FHA Boost Sought For Hospitals
LAS VEGAS (BondBuyer.com) — The U.S. Department of Housing and Urban Development is making a push to expand its presence in the nation’s health care sector by ramping up its long-standing FHA mortgage insurance program for hospitals.
Hospitals are eying the Federal Housing Administration Section 242 mortgage insurance program as a way to get financing for projects that can qualify as they have found themselves cut off from the credit markets due to the collapse of the bond insurance business and other factors.
Speaking Friday at The Bond Buyer’s 10th Annual Nonprofit Hospital Finance Conference, Steven W. Hunt, a senior account executive for HUD, said the program aims to support hospital projects by helping to reduce their cost of capital. It focuses on hospital construction but can be used for other purposes. Traditionally aimed at urban hospitals with most participants located in New York, the program is now in 43 states.
Many hospitals and their financiers ignored the program in the past because they perceived HUD’s standards as too onerous, according to Alan P. Richman, president and chief executive offier of InnoVative Capital, a mortgage banking and financial advisory firm. And municipal bond deals associated with the program have been bonus casino few in number and relatively small in size. But given the tightening of lending standards as a result of the financial crisis, HUD’s way of doing thing is “now in vogue,” Richman said.
Under the program a qualifying hospital can get an FHA-insured mortgage that can be securitized as a Ginnie Mae loan that is guaranteed by the federal government and purchased by an investor. Most current participants in the program are critical-care facilities in urban and rural areas.
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SOURCE: The Bond Buyer
