Senior Housing Loans Racing Through HUD With Queue at Zero

The infamous queue of applications for the Department of Housing and Urban Development’s senior housing and healthcare finance programs has been dissolved, and timelines for new applications are zipping through up to 10 times faster than before. 

Two to three years ago, it could take a year—or longer—to have a HUD Section 232 application picked up by an underwriter, with as many as 300 other applicants waiting in line, says Jeffrey Davis, chairman of Cambridge Realty Capital Companies. 

“Today, on average, there maybe 10 applicants awaiting their turn and the average time it takes for an underwriter to lay eyes on the application is about one month or less,” he said in a company statement on the HUD queue’s status. 

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Currently there are no queues in any of HUD’s multifamily loan programs nationwide, Ben Metcalf, deputy assistant secretary for Multifamily Housing at HUD, announced during a lenders conference on April 24. For the LEAN program, there are only nine deals in the Section 232/223(f) refinance program queue, all of which have been submitted within the last two weeks, and four additional deals in the new construction queue. 

Clearing the queue—which at its worst grew to 347 in August 2011—has been a long time in coming. HUD had hoped to eliminate the senior housing queue by the middle of 2012, according to a January 2012 letter to lenders. Then in March of that year, the former acting director of HUD’s LEAN program told attendees of a regional lenders association conference that the department had “busted through” the backlog, whittling it down to 119 applications. 

At the time, lenders including Cain Brothers and Love Funding were already seeing marked improvements in the timing of the application process as HUD hired more contract reviewers and began sharing the workload between offices. 

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But the government shutdown in September 2013 halted the queue-dissolving. HUD exhausted its commitment authority that month and announced it ceased construction inspections of healthcare projects during the shutdown. Only loans with mortgage insurance commitments issued prior to Sept. 30 were closed, with new activity put on hold for many loan programs throughout HUD until the shutdown. 

By the first week of January 2014, HUD had 206 applications in underwriting review and another 107 in the queue that had not yet been assigned, mostly for the Section 232/223(f) program, according to the most recent data available via HUD’s Weekly Statistical Reports.

All the current LEAN applications are less than three months old, says Michael Vaughn, senior vice president at Walker & Dunlop. In addition to HUD increasing the amount of staff working on the queue, volume also dropped as interest rates rose, but financing activity is expected to remain elevated. 

“Volume may rise due to some large portfolio refinancings and in fact because there are no queues,” Vaughn told SHN. “The basics of the program are attractive and HUD has the capacity, so volume should continue at a high level.”

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Written by Alyssa Gerace

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