Mortgage Insurance_Nursing Homes, Intermediate Care Facilities, Board and Care Homes and Assisted Living Facilities
Published on AidPage by
IDILOGIC on Jun 24, 2005
Purpose of this program:
To provide mortgage insurance to HUD-approved lenders to facilitate the construction or rehabilitation of nursing homes, intermediate care facilities, board and care homes and assisted living facilities, to allow purchase or refinancing with or without repairs of projects not requiring substantial rehabilitation, and to provide loan insurance to install fire safety equipment.
Possible uses and use restrictions...
Section 232 insures lenders against loss on mortgage defaults. Insured mortgages may be used to finance construction or renovation of facilities to accommodate 20 or more patients requiring skilled nursing care and related medical services, or those who while not in need of nursing home care, are in need of minimum but continuous care provided by licensed or trained personnel. Board and care homes and assisted living facilities are also eligible and must contain a minimum of five accommodations or units. Nursing homes, intermediate care facilities, board and care homes and assisted living facilities may be combined in the same facility covered by an insured mortgage or may be in separate facilities. Nursing homes, intermediate care facilities, board and care homes and assisted living facilities must be licensed or regulated by the appropriate state agency, municipality, or other political subdivision where located. Contractors for new construction and substantial rehabilitation projects must comply with prevailing wage requirements under the Davis- Bacon Act.
Who is eligible to apply...
Eligible mortgagors include investors, builders, developers, public entities, nursing homes and private nonprofit corporations or associations.
Credentials/Documentation
Documentation regarding the characteristics of the property and the qualifications of the mortgagor are assembled by the mortgagee and submitted with the application. Certification of need and inspection and licensing by the State agency designated by the Public Health Service Act for the State in which the nursing home or intermediate care facility is to be located is required, or, if no State Agency exists, an alternative market study is required. A Certificate of Need may be required for a board and care home or assisted living facility. A statement from the appropriate State Agency is required stating that the State is in compliance with Section 1616 (e) of the Social Security Act. This facility must be licensed. This program is excluded from coverage under OMB Circular No. A-87.
Note:This is a brief description of the credentials or documentation required prior to, or along with, an application for assistance.
About this section:
This section indicates who can apply to the Federal government for assistance and the criteria the potential applicant must satisfy.
For example, individuals may be eligible for research grants, and the criteria to be satisfied may be that they have a professional or scientific degree,
3 years of research experience, and be a citizen of the United States. Universities, medical schools, hospitals, or State and local governments may also be eligible.
Where State governments are eligible, the type of State agency will be indicated (State welfare agency or State agency on aging) and the criteria that they
must satisfy.
Certain federal programs (e.g., the Pell Grant program which provides grants to students) involve intermediate levels of application processing, i.e., applications
are transmitted through colleges or universities that are neither the direct applicant nor the ultimate beneficiary. For these programs,
the criteria that the intermediaries must satisfy are also indicated, along with intermediaries who are not eligible.
How to apply...
Application Procedure:
For Traditional Application Processing (TAP), the application for Firm commitment is submitted by the sponsor through a HUD-approved mortgagee, and the application is processed by the Multifamily Hub or Program Center. For Multifamily Accelerated Processing (MAP), the application for a Firm Commitment, including a full under-writing package, is submitted by the MAP lender for HUD Field Office review. This program is excluded from coverage under OMB Circular No. A-110.
Note: Each program will indicate whether applications are to be submitted to the Federal headquarters, regional or local office, or to a State or local government office.
Award Procedure:
The local HUD Field Office makes the final decision to approve, or reject individual projects.
Note: Grant payments may be made by a letter of credit, advance by Treasury check, or reimbursement by Treasury check.
Awards may be made by the headquarters office directly to the applicant, an agency field office, a regional office,
or by an authorized county office. The assistance may pass through the initial applicant for further distribution by
intermediate level applicants to groups or individuals in the private sector.
Deadlines and process...
Deadlines
Deadlines are established on a case-by-case basis by the designated Multifamily Hub or Program Center and are mutually agreed to at the pre-commitment conference.
Note:
When available, this section indicates the deadlines for applications to the funding agency which will
be stated in terms of the date(s) or between what dates the application should be received.
When not available, applicants should contact the funding agency for deadline information.
Range of Approval/Disapproval Time
Processing time depends upon the degree of preparation by the sponsor and whether or not Multifamily Accelerated Processing (MAP) or Traditional Application Processing (TAP) is used.
