FHA Announces Express Lane for HUD Section 232/223(f) Applications

The Federal Housing Administration has announced that the Office of Healthcare Programs (OHP) is now offering an “Express Lane” for HUD Section 232/223(f) applications that meet certain low-risk criteria. Express Lane applications will have queue priority.

Express Lane Eligibility

The criteria for Express Lane eligibility are listed below. Note that all criteria (as applicable) must be met to qualify:

• Maximum of 70% loan to value. 

• A minimum debt service coverage ratio using unadjusted* trailing 12-month net operating income (including the underwritten reserve for replacement deposit) as follows:
  • 2.0x for the skilled nursing facility portion of the facility
  • 1.6x for the non-skilled nursing facility portion of the facility

* “Unadjusted” is defined as having no modifications to net operating income (e.g. no adjustments for bad debt, management fee, rate increases, etc.)

• The following quality of care attributes (on skilled nursing facilities):
  • Minimum of 2 Star Medicare.GOV Overall star rating, and
  • Minimum of 2 Star Medicare.GOV Health Inspection star rating, and
  • No Red Hand (abuse/neglect) indicator on Medicare.GOV, and
  • No “G” tags or higher in the previous 12 months.

• All identified controlling participants must have no history of FHA insurance claims or defaults (60+ days late) on FHA-insured loans. Prior FHA program experience is not required. 

• Not more than 20% of the facility’s revenue can be attributed to a special use. 

• The Operator must have been in place at the facility for two or more years prior to the application submission - owner in non-lease situations, and lessee in lease situations. 

• The mortgage amount must not exceed:
  • $70 million for the greater New York City area - i.e. five county-level administrative divisions/boroughs: The Bronx, Brooklyn, Manhattan, Queens, and Staten Island plus Long Island and Westchester County), or
  • $50 million for any other area. 

• The application must be ready to underwrite and a Firm Commitment decision must be able to be made immediately upon submittal (e.g., no outstanding environmental/previous participation review issues that need to be resolved, not awaiting an OHP Corporate Credit Review to be completed, etc.)

NOTE:  OHP may modify the Express Lane criteria in the future.

Contact a NewPoint lending expert to learn how you can take advantage of the new Express Lane for Section 232/223(f) applications.