Health Care Lean Update
Health Care Lean Update
posted August 2010
Conditional Firm Submissions
In order to reduce the workload that HUD experienced in health care they were skipping the pre-application and requiring a complete firm submission as the first and only step in the process for new construction and substantial rehabilitation applications. This created an unreasonable investment in detailed plans and specs without knowing if HUD accepted the marketability of the development.
HUD will now accept a complete firm submission with only the schematics, site plans, floor plans etc. required for a pre-application, HUD will then issue a conditional commitment subject to a review of the detailed plans and specs to be submitted within 120 days. Please call for details.
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Posted 5-4-2010
Green Team:
In January 2010 HUD created the “Green Team” to process Section 232/223f’s that pass the Risk Assessment and do not have any Regulatory Waivers (and for projects submitted after August 16, 2010, have all 2530′s submitted electronically via APPS). The initial results of the Green Team have been promising. The average days from OIHCF Underwriter assignment to Firm Issuance/Rejection have been 19 days. Moreover, projects processed by the “Green Team” are spending considerably less time in our queue – the last projects assigned to the “Green Team” were in the queue for 77 days vs. the last projects assigned that are not being processed by the “Green Team” were in the queue for 140 days.
Lenders who submitted small, mid-size or large portfolios with a mixture of properties meeting risk assessment will have the following three options:
1. If the projects can close separately, HUD will process those that passed the Risk Assessment with the “Green Team” and those that failed the Risk Assessment will stay in queue and not be processed by the “Green Team”, or
2. If the projects must close together, the projects will stay in the queue and not be processed by the “Green Team”, or
3. Restructure the submittals so all loans pass the Risk Assessment:
- This can be done while a project is in queue (whether part of a portfolio or not).
- We’ve had borrowers bring in additional equity to make the projects pass the Risk Assessment.
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December 12, 2009
from the Lean Team:
OIHCF staff has noticed that some recently reviewed Market Acceptance/pre-applications and their attached market have been projecting optimistic market data from 2-3 years ago which has been projected forward without fully accounting for the current serious economic realities that have altered the market characteristics for those and other markets.
As a result of the findings of our appraisal staff, OIHCF is instituting the following action:
For example, but not limited to the following geographic areas, OIHCF has determined that all market driven assisted living projects in California, Florida, Arizona, Nevada, Michigan, Ohio, Indiana, and Illinois are to be underwritten with FULL RISK MITIGATION. All mortgage insurance applications for properties in those states will be subjected to a full appraisal review and a full review of the market study and if necessary, a more thorough economic analysis. Market studies must take into account the changing economic conditions of the market areas where the facility is located, and both Lender and OIHCF reviews should reflect that reality.
With respect to nursing homes, lenders and OIHCF staff will review the fundamentals of each project. If the nursing homes are contemplated to have a high percentage of private pay residents or otherwise have unusual marketing issues, OIHCF staff will also undertake full risk mitigation. However, if nursing home applications have Certificates of Need, a patient mix that reflects the current market, and other positive underwriting characteristics, then processing will proceed without any change to the current instructions.
OIHCF will continually review the prevailing market conditions and will make appropriate changes as market circumstances dictate.