Nursing Homes & Assisted Living - Refinance & Acquisition
HUD Section 232 Pursuant to Section 223(f)

(http://www.rockportmortgage.com:80//print/termsheets/nursing/232_223f.php)

Purpose
FHA's Section 232 Program was recently amended to provide mortgage insurance for the refinance of conventional (non-FHA insured) nursing homes, intermediate care facilities, board and care homes and assisted living facilities (collectively, "Residential Care Facilities").
Eligible Borrowers
Profit motivated, non-profit and public owners are eligible.
Maximum Term
35 years (fully amortizing) or 75% of the estimated remaining economic life whichever is less, with a minimum term of 10 years.
Maximum Loan
Refinancing
the lesser of:
1. The original principal amount of the existing insured mortgage;
2. The unpaid principal balance of the existing insured mortgage plus the cost of required repairs, improvements, outstanding debt incurred in connection with capital improvements (as approved by the HUD field office), prepayment penalties, and loan closing costs;
3. The amount that can be supported by 90% of next operating income (95% if owner is non-profit). Acquisitions
the lesser of:
1. 85% of FHA's value
2. Amount of debt serviced by 85% of NOI attributable to the real estate
3. 85% of HUD appraised acquisition costs
Personal Liability
None
Prepayment
Typically either closed for two years then open to prepayment at 8% penalty in year three, declining 1% per year.
FHA Application Fees
0.3% of the loan amount
Mortgage Insurance Premiums
1. 1% for the first year* 2. 0.5% of the outstanding loan amount thereafter*
Seconday Financing
Surplus cash notes are permitted, up to 7.5% of the project's value.
Repairs/Replacement
Funds for repairs, deferred maintenance and capital improvements for up to 15% of value or $15,000 per unit can be included in the loan amount, subject to the 85% loan to value limitations.
Funding
Qualifies for government guaranteed mortgage-backed securities or direct placement or may be used to credit enhance tax-exempt bonds.
Interest Rate
Subject to market conditions.
Territory
Nationwide
Eligible Properties
Residential Care Facilities (nursing homes, intermediate care facilities, board and care, and assisted living facilities) must be at least three years old and must provide the necessary space for a central kitchen (whether utilized or not) and group dining. If day care is provided, the day care program must be self supporting. A Residential Care Facility must be licensed and/or regulated by the state (or another political subdivision).*

Assisted living facilities and board and care or personal care facilities also must provide separate dwelling units and have supportive services available to assist residents in carrying out the activities of daily living, including common rooms and the facility necessary for the provision of the above-noted supportive services. Individual assisted living units may contain a kitchenette or full kitchen, and a full bath.*

Additional Program Parameters
* HUD’s new LEAN Program dramatically reduced the processing time to 30 days to close after submission of complete application.
* The FHA Section 232 pursuant to 223(f) mortgage insurance program is the most attractive credit enhancement program available for taxable and tax-exempt acquisition financing or refinance existing nursing homes, intermediate care facilities, assisted living facilities, and board and care (personal care) facilities.
* A replacement reserve deposit will be required at closing. The deposit can be capitalized in the mortgage loan.