Lean Program Changes
Health Care: No More Preapplications
One Step Processing Announced:
Posted December 30, 2009
Copied from HUD’s email lender blast dated December 18, 2009 with our comments.
“As a result of this week’s Kaizen, and feedback from our Lender participants as we re-evaluate how best to provide customer service and timely processing while we continue to experience a severe shortage of staffing resources, the following changes are being implemented immediately:
1. NO FURTHER PRE-APPLICATION SUBMISSIONS WILL BE ACCEPTED. For New Construction projects, applications may still be submitted direct to firm. We are working on a process whereby we can provide more timely and higher quality feedback for new construction projects. The process is being finalized and will be communicated via email blast. Our goal is to have this process rolled out by the upcoming Lender training.
2. In order to serve you better on all the Section 223f’s in the queue, please provide a completed Risk Assessment to Amee Welch (Amee.Welch@hud.gov) – no later than 12/31/09. Also, please include the completed Risk Assessment in all future electronic submissions. Submissions that pass the Risk Assessment and have no Regulatory waivers will receive accelerated processing. We will allow revisions to the previously submitted loan amount to make the submittal more conservative. Any revision will require a new Lender Narrative, Firm Commitment and its attachments.
Also, upon receipt of the Risk Assessment, we will immediately run the project through APPS to determine whether there are any flags.
Should you have any questions on the Risk Assessment or how to fill it out, please contact Wayne Harris, OIHCF Appraiser, at: wayne.d.harris@hud.gov<mailto:wayne.d.harris@hud.gov>
Learn more about these and other LEAN 232 program updates at the upcoming Lender Conference in January 2010. More details on this conference can be found below.”
WHAT THIS MEANS:
This means that borrowers will have to have completed plans and specs, signed construction contracts and the feasibility studies completed with the pre-app requirements with this one final submission. Therefore there will be no invitation letters.
What we intend to do is perform our own in house pre-application and get a desk review of the market completed by the contractor who will do the feasibility study. This will raise the costs by $5,000 to $7,500. If the review determines that there is a market, then we would have the borrower complete the detailed plans and specs and try to time the feasibility study along with the completion of the plans. Feasibility studies must be dated within 90 days of submission. It can take an architect six to nine months to complete plans and specs so completing a feasibility study first would make it stale dated.
WHAT THIS ACCOMPLISHES:
The Lean Team has been swamped with deals and has limited resources. HUD insurance programs are the only sure way to finance viable deals in today’s market so the workload has stacked up. Deals wait to get into the queue for two to three months but once in, they are issuing firm commitments within a few weeks. By eliminating the pre-application they are eliminating half of the workload and should receive more deals that are better thought out before a borrower takes the risk of getting and paying for detailed plans and specs. We think this is a good scenario and will result in faster closings.