HUD Senior Housing Financing Soars in 2011, Up 32%

In the past few years, the U.S. Department of Housing and Urban Development has taken a major role in the healthcare financing arena, as private capital became scarce while the need for seniors housing and care financing increased, and the top three lenders dominated HUD’s financing portfolio.

Capital Funding, LLC funded the most loans at 85, or 20% of the 2011 Lean portfolio of 415 total loans, while Lancaster Pollard and Walker and Dunlop LLC rounded out the top three lenders, with volumes of 60 and 48, respectively. This amounts to nearly half of the total number of loans, and nearly $1.3 billion of mortgage financing.

In fiscal year 2011, HUD endorsed $3,288,581,750 of Section 232 Lean loans through its Office of Healthcare Programs (OHP), approximately 32% more than the $2,542,587,800 in 2010, or 309 total loans.

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Both years’ volume could potentially have been higher were it not for the backlog of loan applications, known as the HUD Queue, which grew to well over 400 applications by the spring of 2011 and forced long wait times of eight to twelve months.

The extended timeframe elicited complaints from applicants whose cases were mired in the backlog, and prompted HUD’s OHP to add 35 permanent staff members, most of them in Section 232 production.

Since September, the queue has shrunk to below 300; HUD plans on processing 80-90 loans a month, and forecasts the backlog of applications to be completed by early summer 2012.

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HUD’s Lean 232 financing volume varied among states between 2010 and 2011. Last year, Florida and Wisconsin combined for 21% of overall loan volume, while in 2011 the two states accounted for barely 3%.

In FY 2011, the numbers were distributed more evenly among the top seven states, including Ohio, California, and Indiana, making up nearly 43% of all loan volume.

Chart: Lean 232 Endorsements by State

Tags: Lean 232 Endorsements by State

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View the FY 2011 Lean data here.

Written by Alyssa Gerace