FHA Nursing Home Lender - Chicago, IL
Work with one of the top FHA 232 and Healthcare Lending teams, Chicago, IL We have spent over twenty five years each, lending on Apartments and Healthcare properites using FHA and FNMA programs - National FHA Fannie Mae and Freddie Mac Apartment and Healthcare Loans
Friday, April 12, 2013
Wednesday, March 6, 2013
FINANCING FOR SENIOR HOUSING, NURSING HOMES, ASSISTED LIVING, AND HOSPITALS
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.
Charles Kendall 773-259-7074
kendallrealtyadv@gmail.com
Scott Kendall 847-903-7578
kendallrealty@gmail.com
Tuesday, May 15, 2012
Apartment Loan rates and This Is Clearly Going To Cost JPMorgan Much More Than $2 Billion
APARTMENT LOAN RATES
Whale Ahoy
JPMorgan announced a $2 billion loss Friday. When compared to its market cap and other indicators, that goes Ouch!, but not much more. However, there’s more going on. The bank has refused to state where in its operations the loss was incurred. For good reason perhaps: the positions that caused the loss are still rumored to be open.
The main problem JPMorgan may be facing, and the 8% loss in pre-market trading may be a sign players are on to this, is that we probably already know where the loss is. A few weeks ago, the financial sphere was full of stories about the London Whale, a JPM trader in London named Bruno Michel Iksil, who had taken such massive - synthetic - derivative (gambling) positions in a 125 company index that they were moving the market itself.
Back then, some hedge funds took counter positions just for the sheer fact that he had bet so much; they figured he couldn't last forever on all trades. The underlying notion was he was long a bunch of companies; well, not a lot has gone well in the markets lately. And if you have overweight derivative positions in one direction (in this case credit default swaps) , you can make a killing or you can get punished fast and furious. He did the latter.
Read more: http://theautomaticearth.org/Finance/jpmorgan-a-tale-of-whales-and-sharks.html#ixzz1uwnfvREt
Tuesday, April 17, 2012
Wednesday, April 29, 2009
FHA 232 can be used to rehab and meet new State Requirements
The FHA 232 loan program can be used to help meet the new life safety rules in most states.
If you are in need of financing to meet new state guidelines check out the fha 232 LEAN programs at our website www.kendallrealtyadvisors.com
If you are in need of financing to meet new state guidelines check out the fha 232 LEAN programs at our website www.kendallrealtyadvisors.com
Friday, February 6, 2009
Revised Guidance for Underwriting of LEAN 232 Loans for Assisted Living Projects:
Given the difficult economic and fiscal environment nationally, the Department is requesting that HUD approved Mortgagees exercise caution in underwriting loans under the LEAN Section 232 programs for new construction and refinance transactions for assisted living facilities. For all Assisted Living Project LEAN mortgage insurance applications under Section 223(f), Section 232 new construction and substantial rehabilitation, and Section 241(a), HUD will require justification/mitigation if the underwritten debt service coverage ratio (“DSCR”) is less than 1.45. Moreover, as was previously discussed with various lenders in June of 2008, for all LEAN mortgage insurance applications involving new construction of Assisted Living units, HUD will require justification/mitigation if the underwritten loan to value is greater than 75%.
The Department would consider, for example, a mitigating factor to be the inclusion of less expensive independent living units in the project or the presence of facility residents that are being provided with state or federal rental assistance subsidies. The Department’s review of mitigating factors will focus on any project specific attributes that result in limiting project market risk or in reducing project financial risk. The Department will be reasonable and flexible in determining where justifiable circumstances or mitigating factors exist.
Additional Guidance on the Use of Project Capitalization Rates:
The Department would like to provide general guidance regarding the usage of capitalization rates for Assisted Living projects. HUD believes that the capitalization rate should be a true reflection of conditions in the marketplace and the specific risks associated with a project. The Department is particularly concerned with the use (in some cases) of an approximate “risk free” capitalization rate for Assisted Living projects. The Department is not mandating a minimum capitalization rate. However, HUD may require justification/mitigation on Assisted Living projects if the capitalization rate used by the appraiser appears not to fully account for specific project and market related risks. This capitalization rate issue should be fully discussed in the Lender Narrative of the LEAN Application.
The Department believes that, in most but not all economic environments, the following debt service constant formula (Debt Service Constant + FHA MIP) multiplied by 1.25 would reflect reasonable guidance for the “minimum” capitalization rate for a proposed project. HUD would expect that the market realities of each project would dictate the capitalization rate to be used, which may be higher than the minimum formula. HUD does not wish to impose requirements for determining the capitalization rate and will defer to the USPAP appraisal standards to provide the definitive guidance on this issue. The Department’s guidance on capitalization rates is not mandatory and the Department understands that this guidance may not be as helpful as a guide when market and economic conditions are either highly optimistic or overly conservative and/or when the interest rate environment reflects unusually low or high project interest rates.
Example for calculating Cap Rate: 7% fixed interest rate plus the MIP of 50 basis points. {.0746+.50bp MIP=.0796*1.25=.0995 or 9.95%}. In this example, the minimum capitalization rate “guidance” is 9.95.
