1 / 28

FHA Office of Residential Care Facilities

FHA Office of Residential Care Facilities. Section 232 – Underwriting Highlights, Insurance, Closings , New Construction. Underwriting Highlights. Queue updates, Closings & Timing. Firm Commitments Issued as of 4/25/2014 . Firm Applications in Review as of 2/19/2014.

orsen
Télécharger la présentation

FHA Office of Residential Care Facilities

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. FHA Office of Residential Care Facilities Section 232 – Underwriting Highlights, Insurance, Closings, New Construction

  2. Underwriting Highlights Queue updates, Closings & Timing

  3. Firm Commitments Issued as of 4/25/2014

  4. Firm Applications in Reviewas of 2/19/2014

  5. Firm Application Queue Numbersas of 4/25/2014

  6. ORCF Underwriting Contract Current Contract Underwriter Assignments

  7. Applications ReceivedFY 14 to 3/21/14

  8. Firm Commitments IssuedFY 14 to 4/25/14

  9. Insurance Changes Proposed changes were vetted with MBA and large FHA servicing lenders along with FNMA New Requirements: • 90 % of Estimated Replacement Cost. • Loss of Business Income • Windstorm coverage • Expanded flood insurance coverage if facility is located in flood zone

  10. Decision Circuit • Tool for setting the scope of the appraisal review. • All applications are looked at by an ORCF appraiser. • The scope of review is on a spectrum depending on risk factors.

  11. Flags -Continued • NOI trending down for 3 years. • Recent NOI at half of concluded rate. • Private Pay or Medicare census higher than proven history. • Medicaid census lower than history. • Occupancy lower than 75% • Change in potential resident days • Recent purchases

  12. Green Flags (tend to offset red flags) • DSCR over 2.00 • LTV under 80% • (LTV evaluated under two Scenarios) • As underwritten • Using most recent NOI and Avg Market Cap rate.

  13. Special Consideration • Loans over $25 million • History doesn’t match Operating Statement. • Purchase within 3 years.

  14. ORCF Loan Committee For 223f main concerns and example mitigation: • Valuing/sizing the loan using prospective NOI • Mitigation: Debt service reserve, reduce mortgage • Patient/Resident care issues • Mitigation: Third-party risk management (one-time or on-going) • Market concerns, facility low historical occupancy levels • Mitigation: Let season until operations turn-around, management/marketing efforts • Loan term as it relates to some functional obsolescence • Mitigation: Reduce loan term, reduce mortgage

  15. Continued ORCF Loan Committee New construction concerns • Borrower/Operator’s lack of experience in developing and operating similar facilities • Low equity contribution less than 20 % • Market concerns • Size of facility in relation to comparable • Aggressive metrics used in loan sizing

  16. Underwriting Highlights • What is going well • New Process for Reviews – changes • Expediting Processing & Reviews

  17. Underwriting Highlights Valuation Issues & Concerns • Prospective or Aggressive NOI conclusions • NOI Conclusion not yet Achieved • Fluctuating NOI History • Declining NOI trend • Aggressive Expense Ratio • Aggressive Cap Rate

  18. New Construction

  19. Proposed New Construction SUPPLY • Competition – existing and proposed (pipeline) • Market position within PMA • Saturation rates • Reasonable capture rates

  20. Replacement Facilities SUPPLY • Proximity • Same demographics • Same services – adding or deleting • How many current residents will transfer

  21. New Construction Supply CON’s and Moratoriums • CON (Certificate Of Need) • Moratoriums on adding new beds • State need calculations • Only transfer within county

  22. New Construction Supply Transitional Rehab Facilities • Hospital discharges to rehab • ALOS (Average Length of Stay) • Hospital incentives • Rehab purpose (cardio, stroke, hip, orthopedic, etc.)

  23. New Construction Demand Demand determinants for Assisted Living • Age • Household Income • Home Value • Income Qualification • Living Status • Acuity, Mobility and Care Limitations • Memory Care Adjustments

  24. New Construction Demand Demand determinants for Skilled Nursing • Age • Acuity • Income Qualification • Mobility • Demand for Transitional Rehabilitation

  25. Closings Expediting Section 232 Closings

  26. Closing TeamUpdates ORCF’s Closing Team is keeping the “conveyor belt” of closing moving! • FY 2013 had 766 closings, compared to 706 in FY 2012, 415 in FY 2011, and 309 in FY 2010 • Fiscal year to date volume much lower, mostly due to 223a7 volume dropping off.

  27. How do I get a HUD Closer assigned? • For a HUD Closer assignment (and any other closing related issues, including extensions) email ORCFCloser@hud.govwhen the HUD Attorney closing package is mailed. • Average turnaround time for closer assignment right now: 1-2 business days • ORCF has 11 full time Closers and 3 contract Closers (most pictured below at our January 2014 Closing Kaizen)

  28. Partnership & Collaboration Please Remember: • Complete, clean, and accurateclosing packages get reviewed and closed quicker • All special conditions must be met and properly documented prior to closing • Use the Special Conditions Matrix! • Responsiveness to HUD Closer and HUD Attorney and fast turnaround is KEY Closing Table Closing Docs

More Related