The U.S. Department of Housing and Urban Development (HUD) announced it is rolling out a new “Express Lane” program for its Section 232 Mortgage Insurance for Residential Care Facilities program.

The new program is meant to speed up the application process for entities that meet “low risk” criteria, according to the announcement.

While the program is aimed toward aiding skilled nursing facilities with receiving HUD funding, the overall impact for senior living is likely going to be limited.

Among the requirements to qualify for the “express lane” includes a maximum of 70% loan to value and a minimum debt service coverage ratio (DSCR) “using unadjusted trailing 12-month net operating income” of 2.0x for skilled nursing facility portion of the facility and 1.6x for the non-skilled nursing facility portion of the facility.

The majority of senior housing loans going to HUD are “at the programmatic DSCR of 1.45x in today’s interest rate environment,” according to David Young, managing director of Greystone.

However, for the operators that do qualify, the program should help clear up the months-long queue and bring processing times to match those of typical government-sponsored enterprise funding, said Steve Kennedy, Jr., executive managing director of VIUM Capital.

“The Express Lane’s speed should make HUD financing as quick—if not quicker—than typical GSE executions, boosting its appeal for strong assisted-living and memory-care properties as well,” Kennedy said.

However, Young noted that with more deals jumping the queue, loans in the queue that don’t qualify would experience slightly longer delays.

Kennedy added that the standard HUD queue is between two and three months, with underwriting commitments taking 45 to 60 days. The new program could reportedly cut the underwriting commitment down to five to eight days, cutting up to five months of waiting time and marking a “major win for borrowers.”

Overall, below market value options in senior housing and skilled nursing are the most likely to benefit from the new program, Young said.

Additional requirements to qualify for the “Express Lane” include not having a history of Federal Housing Administration (FHA) insurance claims or defaults on FHA loans, no more than 20% of a facility’s revenue being attributed to special use, operators being in place at a facility for a minimum of two years prior to applying, and mortgages not exceeding $50 million, with the exception of operators in the New York City area, who cannot exceed $70 million.