HEALTHCARE BORROWERS TO RECEIVE SPEEDIER HUD 232 LOANS AS DRAMATIC RESTRUCTURING PROGRAM ENERGIZES HUD

Against a backdrop of steadily deteriorating conditions in the financial markets, senior housing/healthcare borrowers caught a sizable break with the recent announcement by FHA Commissioner Brian Montgomery that HUDs healthcare funding programs, frequently faulted in the past for being administratively tedious and slow, will run more lean and efficient from this point forward.

Sweeping changes in the way loans are approved and processed means operators of skilled nursing, assisted living and specialized use facilities who qualify for desirable FHA-insured HUD financing under the Section 232 program will have their applications processed and approved on a timetable that more closely resembles the timing for conventional loans, says Cambridge Realty Capital Companies Chairman Jeffrey A. Davis.

Cambridge is one of the nations leading senior housing/healthcare lenders with more than 300 closed industry loans totaling $2.75 billion since the mid-1990s. The company has consistently ranked among the nations leading FHA/MAP-approved HUD lenders and has been underwriting HUD Section 232 healthcare loans since the late 1980s.

Over the years, our underwriters have observed a number of structural changes at the agency from a front row seat. But nothing compares with the dramatic restructuring recently announced by Commissioner Montgomery, he noted.

In the first of two significant changes, responsibility for processing HUD Section 232 loans shifts to the FHAs Office of Insured Healthcare Facilities (OIHF), which is based in Washington, D.C., and also has jurisdiction over the Section 242 hospital mortgage insurance program. In its other major decision, FHA has adopted the Toyota Motor Corp.s highly touted Lean management process to simplify and trim the time it takes to review and process HUD applications.

Davis points out that by moving Section 232 programs to the OIHF and expanding that offices professional staff, FHA believes it has created a unified single-source for program and policy development and a more consistent and user-friendly platform for borrowers, lenders and operators. This change reflects the agencys conviction that, in the past, Section 232 policies and procedures have been unevenly implemented in the field by local HUD offices.

Under the Lean management process, loan applications will be filed electronically, feature fewer exhibits and require conventional market-based appraisals instead of HUD-specific reports. The goal is to review an application, issue a commitment and get to closing within 40 days, Davis said.

But one shouldnt read into the latest changes the notion that HUD is compromising its underwriting standards in any way. Successful applications will still be processed by lenders who are thoroughly familiar with the rules and the agencys expectations, he said.

Davis says FHA has started to gradually implement the changes and hopes to be fully on stream with the Lean processing method by the end of September. However, those who are ready to get started with a HUD application now will not be penalized in any way because experienced HUD lenders have received comprehensive training in how to work with the new process, he said.

Privately owned since its founding in 1983 as a real estate investment banker specializing in commercial real estate properties, Cambridge emerged in the 1990s as one of the nations leading senior housing and healthcare debt and equity capital providers, closing more than 300 such transactions totaling more than $2.75 billion since then.

The company is one of the nation's leading HUD 232 FHA / MAP-approved lenders and also has an integrated debt / equity financing strategy that includes direct property acquisitions and joint ventures; sale / leasebacks for clients; conventional and mezzanine debt financing; and acquisition of distressed debt. Additionally, Cambridge offers a wide array of conventional lending options for senior housing / healthcare owners, including permanent construction and interim loans on either a floating or variable rate basis.

Cambridge is the creator of The Signature Experience, a four-step process designed to transform the traditional lender / borrower relationship and identify ideal capital solutions for worthy projects. The company has created four separate processes for customer groups that are designed to build and enhance long-term relationship potential and speed the way loans are processed and closed. Programs include The Key To Capital for senior housing owners, The Navigator Experience for senior housing brokers and mortgage bankers, The Principal Lender Network for lenders who refer loans to Cambridge, and The Relationship Building Experience for various industry-related consultants, including lawyers and accountants.

The company has a regional office in New York, affiliate office in Los Angeles, and correspondent relationships nationwide. The firm also has established key origination relationships and a dozen or more Internet-based strategies.

Cambridges award-winning Web site, www.cambridgecap.com, provides monthly rate updates for its debt and equity capital programs. The company also publishes the bi-monthly e-PULSE electronic newsletter, which delivers company news and feature stories via e-mail to corporate friends and clients. For additional information, contact Cambridge at (312) 357-1601 or via e-mail at info@cambridgecap.com.

Contact:
Evan Washington
Phone: (312) 521-7603
Fax: (312) 357-1611
E-Mail: ew@cambridgecap.com