It’s not a well-kept secret. Obtaining approval for attractive HUD financing can be more time-consuming or problematic than some senior housing/healthcare borrowers care to abide by.
“Flexibility is not a word borrowers usually associate with the FHA-insured product,” says Cambridge Realty Capital Vice President Tony Marino.
Cambridge consistently is ranked among the top HUD lenders in the country. Mr. Marino manages the company’s permanent and construction HUD loan portfolios, working as a liaison between property owners and the agency.
He says everyone knows HUD plays by very established rules and adheres to rigorous and demanding underwriting guidelines and standards. The agency is a stickler when it comes to details and can be relied upon to carefully scrutinize every document that passes first through the application and then the underwriting process.
“But the idea that HUD is rigid and inflexible is not supported by the facts. There are situations in which loans are approved for borrowers with issues that can be resolved,” he said.
A loan payment that is late due to slow Medicaid payments from the state might be excusable. Or HUD might more readily work with owners whose situations require the repositioning of a property in the marketplace, or calls for improvements that will temporarily disrupt cash flow.
HUD also has been known to listen to creative solutions suggested by lenders, he noted.
Marino describes a situation in which a borrower was late on payments and in danger of foreclosure. For this borrower, Cambridge was able to suggest a creative solution involving cash from existing escrows and refinancing with HUD’s 223(a)(7) funding program.
“We were able to bring the loan current and refinance the mortgage with net savings to the borrower of $20,000 per month,” he said.
“HUD may not be quick to offer suggestions regarding the best way to resolve issues. But lenders who understand the rules and are able to come up with creative solutions find the agency is more receptive today than before.”