FHA expands its Insurance to Nursing-Homes.

Nursing-home operators have finally found relief in the Financial Housing Administration.

Nursing-home operators originally sought out private banks for loans due the relative immediacy with which they’re approved. Private banks were preferable to the FHA, which can often take twice the amount of time to approve a loan and the bureaucracy also has the liberty can add on various restrictions to the loan agreement. This an limit a nursing-home from expanding without approval if the FHA so chose. 

Recently however, banks have been declining loans to nursing-home operators. Given America’s economic crisis and impending changes to the Medicare system, banks fear that nursing-homes are at risk for defaulting on their loans. This insecurity causes banks to be incredibly cautious with their loans, and seek out the facts about their borrowers.

For instance, there’s been increased competition for nursing-homes, given the recent developments of assisted living—essentially apartment homes for the elderly, but with more freedom. This may be part of the reason for the nursing-homes’ slight decline in occupants. However, this is not a sufficient enough decrease to warrant a fear of defaulting on a loan. Fortunately, the FHA is aware of this.

The FHA insures lenders against losses, and they can safely determine this based on a company’s tract record and credit. The FHA can sight risk factors, and that’s why approving the nursing-homes across the country is a very minimal, low risk expense.  An FHA spokesperson stated that the nursing-home foreclosure rate is below 1%. Not only this, but the nursing-homes’ cumulative loan amount is a fraction of the cost of the FHA’s home loans it approves every year.

Most of the loans still come from the private banks; in truth, Walker & Dunlop posit that the FHA has only backed $14 billion of a $90 billion industry. The nursing-homes obtain a relatively small amount from the FHA, and this is all the more they’ve approved the nursing-homes; they are secure from defaulting.

Michael Vaughn, head of FHA health-care finance at Walker & Dunlop, said that this improvement guarantees that the nursing-homes will not have to pay above a 3% interest rate, and will allow their loan to mature in 35-40 years. This kind of security insures nursing-homes against in a time of economic crisis and shifting Medicare.

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About alifarahpour

Ali Farahpour is the founder and president of FNC Title Services, LLC. Farahpour has nearly 20 years of experience in residential and commercial real estate settlements, with a focus on serving senior citizens through home equity conversion mortgage (“HECM”) transactions. He is a resident title insurance producer for Maryland and in addition holds several individual title insurance licenses throughout the country. More recently, Mr. Farahpour focused his skills on serving the reverse mortgage industry. In 2007 he founded FNC Title Services, LLC, a multi-state title insurance agency that specializes in closing HECM transactions. As a means to better serve his clients, Mr. Farahpour developed on-line systems that allow FNC clients to generate fees, GFEs and open and track title orders. Clients are able to close loans throughout the nation and are guided by specific FNC divisions dedicated to reverse mortgages. Mr. Farahpour runs FNC Title Services, LLC from its corporate headquarters in Rockville, Maryland and lives with his family in Bethesda, Maryland. You can read more about FNC at www.fnctitle.com
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