The House Committee on Financial Services succumbed to pressure by the American Hospital Association and agreed to preserve the federal program that insures hospital mortgages, but will tighten up the requirements, reported Becker's Hospital Review.
In recent revisions to the Protecting American Taxpayers and Homeowners Act of 2013, the House Committee has decided to retain the Section 242 mortgage insurance program, which is overseen by the U.S. Department of Housing and Urban Development.
The Section 242 program has been in existence since 1968. It is considered crucial by many hospitals for refinancing their debts, particularly during the recent credit crunch as a result of the 2008 financial crisis.
In a recent committee hearing, the AHA urged lawmakers to retain the program, saying it "is often a last resort for communities seeking to maintain access to urgently needed hospital services."
However, Becker's reported that the amended bill would require the HUD Secretary to set standards guaranteeing a reasonable number of hospitals receive mortgage backing that otherwise would not be able to obtain it elsewhere. Caps would also be placed on the number of Section 242 mortgages obtained by a single entity. The agency would also have to study the geographic concentrations of such mortgages.