Assisted Living/Nursing Homes
Refinance & 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 232/223(f) | Refinance | Acquisition |
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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 (collectively, "Residential Care Facilities"). |
| 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. |
| Maximum
Loan | 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 | 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) |
| 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. |
| Mortgage Insurance
Premium | 1% for the first year and 0.5% of the outstanding loan amount thereafter. |
| 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. |
| Finance Fee | Negotiable; 1.5% - 2.5% typical |
| Secondary
Financing | Surplus cash notes are permitted, up to 7.5% of the project's value. |
| 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 |
| 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. |
| 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. |
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