FHA financing program seeks higher profile

For 40 years, a Federal Housing Administration program has existed to help hospitals with decent--but not great--financial profiles to obtain financing for new facilities, upgrades of existing facilities or even acquisitions. The program, known in gov-speak as FHA 242, backs loans for such borrowers, and by doing so helps them get the loans at lower interest rates. Still, despite scary financial market conditions that make this program particularly attractive, many hospitals don't know it exists. So now, the FHA is beginning a marketing campaign to reach hospitals that might qualify.

To date, the FHA program has insured 358 hospital mortgages totaling $13.5 billion. The program, which will lend up to 90 percent of the value of the facility, is particularly lenient with "critical access" hospitals, which don't have to be performing quite as well to get FHA backing. However, hospitals with very strong credit profiles and access to other financing sources don't quality, nor do hospitals on the brink of disaster, officials say. In the past, the FHA 242 program was only underwriting two to four mortgages a year, and applications might take a year to be processed. But of late, the FHA has boosted its staff, adding specialists who knew the hospital business intimately, and its pace has improved--with staffers processing nine loans totaling $647 million in 2007. The agency is also marketing the program more aggressively to ensure that it spreads risk as widely as possible.

To learn more about FHA 242:
- read this Modern Healthcare piece (sub. req.)

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