Some things never change but may get easier to work with over time.

For example, applying for and securing an FHA-approved HUD 232 loan has been likened to balancing the interests of borrowers, lenders and the government agency on a three-legged stool.  This hasn’t changed, but the challenge does get easier the second time around, says Cambridge Realty Capital Companies Chairman Jeffrey Davis.

Cambridge is one of the nation’s leading senior housing/healthcare lenders, with more than $4.5 billion in closed transactions.  The company consistently ranks among the top FHA-approved lenders in the country.

“HUD still requires borrowers and lenders to present impeccably prepared documents and meet demanding underwriting criteria.  However, for those borrowers seeking to refinance an existing HUD 232 mortgage loan, the process is not the chore it once was,” he suggests.

Mr. Davis says HUD’s 223(a)(7) funding program is used by borrowers whose existing HUD loans are beyond the lockout period.  The lockout period refers to a time period between when a loan closes and when it can be refinanced, which varies depending upon a loan-specific set of circumstances.

“The timing for this type of financing is auspicious because interest rates today remain relatively low, and low rates equate to higher operating profits.  Because the funding program enables borrowers to refinance the full original loan amount, additional funds for capital improvements are available to the borrower,” he said.

He points out that FHA-approved HUD lenders like to see capital improvements in the assets they’re holding.  And they like the fact that debt service is the only major underwriting consideration involved in 223 (a)(7) loans.

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