Preapplication Coordination
For Traditional Application Processing (TAP) of a mortgage insurance application, the sponsor will have an initial conference with the local HUD Multifamily Hub or Program Center to determine the preliminary feasibility for the project before a site appraisal and market analysis application, or a firm commitment application, is submitted. For Multifamily Accelerated Processing (MAP) for new construction or substantial rehabilitation loans, the sponsor works with a MAP-approved lender who submits certain required exhibits for the preapplication stage. For refinance or purchase of an existing health care project, under Section 232/223(f), there is no preapplication stage under MAP. This program is excluded from coverage under OMB Circular No. A-102. An environmental assessment is required for this program. This program is eligible for coverage under E.O. 12372, "Intergovernmental Review of Federal Programs." An applicant should consult the State office or official designated as the single point of contact additional information.
Note:
This section indicates whether any prior coordination or approval is required with governmental or nongovernmental units
prior to the submission of a formal application to the federal funding agency.
Appeals
If an application for mortgage insurance is refused, HUD will state the reasons for the refusal. If reapplication is desired, the applicant may modify the application and reapply.
Note:
In some cases, there are no provisions for appeal. Where applicable, this section discusses appeal procedures or allowable rework time for resubmission
of applications to be processed by the funding agency. Appeal procedures vary with individual programs and are either listed in this section or
applicants are referred to appeal procedures documented in the relevant Code of Federal Regulations (CFR).
Renewals
The term of a commitment to insure may be extended when more time is required to close the loan.
Note:
In some instances, renewal procedures may be the same as for the application procedure, e.g., for projects of a non-continuing nature renewals will be treated as new, competing applications; for projects of an ongoing nature, renewals may be given annually.
Who can benefit...
Residents requiring skilled nursing, custodial care, and assistance with activities of daily living are eligible to live in a structure whose mortgage is insured under the program.
Beneficiaries
About this section:
This section lists the ultimate beneficiaries of a program, the criteria they must satisfy and who specifically is not eligible. The applicant and beneficiary will generally be the same for programs that provide assistance directly from a Federal agency. However, financial assistance that passes through State or local governments will have different applicants and beneficiaries since the assistance is transmitted to private sector beneficiaries who are not obligated to request or apply for the assistance.
What types of assistance...
Guaranteed/Insured Loans
Programs in which the Federal government makes an arrangement to identify a lender against part or all of any defaults by those responsible for repayment of loans.
How much financial aid...
Range and Average of Financial Assistance
The maximum amount of the loan for new construction and substantial rehabilitation would be equal to 90 percent (95 percent for nonprofit sponsors) of the estimated value of the physical improvements and major movable equipment. For existing projects, the maximum is 85 percent (90 percent for nonprofit sponsors) of the estimated value of the physical improvements and major movable equipment.
Note:
This section lists the representative range (smallest to largest) of the amount of financial assistance available. These figures are based upon funds awarded in the past fiscal year and the current fiscal year to date. Also indicated is an approximate average amount of awards which were made in the past and current fiscal years.
Obligations
(Mortgages insured) FY 03 $2,175,633,000; FY 04 est $2,300,000,000; and FY 05 est $2,418,750,000.
Note:
The dollar amounts listed in this section represent obligations for the past fiscal year (PY), estimates for the current fiscal year (CY), and estimates for the budget fiscal year (BY) as reported by the Federal agencies. Obligations for non-financial assistance programs indicate the administrative expenses involved in the operation of a program.
Account Identification
86-4077-0-3-371.
Note:
Note: This 11-digit budget account identification code represents the account which funds a particular program.
This code should be consistent with the code given for the program area as specified in Appendix III of the Budget of the United States Government.
Examples of funded projects...
Not applicable.
About this section
This section indicates the different types of projects which have been funded in the past. Only projects funded under Project Grants or Direct Payments for Specified Use should be listed here. The examples give potential applicants an idea of the types of projects that may be accepted for funding. The agency should list at least five examples of the most recently funded projects.
Program accomplishments...
In Fiscal Year 2003, the Department insured mortgages for 298 health care facilities with 37,176 beds/units. It is estimated that approximately the same number of projects will be insured during fiscal year 2004.
Criteria for selecting proposals...
Not applicable.
Assistance considerations...
Length and Time Phasing of Assistance
The maximum mortgage term is 40 years for new construction and substantial rehabilitation. The maximum term for existing projects without substantial rehabilitation is 35 years.
