Assisted Living/Nursing Homes
Refinance or Acquisition without Substantial Rehabilitation
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Rockport Mortgage Corporation
is an FHA-approved Mortgagee and actively
provides financing utilizing the FHA insurance
programs nationwide.
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HUD
232 / HUD 223(f)
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HUD
223(a)(7)
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Purpose
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FHA's Section 232 Program
was recently amended to provide mortgage
insurance for the refinance of conventional
(non-FHA insured) intermediate care facilities,
board and care homes and assisted living
facilities.
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Provides
mortgage insurance in connection with the
refinance of projects currently
insured by FHA. Available
for profit motivated or non-profit borrowers.
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Eligible
Borrowers
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Profit motivated, non-profit
motivated and public owners are eligible.
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Maximum Term
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35 Years (fully amortizing)
or 75% of the estimated remaining economic
life whichever is less, with a minimum
term of 10 years.
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May
not exceed the remaining term of the existing
mortgage, except in special cases where
due to the project feasibility, FHA may
extend the new term up to 12 years beyond
the term of the original mortgage.
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Maximum Loan
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Refinance
The lesser of:
1) 85% of FHA's value
(90% for non-profits)
2) Amount of debt serviced
by 85% of NOI attributable to the real
estate (90% for non-profits)
3) 100% of HUD appraised transaction
costs
Acquisition
The lesser of:
1) 85% of FHA's value
(90% for non-profits)
2) Amount of debt serviced
by 85% of NOI attributable to the real
estate (90% for non-profits)
3) 85% of HUD appraised acquisition
costs (90% for non-profits)
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The lesser of:
1) The original principal
amount of the existing insured mortgage.
2) The unpaid principle balance
of the existing insured mortgage plus the cost
of required Repairs, improvements, outstanding
debt incurred in connection with capital improvements,
prepayment penalties, and loan closing costs;
3)The amount that can be supported
by 90% of net operating income (95% if owner
is non-profit)
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Personal Liability
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None
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None
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Prepayment
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Negotiable
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FHA Application
Fees
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0.3% of the loan amount.
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0.3% of the loan amount.
At closing, HUD will approve reimbursement
up to one-half of the application fee.
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Mortgage Insurance
Premium
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1% for the first year and
0.5% of the outstanding loan amount thereafter.
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.5%
of the outstanding loan amount.
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Repairs and
Replacements
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Funds for repairs, deferred
maintenance and capital improvements for
up to 15% of value or $6,500 per unit (may
be adjusted for high cost areas) can be
included in the loan amount, subject to
the 85% loan to value limitations.
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None.
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Finance
Fee
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Negotiable
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Negotiable
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Secondary
Financing
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Surplus cash notes are permitted,
up to 7.5% of the project's value.
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None.
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Funding
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Qualifies for government
insured mortgage-backed securities or direct
Placement or may be used to credit-enhance
tax-exempt bonds.
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Interest
Rate
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Subject
to market conditions.
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Territory
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Nationwide.
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Nationwide.
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Additional
Parameters
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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 of existing nursing homes,
intermediate care facilities, assisted
living facilities, and board and care
(personal care) facilities.
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A replacement reserve
deposit will be required at closing.
The deposit can be capitalized in the
mortgage loan.
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The Program is available
for fully insured mortgages or coinsured
mortgages that have been converted
to full insurance.
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Funds to cover repairs
and costs of the transaction can be
included in the mortgage loan. Outstanding
debt incurred in connection with capital
improvements already made to the property
may also be included in the mortgage
loan, subject to FHA approval.
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The term of the new
mortgage may not exceed the remaining
term of the existing mortgage though
FHA may extend the new term up to 12
years beyond the term of the original
mortgage if it is required for project
feasibility.
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Loans insured under 223(a)(7)
assume program characteristics of the
underlying mortgage insurance program.
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Processing Section 223(a)(7)
applications usually takes 30-45 days.
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Eligible Properties
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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).
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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 our the activities of daily
living, including common rooms and
the facilities 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.
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not
applicable
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