lenders.  Due to the changes from the real estate market crash, the wave of bank consolidations, and the reluctance of the remaining banks to return to lending, owners should reexamine their traditional views of FHA financing. 
Traditional financial institutions no longer securitize senior multifamily and health care loans, thereby eliminating the availability of conduit financing for these projects.  We have not yet seen the end of the foreclosure crisis and if banks incur addition losses, bank financing for these types of projects will be almost impossible to obtain.  

FHA, on the other hand, has improved its process dramatically.  FHA-based financing has always offered several significant advantages over traditional bank and conduit lending sources if one was willing to deal with the red tape.  Much of that red tape has now been removed or streamlined and programs to finance hospitals have been added.  The most obvious advantage to FHA is continued credit availability that is unaffected by the subprime fiasco.  Additional advantages are lower fixed rates, nonrecourse loans, and long-term fully-amortizing debt.

FHA loans do not contain the numerous covenants contained in traditional lending documents and specifically do not contain a debt service coverage requirement.  As markets evolve and Medicaid and Medicare reimbursement methodologies are revised, a manager’s ability to maintain a stable and predictable debt service coverage is continually challenged.  FHA-based financing will prove especially valuable.

Our principal business is providing FHA-based refinancing for multifamily, nursing homes, assisted living facilities, and hospitals.  We pride ourselves on our ability to restructure traditional debt into FHA-based debt and working with owners to develop a program using both traditional and FHA-based financing.  Let us help you with your financial needs.  Please contact us at your earliest convenience.

Charles Kendall 773-259-7074 

Scott Kendall 847-903-7578

Friday, August 31, 2012

FHA 242 Refinance of Hospitals finally expected to be opened any day OMB

FHA 242 Hospital refinancing is finally gone to be approved very soon.

Looking for long term 25 year fixed rates under 3.5% to increase the Hospital Cash Flow build reserves call soon. (847) 903-7578 Scott Kendall CEO Kendall Realty Commercial Health Care FHA financing.

Tuesday, July 7, 2009

FHA 242/FHA 223(f) Hospital Refinance

Effective July 2, 2009 FHA will refinance Hospital Loans WITHOUT THE REQUIREMENT FOR REHAB OR NEW CONSTRUCTION.




Thursday, April 30, 2009

FHA 242 Hospital Financing

Program helps hospitals access capital, stimulate economy

The Federal Housing Administration’s Section 242 Mortgage Insurance Program offers a “ray of sunshine” for hospitals looking to address their financing needs for construction projects, an FHA official told hospital leaders April 27 at the American Hospital Association annual meeting. “But for Section 242 many hospitals wouldn’t exist in small rural communities,” said Roger Miller, who heads the FHA program for the U.S. Department of Housing and Urban Development.

This month, the program completed its largest single transaction in history, insuring a $756 million hospital mortgage that will save Capital Health of Trenton, NJ, an estimated $538 million in interest over the 25-year life of the loan. Miller noted that every $1 billion in FHA-financed construction produces $2.8 billion in economic stimulation, because hospitals “are economic engines that create jobs and stimulate the economy.”

AHA has proposed strengthening and streamlining the HUD 242 program by increasing program funding, and providing additional financial resources to hospitals so they may qualify for the program.

Tuesday, January 20, 2009

FHA Design Build and rates

FHA is now more flexible on processing prior to final architectual drawing. This allows the owner to start the financing process while the contractor and architect are working on the final plans.

The rates for FHA GNMA taxable debt 242 debt has averaged between 6.5 and 7% for the last six months. Some borrowers are finding these rates lower than tax-exmempt transactions without all the bond and legal costs.

About Us:

Our knowledgeable team has worked in the mortgage banking/investment banking industry for the past 24 years specializing in healthcare lending, multifamily housing, FHA and FNMA insured loans. Throughout our careers, we have originated and/or underwritten in excess of $745,000,000 in mortgage loans with a focus on acute care hospitals, assisted living facilities, senior housing, and skilled nursing facilities. Previously our team has worked for several NY-based investment banking/mortgage banking firm specializing in conventional and government-assisted loans. Chuck has been president of a FHA mortgage company and a developer. Scott was the VP of Origination for several FHA and FNMA lenders. He has extensive experience working on affordable housing as the Midwest Loan Officer for FNMA Multifamily Affordable Housing Products. We understand that the integrity of the loan officer for the loan quote and rate pricing can make a huge difference for FHA clients.