Essential terminology for HUD 232 and 242 financing programs
A mortgage insurance program that helps finance the construction, acquisition, and refinancing of nursing homes, assisted living facilities, and other residential care facilities.
A mortgage insurance program that helps finance the construction, acquisition, and refinancing of hospitals and other acute care medical facilities.
Lender Enterprise Architecture Network. HUD's network of approved lenders who specialize in healthcare financing and have demonstrated expertise in HUD programs.
Multifamily Accelerated Processing. A program that streamlines HUD mortgage insurance approval for qualified lenders and borrowers.
Debt Service Coverage Ratio. A measure of a facility's ability to service its debt, calculated as Net Operating Income divided by Annual Debt Service. HUD typically requires a minimum DSCR of 1.15-1.25.
Loan-to-Value ratio. The loan amount divided by the property value. HUD typically allows up to 90% LTV for healthcare facilities.
Net Operating Income. Operating revenues minus operating expenses, excluding debt service, taxes, and depreciation. A key metric for assessing facility profitability.
The total amount of principal and interest payments due on a loan during a specified period, typically calculated on an annual basis.
An insurance fee paid to HUD to protect the lender against default. For HUD 232/242, typically ranges from 0.55% to 1.0% annually.
The process of evaluating a loan application, assessing risk, and determining loan terms. HUD underwriting typically takes 2-4 months.
The number of occupied beds in a facility at a given time. Average daily census is a key metric for projecting facility revenue.
The percentage of available beds that are occupied. Calculated as Average Daily Census divided by Total Licensed Beds. Higher occupancy rates indicate stronger financial performance.
The distribution of patient payments by source: Medicare, Medicaid, private insurance, and private pay. Payer mix significantly impacts facility revenue and profitability.
A federal health insurance program for people age 65 and older, and some younger people with disabilities. Medicare is a major payer for healthcare services.
A joint federal-state health insurance program for low-income individuals and families. Medicaid reimbursement rates vary by state.
A measure of the relative complexity and resource intensity of patients served. Higher case mix indicates more complex patient populations requiring more resources.
Federal law requiring that workers on federally-funded construction projects be paid prevailing wages. Applies to HUD-financed construction projects.
An evaluation of environmental conditions and potential hazards at a property. Required for all HUD applications to ensure environmental compliance.
An independent professional valuation of a property. HUD requires appraisals to determine the maximum loan amount and ensure adequate collateral.
Insurance that protects the lender against loss due to defects in the property title. Required for all HUD loans.
An agreement where one lender agrees to have their claim on property subordinated to another lender's claim. Important in refinancing scenarios.
Money held by a third party (typically the lender) pending completion of a transaction or fulfillment of conditions. Common for property taxes and insurance.
The initial phase of the HUD application process where the borrower and lender discuss the project and determine preliminary feasibility.
The complete submission of all required documents to HUD for formal review and underwriting.
HUD's preliminary approval of a loan, subject to specific conditions that must be satisfied before final approval.
HUD's final approval of a loan, indicating that all conditions have been satisfied and the loan is ready to close.
The final step in the loan process where documents are signed, funds are disbursed, and the loan becomes effective.
A disbursement of loan funds, typically during construction. Draws are made as construction progresses and inspections are completed.
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