Here’s something senior housing/healthcare borrowers may not realize about popular HUD Lean funding programs:

“The HUD agency may be more flexible than some have been led to believe,” says Cambridge Realty Capital Companies Vice President Tony Marino.

Cambridge is one of the nation’s leading senior housing/healthcare lenders and consistently ranks among the top FHA-approved HUD lenders in the country.  Marino manages the company’s permanent and construction loan portfolios, working as liaison between property owners and HUD.

It’s no secret that HUD plays by well-established rules and adheres to demanding underwriting guidelines and standards.    Also well known is the fact the agency can be a stickler when it comes to details and can be relied upon to carefully scrutinize every document it receives.

“But the idea that HUD is rigid or inflexible doesn’t always mesh with reality.  In certain situations HUD has been known to work with borrowers that have situational issues that can be resolved, including some situations it would have taken a pass on in the past,” Marino says.

For example, he says a late loan payment due to slow Medicaid payments from the state might be excusable.  Or HUD might more readily work with owners whose situation requires the repositioning of property in the marketplace, or calls for improvements that will temporarily disrupt cash flow.

Marino describes a situation in which a borrower was late on payments and in danger of foreclosure.   Cambridge was able to suggest a creative solution involving cash from existing escrows and refinancing with HUD’s 223 (a)(7) funding program.

“In this example, we were able to bring the loan current and refinance the mortgage with a net savings to the borrower of $20,000 per month,” he said.

In another example, Marino says an owner/operator fell behind on mortgage payments and decided to sell the operations end of the business.  Making a change of this sort usually requires two to three months, but the borrower already was behind on payments and facing default.

To avoid default on the loan, Cambridge was able to obtain from HUD quick approval of the new operator.  As a condition of purchase, the new operator brought the loan current by paying off the delinquent debt.

“The point is, when a problem arises, HUD may not be quick to offer suggestions regarding the best way to resolve it. But lenders who understand the rules and are able to come up with creative solutions will find the agency is more receptive to situational issues than before,” Marino said.

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