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NewPoint Ranks #2 HUD LEAN Lender for 2023

Though Overall HUD LEAN Volume Drops Slightly, a 45% Increase in 223(f) Activity Reflects Improving Industry Fundamentals

The U.S. Department of Housing and Urban Development ("HUD") recently released production data for its 2023 fiscal year, which ended September 30. NewPoint Real Estate Capital ("NewPoint") showed strong on the HUD/FHA LEAN Rankings, securing the #2 spot in both deal volume ($379.6 million) and loan count (29 loans closed). Over the last decade, NewPoint – which acquired leading HUD healthcare lender Housing & Healthcare Finance ("HHC Finance") in December 2021 – has consistently been ranked in the top echelon of HUD LEAN lenders.
Despite a persistent rise in interest rates over the past year, overall activity in healthcare (LEAN) fundings decreased just slightly from $2.95 billion in 2022 to $2.87 billion in 2023. However, a closer examination of trends in the loan programs utilized unveils some significant shifts in activity under the surface of a relatively flat year. Activity in the 223(a)(7) program, this is, refinancing of existing HUD/FHA loans, dropped dramatically (95 loans in 2022 vs. 21 in 2023) as the financing strategy had difficulty generating interest rate savings starting in mid-2022. In addition, an operating loss loan program that was put in place temporarily coming out of COVID went away in 2023; there were 23 such loans in 2022 – that went to zero in 2023. 
That slack was made up largely by volume under the 223(f) program – refinances of non-HUD loans or acquisition financing – which hit $2.68 billion in fiscal year 2023 compared to $1.85 billion in 2022, a 45% increase. The increase in 223(f) activity, which was largely driven by refinancing activity, demonstrates the continued improvement in industry fundamentals coming out of the COVID pandemic, which had previously impacted loan volumes.
"Volume has not yet returned to 2019 levels, but we are moving in the right direction," said Michael Gehl, Chief Investment Officer of FHA Lending at NewPoint. "We are seeing occupancies ticking upward, reimbursement rates increasing in many states, and labor challenges abating. We expect HUD LEAN lending to keep growing steadily in proportion to improvements in market conditions until we make a full comeback to pre-pandemic levels. This is not likely to happen in fiscal year 2024, but we are hopeful for 2025."
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