HUD to offer new mortgage option for hospitals

Cash-strapped hospitals may soon have another option for refinancing their high-interest debt, courtesy of the Department of Housing and Urban Develop. HUD is expected to announce soon that hospitals may refinance through the agency's insured mortgage loans.

FHA's mortgage insurance program for hospitals, Section 242, provides HUD-insured mortgages made by private lenders to finance construction or renovation of acute-care hospitals, along with equipment needed to operate the facility.

HUD's William Lammers, who spoke at the Healthcare Financial Management Association's Annual National Institute this week, said the proposed changes to the program would remove a requirement that hospitals use at least 20 percent of the loan for new construction, giving them more freedom to address short-term needs.

Since 1968, the agency has provided insurance for $14.9 billion in hospital loans. With the financial industry shying away from financing virtually any hospital bonds or credit, there should definitely be many takers for HUD's offer. (In fact, I wouldn't be surprised if the agency insured more than $14 billion in loans this year alone, if it's willing.)

To get more information:
- read this Modern Healthcare piece (reg. req.)
- Contact FHA

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