HUD releases updated Section 232 handbook
The U.S. Department of Housing and Urban Development's Office of Residential Care Facilities published its new handbook for the Section 232 Healthcare Mortgage Insurance Program on Tuesday.
The provisions, effective Jan. 5, will apply to all new loan applications and transactional requests for existing Section 232 projects.
The Federal Housing Administration loan product provides mortgage insurance for residential care facilities such as assisted living facilities, board-and-care facilities and nursing homes. Funds may be used to finance the purchase, refinance, new construction or substantial rehabilitation of a project.
HUD said it revised the handbook to clarify guidance or better reflect program policy.
In May when HUD was still seeking comments on a draft of the handbook, Brendan Healy, vice president of financial advice and solutions provider Lancaster Pollard, told McKnight's Senior Living that the handbook had three main changes:
2. Any property that has a small amount of debt related to the property now can extract equity through a financing. Previously, those who completed a cash-out refinance had to wait two years before approaching HUD. Now, those who have less than 70% loan-to-value with a stable facility can immediately approach HUD about refinancing the cash-out debt through the 232 program.
3. HUD has loosened some criteria so that some debt related to the initial startup of an operation, as well as some operator debt, is eligible for financing. “They started to see that most of the ‘low-hanging-fruit' refinances have been done,” Healy said. Formerly, he explained, a three-year wait was required.