New queue-priority process offers faster executions for low-risk seniors housing and healthcare acquisition financing and refinancing.
The U.S. Department of Housing and Urban Development (HUD)/Federal Housing Administration (FHA) has announced a major efficiency update to accelerate Section 232/223(f) financing. Specifically, the Office of Healthcare Programs (OHP) has launched a new “Express Lane” for the acquisition financing or refinancing of seniors housing, assisted living, and skilled nursing properties nationwide. This new initiative gives queue priority to loans that meet specific low-risk criteria.
We view this as a meaningful development for seniors housing and healthcare owners and operators seeking greater efficiency and faster executions. Here’s what you need to know:
What is the Express Lane?
HUD/FHA Section 232/223(f) Express Lane processing grants queue priority to qualifying acquisition and refinance transactions. This can result in months of time savings for qualifying deals—making FHA’s attractive rates and long amortizations even more compelling, especially since execution time has often been a key drawback when considering FHA loans. Note that prior FHA program experience is not required.
Eligibility Criteria at a Glance
To qualify for the Express Lane, applications must meet the following (as applicable):
- Maximum 70% loan-to-value
- A minimum debt service coverage ratio using T-12 NOI (including reserves) as follows:
- 2.0x for the skilled nursing portion of the facility
- 1.6x for the non-skilled nursing portion of the facility
- Loan amounts not to exceed:
- $70 million for the greater New York City area, and $50 million for any other area
- Quality of care attributes (for skilled nursing):
- Minimum 2-Star CMS Ratings (Overall and Health Inspection)
- No Red Hand indicators
- No “G” tags or higher in the previous 12 months
- No history of FHA insurance claims or defaults
- No more than 20% of revenue attributed to special use
- Operator must have been in place for two years or more
- The application must be ready to underwrite
- A firm commitment decision must be able to be made at submission (e.g. no outstanding environmental/previous participation review issues to resolve, not awaiting an OHP corporate credit review to be completed, etc.)
Portfolios can be processed through the Express Lane if all included properties meet criteria and any required OHP reviews are complete. Applications that don’t qualify will be routed through the standard 223(f) queue.
Let’s Talk
Not sure if your deal qualifies? Lument has been a leading FHA Section 232 Lean lender for decades, and our experts are ready to help you assess eligibility and guide you through the Express Loan submission process. Reach out to our team today.
And there’s more. Lument is also spearheading efforts to bring similar efficiency improvements on the asset management side, specifically for Section 232 loan assumptions. As we’ve previously detailed here, HUD/FHA loan assumptions are a powerful and often underutilized tool.
Our asset management team is now coordinating with HUD to beta test a CHOP Express Lane concept that offers accelerated processing for change of borrower, operator, management agent, or parent of the operator requests, subject to a set of eligibility requirements similar to that above. The goal, once again, is to help qualified transactions move faster and more predictably through the process. If you are pursuing or considering a loan assumption, we’d be glad to walk you through the potential benefits and how we can get that transaction across the finish line more efficiently. Contact an expert on our seniors housing and healthcare to learn more.
