The U.S. Department of Housing and Urban Development (HUD), through the Federal Housing Administration (FHA), provides FHA-approved lenders with mortgage insurance for a variety of loans. The loans can range from single-family homes to hospitals. The FHA is the single largest issuer of mortgages in the world. It was created as a part of the National Housing Act of 1934, and on top of insuring loans, it sets the standards for construction of homes.
The FHA’s funding comes from the loans it insures and underwrites. This means that the operation of the FHA costs taxpayers nothing. The FHA uses the proceeds from the insurance payments to fund the program. This mortgage insurance allows for protection against losses for underwriters or homeowners that default on their loan obligations. There is less risk due to the FHA paying a claim to the lender in case of a default. By securing the loans, it allows banks to take bigger risks on housing projects and provides stimulus and jobs to the economy.
A New Policy
Recently, the FHA changed its policy on the people it would insure. Previously, it would only insure home loans for those with an approximate 500 FICO score and penalize lenders that loaned money to people with lower scores. The new policy allows lenders to lend to whomever they want without fear of being assessed as “High-Risk.” This will allow for the FHA to insure and underwrite more loans, which in turn will continue to stimulate the economy and provide new jobs to a variety of people.
Davis H. Stevens, the president and CEO of the Mortgage Bankers Association and a former head of the FHA, stated that this new approach should help borrowers with lower FICO scores who have reliable income and a solid ability to repay their loans.
Leading the way in senior care finance, Cambridge Realty recently provided a $15,867,000 FHA-insured loan to refinance Ottawa Pavilion, located in Ottawa, Illinois. Ottawa Pavilion has 129 beds and is devoted to skilled nursing care for seniors.
This is only one of several loans that Cambridge has arranged recently. Cambridge also underwrote an $8.6 million HUD-insured loan to refinance a South Bend, Indiana nursing facility, Cardinal Nursing & Rehabilitation Center. These loans will not only help Cambridge but will ensure seniors continue to receive high quality care, and provide more jobs and stimulus for the economy.
Cambridge has ranked among the top five FHA-insured HUD lenders over the past 15 years and also has a variety of conventional lending options available. In this economy, Cambridge will continue to work to provide jobs for people while maintaining its position as a leader in the senior housing finance industry.