Senior Housing HUD Lending On the Rise

The U.S. Department of Housing and Urban Development’s (HUD) Lean mortgage insurance program for senior housing may have finally hit a turning point after experiencing a few years of declining loan volumes.

During the fiscal year ended Sept. 30, 2016, senior housing loan volume from the federal agency actually rose for the first time in years—if only slightly. And updated eligibility requirements may have had something to do with that, according to experts.

HUD’s Lean mortgage insurance program, which finances seniors housing properties, closed $2.84 billion of loan volume during the fiscal year ending Sept. 30, 2016, according to HUD data cited by Columbus, Ohio-based Lancaster Pollard. That’s up 5% from last year’s total of $2.7 billion.


Thirty-four different lenders closed a total of 287 loans within this past fiscal year. Lancaster Pollard, which came in first among all lenders in total loan amount and transactions closed, was responsible for 21% of the total activity. The company has been the top HUD Lean lender since fiscal year 2010.

The $2.84 billion in total loan volume was “basically flat year-over-year,” Kass Matt, president of Lancaster Pollard, told Senior Housing News. But the gain over last year is noteworthy, as loan volume during the fiscal year ending Sept. 30, 2015, was down 35.7% from the previous year’s total of $4.2 billion, and down 53.4% from HUD’s record total of $5.8 billion in 2013.

In 2016, HUD changed its eligibility rules and interest rates fell “rather dramatically,” Matt noted. This drove renewed interest and renewed discussion among lenders, he said.


“HUD released updated eligibility rules which allowed for recapitalization and owner buyouts, among other things,” Matt said. “That drove some activity.”

Lancaster Pollard, which closed 60 transactions worth $554.4 million during the most recent fiscal year, has lofty expectations for the fiscal year ending on Sept. 30, 2017, Matt explained.

“We expect 2017 to be a phenomenal year for FHA volume,” Matt said. “Our pipeline is about double where it was on Jan. 1, 2016.” 

Written by Mary Kate Nelson

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