FHA To Begin Insuring Hospital Refi Loans

deral Housing Administration (FHA) will now provide mortgage loan insurance for hospital refinancing, according to HUD Secretary Shaun Donovan. Prior to this, hospitals could only get FHA insurance on loans that included a substantial construction component, such as replacing, rebuilding or renovating existing structures. ‘This refinance program will help hospitals struggling with skyrocketing interest rates and limited credit options,’ Donovan said in a media statement. ‘The savings provided through FHA refinancing should also help hospitals decrease the cost of healthcare, which is a major priority of the Obama administration.’ The primary focus of the program is to help those hospitals that have seen the cost of borrowing increase as a result of the demise of AAA bond insurance, downgrades of commercial banks and the disappearance of financing alternatives. HUD is prepared to accept refinancing applications as soon as lenders are prepared to submit them, the department says. The application process will be similar to that for construction loans, but it is expected to be significantly faster and have fewer required steps. HUD anticipates that full applications will start to be received in August and that, following application review, insurance commitments for refinancing will start to be issued in October. HUD estimates that, in fiscal year 2010, it will receive between 25 and 40 applications for refinancing hospital debt through FHA, in addition to between 10 and 15 construction-related loan applications in the pipeline. SOUR

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