FHA Insured Loans for Long Term Healthcare Facilities: Recent
*This article, “FHA Insured Loans for Long Term Healthcare Facilities: Recent Developments as a Popular Product Evolves to Meet Growing Needs”, Volume 23, Number 5, first appeared in The Health Lawyer, an ABA publication, in June 2011. *This information or any portion thereof may not be copied or disseminated in any form or by any means or downloaded or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. FHA INSURED LOANS FOR LONG TERM HEALTHCARE FACILITIES: RECENT DEVELOPMENTS AS A POPULAR PRODUCT EVOLVES TO MEET GROWING NEEDS Andrea C. Barach, Esq. Wendy A. Chow, Esq.1 Bradley Arant Boult Cummings LLP, Nashville, TN I. Introduction The “Great Recession” continues, and the commercial financial markets remain difficult for many borrowers. In this environment, healthcare providers have continuing challenges as they seek financing for their facilities. The financing market can be expected to continue difficult into 2011 and perhaps beyond. For owners of long term care facilities, one bright spot in the financing world has been mortgage financing insured by the Federal Housing Administration (“FHA”) under Section 232 of the National Housing Act.2 After all, what is not to like - long terms (35-40 years), low fixed rates, no personal recourse and no required guaranties by high-income individuals. Even better, these loans are assumable by qualified purchasers. Of course, nothing in life is free, and in order to enjoy these benefits, borrowers must comply with a host of specific substantive and procedural requirements. Within the past year,3 the volume of Section 232 mortgage loans has grown dramatically, and new concerns have arisen, particularly from the novel “master lease” structure for portfolio loans, and further refinements to the treatment of accounts receivable financing.
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