Why Senior Housing Borrowers Might Secure FHA Loans Faster

Just a few years ago, senior housing companies seeking Federal Housing Administration financing faced exceedingly long wait times, due to an immense backlog. Happily, that backlog is no more—and soon, FHA financing might be secured even more quickly.

The FHA is converting its Seattle office from handling multifamily to health care business, meaning more manpower devoted to programs such as the Section 232 Lean loan program. These products are used to finance the purchase, construction, and substantial rehabilitation of assisted living and other senior care properties.

“The LEAN program has been short-staffed for a number of years now, so having additional people can only be positive, as long as they’re trained up and correctly know how to underwrite,” Ryan Miles, senior vice president at Lancaster Pollard, told Senior Housing News. “We should see, hopefully, a reduction in timeframes.”


Another potential positive, according to Miles: With more dedicated employees on its health care products, the agency might be able to scale back on contracted underwriters.

Columbus, Ohio-based Lancaster Pollard has been the nation’s top Lean lender since fiscal year 2010. The firm closed 65 loans, totaling $531 million, in 2015.

Longer wait times are one drawback to this type of financing, with a primary benefit being favorable interest rates. Given general expectations that interest rates are set to rise in the near future, this news of shorter waits could be especially pleasing to senior housing companies.


“This gives borrowers a greater amount of comfort that their loan will be processed efficiently, so they can take advantage of current low interest rates,” Miles said.

The transitioning of the Seattle office is part of the Department of Housing and Urban Development’s overhaul of its multifamily business. The “Multifamily for Tomorrow” initiative is scheduled to be completed this year. It is a multifaceted effort that involves new workload sharing practices and other changes, as well as streamlining how HUD’s multifamily offices are distributed. The Seattle regional center is the only one that will be switching over to the Office of Healthcare Programs.

That change already is well underway. All multifamily FHA mortgage applications for the Seattle or Portland offices were to be sent instead to San Francisco as of November 13, 2015, according to an agency memo.

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“Employees in the Seattle Multifamily Hub will soon have the option of transitioning to the Office of Healthcare Programs,” Seattle Multifamily Hub Director Philip Head wrote in that memo from last October. 

The regional centers process loans nationwide, not only for borrowers based in the region.

The Lean program boomed in 2013 and 2014, with senior housing companies lining up to refinance. Activity was down last year, with $2.7 billion of loan volume closed. That was a nearly 36% decline from 2014. 

There were 73 Section 232 applications currently in underwriting review and 56 applications not yet assigned as of the week of Feb. 12, 2016, according to the FHA. A year ago, the agency had about the same number of applications in review—70—but only 12 in the queue.

Written by Tim Mullaney

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