Yes…but, is this within the scope and purpose of the US federal government to insure mortgages for the construction or operation of nursing homes? How many FHA mortgages have been used to fund nursing homes and have there been any defaults of FHA loans to nursing homes? What other investment avenues are available to finance nursing home construction or operation?
$1 Million Penalty Brings Record Nursing Home Default Near an End… The federal mortgage insurance program has had few significant defaults in its nearly 50-year history, but a number of government watchdogs — including HUD’s own inspector general — have routinely warned that the department does not spend enough time monitoring the financial viability of nursing home owners and operators in the program.
SECTION 232 OF THE NATIONAL HOUSING ACT
Section 232 of the National Housing Act authorizes the Federal Housing Administration to insure mortgages made by private lenders to finance the development of nursing homes, intermediate care facilities, board and care homes, and assisted living facilities.
Section 232 Mortgage Insurance for Residential Care Facilities program and the Section 242 Mortgage Insurance for Hospitals
The Office of Residential Care Facilities (ORCF) manages the Section 232 program, which provides mortgage insurance for residential care facilities such as assisted living facilities, nursing homes, intermediate care facilities, and board and care homes.
Section 232 may be used to finance the purchase, refinance, new construction, or substantial rehabilitation of a project. A combination of residential healthcare uses is acceptable – e.g. refinance of a nursing home coupled with new construction of an assisted living facility. The benefit to the lender is that the loan is insured by FHA. The benefit to the borrower is that the loan is at a fixed interest rate, often lower than conventional rates, and is non-recourse.
SECTION 242 OF THE NATIONAL HOUSING ACT
Section 242 of the National Housing Act provides mortgage insurance for acute care hospital facilities ranging from large teaching institutions to small rural critical access hospitals.
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