Assisted Living/Nursing Homes
Refinance or Acquisition without Substantial Rehabilitation |
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) | HUD 223(a)(7) |
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| Purpose | 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. | Provides mortgage insurance in connection with the refinance of projects currently insured by FHA. Available for profit motivated or non-profit borrowers. |
| Eligible
Borrowers | Profit motivated, non-profit motivated 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. | 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. |
| Maximum Loan | 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) | 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) |
| Personal Liability | None | None |
| Prepayment | Typically closed for five years then open to prepayment at 5% prepayment fee in year six, declining 1% per year. |
| FHA Application
Fees | 0.3% of the loan amount. | 0.3% of the loan amount. At closing, HUD will approve reimbursement up to one-half of the application fee. |
| Mortgage Insurance
Premium | 1% for the first year and 0.5% of the outstanding loan amount thereafter. | .5% of the outstanding loan amount. |
| Repairs and
Replacements | 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. | None. |
Finance Fee | Negotiable; 1.5% - 2.5% typical. | Negotiable; 1.0% - 2.0% typical. |
| Secondary
Financing | Surplus cash notes are permitted, up to 7.5% of the project's value. | None. |
| Funding | Qualifies for government insured mortgage-backed securities or direct Placement or may be used to credit-enhance tax-exempt bonds. |
Interest Rate | Approximately 150-200 basis points over 10-Year Treasury, but subject to market conditions. |
Territory | Nationwide. | Nationwide. |
| Additional
Parameters | -
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. -
A replacement reserve deposit will be required at closing. The deposit can be capitalized in the mortgage loan. | -
The Program is available for fully insured mortgages or coinsured mortgages that have been converted to full insurance. -
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. -
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. -
Loans insured under 223(a)(7) assume program characteristics of the underlying mortgage insurance program. -
Processing Section 223(a)(7) applications usually takes 30-45 days. |
| 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 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. | not applicable |
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