Formula and Matching Requirements
The maximum amount of the loan for new construction and substantial rehabilitation would be equal to 90 percent (95 percent for nonprofit sponsors) of the estimated value of the physical improvements and major movable equipment. For existing projects, the maximum is 85 percent (90 percent for nonprofit sponsors) of the estimated value of the physical improvements and major movable equipment. HUD charges one-half percent of the mortgage amount per annum for mortgage insurance premium. The combined HUD site appraisal and market analysis application and commitment fees are $3 per $1,000 of the mortgaged amount. The HUD inspection fee may not exceed $5 per $1,000 of the mortgage amount for new construction and substantial rehabilitation projects. The inspection fee for existing projects may not exceed one percent of the total cost of repairs.
Note:
A formula may be based on population, per capita income, and other statistical factors. Applicants are informed whether there are any matching requirements to be met when participating in the cost of a project. In general, the matching share represents that portion of the project costs not borne by the Federal government. Attachment F of OMB Circular No. A-102 (Office of Management and Budget) sets forth the criteria and procedures for the evaluation of matching share requirements which may be cash or in-kind contributions made by State and local governments or other agencies, institutions, private organizations, or individuals to satisfy matching requirements of Federal grants or loans.
Cash contributions represent the grantees' cash outlay, including the outlay of money contributed to the grantee by other public agencies, institutions, private organizations, or individuals. When authorized by Federal regulation, Federal funds received from other grants may be considered as the grantees' cash contribution.
In-kind contributions represent the value of noncash contributions provided by the grantee, other public agencies and institutions, private organizations or individuals. In-kind contributions may consist of charges for real property and equipment, and value of goods and services directly benefiting and specifically identifiable to the grant program. When authorized by Federal legislation, property purchased with Federal funds may be considered as grantees' in-kind contribution.
Maintenance of effort (MOE) is a requirement contained in certain legislation, regulations, or administrative policies stating that a grantee must maintain a specified level of financial effort in a specific area in order to receive Federal grant funds, and that the Federal grant funds may be used only to supplement, not supplant, the level of grantee funds.
Post assistance requirements...
Reports
Any change of the mortgagor during the period of mortgage insurance must be approved by HUD. Defaults in meeting the mortgage terms must be reported. All mortgagors are required to file, electronically, an annual financial statement to HUD audited and prepared in accordance with Generally Accepted Accounting Principals and Generally Accepted Auditing Standards. All approved mortgagees at any time upon request by HUD must furnish a copy of their latest financial statement.
Note:
This section indicates whether program reports, expenditure reports, cash reports or performance monitoring are required by the Federal funding agency, and specifies at what time intervals (monthly, annually, etc.) this must be accomplished.
Audits
The Department of Housing and Urban Development reserves the right to audit the accounts of either the mortgagee or mortgagor, or lesser, in order to determine their compliance and conformance with HUD regulations and standards.
Note:
This section discusses audits required by the Federal agency.
The procedures and requirements for State and local governments and nonprofit entities are set forth in OMB Circular No. A-133.
These requirements pertain to awards made within the respective State's fiscal year - not the Federal fiscal year,
as some State and local governments may use the calendar year or other variation of time span designated as the fiscal year period,
rather than that commonly known as the Federal fiscal year (from October 1st through September 30th).
Records
Mortgagees are required to service and maintain records in accordance with acceptable mortgage practices of prudent lending institutions and the FHA regulations.
Note:
This section indicates the record retention requirements and the type of records the Federal agency may require.
Not included are the normally imposed requirements of the General Accounting Office.
For programs falling under the purview of OMB Circular No. A-102, record retention is set forth in Attachment C.
For other programs, record retention is governed by the funding agency's requirements.
Regulations...
Authorization
National Housing Act, as amended, Section 232; Housing Act of 1959, as amended, Public Law 86-372; Housing and Urban Development Act of 1969, Public Law 91-152, 73 Stat. 654, 83 Stat. 379; Public Laws 95-128, 95-557, 96-153, and 98-181.
Note:
This section lists the legal authority upon which a program is based (acts, amendments to acts, Public Law numbers, titles, sections, Statute Codes, citations to the U.S. Code, Executive Orders, Presidential Reorganization Plans, and Memoranda from an agency head).
Regulations, Guidelines, And Literature
Fact Sheet: Nursing Homes (Mortgage Insurance); Minimum Property Standards for Nursing Homes; (FHA Regulations). Handbook for Nursing Homes and Intermediate Care Facilities; (4600.1); (FHA Regulations 24 CFR 232 and 200), available on HUDCLIPS at http://www.hudclips.org.