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Healthcare
HUD 232/223(a)(7)
Streamlined Refinance of Existing HUD-Insured Loan
Program Overview
Provides a streamlined refinance to reduce the interest rate and debt service cost and extend the loan term on existing HUD-insured healthcare properties.
Typical Terms
- Borrower Type
- For-Profit or Non-Profit single asset borrower entity
- Recourse / Guaranty
- Non-recourse
- Loan Term / Amortization
- Loan term may be extended up to 12 years beyond the original maturity date
- Interest Rate
- Determined by market conditions and fixed for the full term of the loan
- Loan Parameters
- The lower of: 1) amount required to pay off the existing loan balance, prepayment penalties, repairs, and loan transaction costs; 2) the original loan amount on the current HUD insured loan; 3) amount supported by a 1.11x debt service coverage ratio
- Prepayment
- Negotiable. Typically, 10-year call protection with a combination of lockout and/or stepdown pre-payment penalty. Existing prepayment penalties may be included in the new loan
- Assumption
- Loans are fully assumable, subject to HUD approval.
- HUD Application Fee
- 0.15% of the loan amount, due at Firm Application submission
- HUD MIP
- 0.50% due at closing, and 0.55% annually (0.45% with LIHTC)
- 3rd Party Reports
- Project Capital Needs Assessment (PCNA) typically required; exceptions may be granted for newly constructed projects or projects with recently complete PCNA's.
- Reserves
- Typical Tax and Insurance escrows (including MIP) and Replacement Reserves as determined by PCNA and program requirements
Eligible Property Types
- Existing HUD-insured healthcare facilities