Senior Housing Financings Continue Despite Sluggish Economy With Help From Government Program

With the broader housing market struggling and the tax credit market in disarray, senior housing financings continue to proceed along in 2009 at slower pace.  Many borrowers, both corporate and consumer, are accessing government programs more in comparison to the past five years as other third party lenders are wary to re-enter the market.  Besides improved loan processing, these government programs are offering attractive borrowing costs for those who qualify.  Many more companies are continuing to announce financings and the number of transactions utilizing the LEAN processing model through the the Federal Housing Administration (FHA). 

The HUD 232 LEAN program was introduced in 2008 and was designed to eliminate bureaucratic red tape and dramatically reduce the time it takes to apply, qualify for and obtain popular HUD financing for nursing homes and assisted living properties. As part of a major reorganization, administrative responsibility for HUD 232 healthcare loans passed to the FHA’s Office of Insured Health Care Facilities (OIHCF), the group that also coordinates funding for HUD‘s Section 242 hospital mortgage insurance program.  The OIHCF has become a unified single-source for the HUD 232 program, which in the past had been administered unevenly by FHA housing professionals in HUD field offices scattered throughout the U.S.

Even though Cambridge Realty Capital Companies reports loan origination request volume slightly down from its requests during the same period in 2008, it sees the FHA LEAN program as a key driver to its growth in 2009.


“Given all the turmoil in the banking industry, it’s understandable that borrowers might not be in such a euphoric mood. However, there appears to be a lot of interest in government funding programs and interim loans that bridge to more attractive, recession-proof FHA-insured government loans at some point in the future,” he said.

Love Funding announced that it had completed its second deal placed through the LEAN processing model and successfully refinanced the borrower into a $5,560,000 35-year fully amortizing, non-recourse loan include a 5.8 percent fixed interest rate with a loan-to-value ratio of 80 percent.  The project was a 40-bed assisted living facility located in Leesburg, Virginia on 3.2 acres.

According to Laura Saull-Smith, Senior Vice President of Love Funding, “This facility was acquired by the current owner in August of 2008 and had short-term debt that needed to be repaid as quickly as possible. We are pleased to add Meadow Glen of Leesburg to our servicing portfolio as it is one of the best operated assisted living facilities in Virginia.”