The revised guidance relative to the debt service coverage ratio, loan to value, and capitalization rates for assisted living projects shall apply to any future application for mortgage insurance where an FHA Project Number is issued after February 6, 2009. Alternatively, if the FHA number has not been issued but a project appraisal is underway, FHA will accept the lower DSCR of 1.3 for refinancing and 1.35 for new construction if an appraisal engagement letter was executed prior to February 6, 2009, and if appraisals using the lower DSCRs are finalized and provided to HUD prior to April 6, 2009. On projects that do not meet this revised guidance (where the FHA Project Number was issued on or prior to February 6, 2009) the Lender should provide a notification in the Check Transmittal Letter and Lender Narrative of the mortgage insurance application that provides for the discussion of the appraisal lender modifications.
Please note that the previous guidance on loan to value and debt service coverage on Section 232/223(f)’s for Skilled Nursing and Independent Living Facilities have not been revised.
The Department would consider, for example, a mitigating factor to be the inclusion of less expensive independent living units in the project or the presence of facility residents that are being provided with state or federal rental assistance subsidies. The Department’s review of mitigating factors will focus on any project specific attributes that result in limiting project market risk or in reducing project financial risk. The Department will be reasonable and flexible in determining where justifiable circumstances or mitigating factors exist.
Additional Guidance on the Use of Project Capitalization Rates:
The Department would like to provide general guidance regarding the usage of capitalization rates for Assisted Living projects. HUD believes that the capitalization rate should be a true reflection of conditions in the marketplace and the specific risks associated with a project. The Department is particularly concerned with the use (in some cases) of an approximate “risk free” capitalization rate for Assisted Living projects. The Department is not mandating a minimum capitalization rate. However, HUD may require justification/mitigation on Assisted Living projects if the capitalization rate used by the appraiser appears not to fully account for specific project and market related risks. This capitalization rate issue should be fully discussed in the Lender Narrative of the LEAN Application.
The Department believes that, in most but not all economic environments, the following debt service constant formula (Debt Service Constant + FHA MIP) multiplied by 1.25 would reflect reasonable guidance for the “minimum” capitalization rate for a proposed project. HUD would expect that the market realities of each project would dictate the capitalization rate to be used, which may be higher than the minimum formula. HUD does not wish to impose requirements for determining the capitalization rate and will defer to the USPAP appraisal standards to provide the definitive guidance on this issue. The Department’s guidance on capitalization rates is not mandatory and the Department understands that this guidance may not be as helpful as a guide when market and economic conditions are either highly optimistic or overly conservative and/or when the interest rate environment reflects unusually low or high project interest rates.
Example for calculating Cap Rate: 7% fixed interest rate plus the MIP of 50 basis points. {.0746+.50bp MIP=.0796*1.25=.0995 or 9.95%}. In this example, the minimum capitalization rate “guidance” is 9.95.
The revised guidance relative to the debt service coverage ratio, loan to value, and capitalization rates for assisted living projects shall apply to any future application for mortgage insurance where an FHA Project Number is issued after February 6, 2009. Alternatively, if the FHA number has not been issued but a project appraisal is underway, FHA will accept the lower DSCR of 1.3 for refinancing and 1.35 for new construction if an appraisal engagement letter was executed prior to February 6, 2009, and if appraisals using the lower DSCRs are finalized and provided to HUD prior to April 6, 2009. On projects that do not meet this revised guidance (where the FHA Project Number was issued on or prior to February 6, 2009) the Lender should provide a notification in the Check Transmittal Letter and Lender Narrative of the mortgage insurance application that provides for the discussion of the appraisal lender modifications.
Please note that the previous guidance on loan to value and debt service coverage on Section 232/223(f)’s for Skilled Nursing and Independent Living Facilities have not been revised.
Tuesday, January 6, 2009
Nursing Home Loans
Skilled Nursing/Assisted Living Facility 232
Refinance, Purchase or New Construction
- 80% to 85% Loan-to-value Refinance and Purchase under LEAN
- no cash out, but FHA is reviewing existing debt payoff rules
- 35 Year amortization existing, 40 years, plus construction, new construction
- 35 Year Term existing, 40 year term new construction (no balloon)
- No maximum loan amount
- Low, fixed interest rate, based on market spreads over the Ten-Year Treasury Yield
- No personal liability (non-recourse)
- Negotiable pre-payment terms
- 1:25 Minimum Debt Service Coverage (lean program)
This loan is always assumable and third-party expenses and loan costs are financeable.
Refinance, Purchase or New Construction
- 80% to 85% Loan-to-value Refinance and Purchase under LEAN
- no cash out, but FHA is reviewing existing debt payoff rules
- 35 Year amortization existing, 40 years, plus construction, new construction
- 35 Year Term existing, 40 year term new construction (no balloon)
- No maximum loan amount
- Low, fixed interest rate, based on market spreads over the Ten-Year Treasury Yield
- No personal liability (non-recourse)
- Negotiable pre-payment terms
- 1:25 Minimum Debt Service Coverage (lean program)
This loan is always assumable and third-party expenses and loan costs are financeable.
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