HUD Lean Program Ends Year with $2.8 Billion in Loan Production

The U.S. Department of Housing and Urban Development (HUD) recently released production data for its Lean mortgage insurance program, which finances seniors housing properties, for the fiscal year ending Sept. 30, 2016. Over the course of the fiscal year, the program closed $2.84 billion of loan volume, an increase of 5% as compared to 2015. Lancaster Pollard led all lenders in transactions closed and total loan amount, at 60 and $554.4 million respectively.

A total of 287 loans were closed, covering over 32,000 units or beds, as the program continues to serve as an important source of debt capital to the seniors housing industry. In recent years, HUD has implemented changes to improve its process and create consistencies. Those efforts have proved successful, evident in the fact that HUD reached its goal for total number of commitments issued in FY2016.

“We applaud HUD as it continues to do an outstanding job processing a large number of transactions while continually improving the process along the way,” said Kass Matt, president of Lancaster Pollard.

Thirty-four lenders closed loans within the program in fiscal year 2015 with Lancaster Pollard responsible for 21% of the total activity.

“At the beginning of 2016, there was a general feeling that we would see a gradual rise in long term interest rates, but once again, it never materialized,” Matt said. “Long term rates fell and remain well below historical averages, and in that low interest rate environment we were able to close 53 refinancings using the FHA Sec. 232/223(f) program, reducing rates for our clients and improving their fiscal outlook.”

“In addition, we closed seven loans through the FHA Sec. 232 and 241(a) programs that provided funds for new construction, expansion and substantial renovations,” Matt added. “Separately, and not included in the aforementioned totals, we closed 17 note modifications of existing HUD loans for a total of $161.2 million reducing debt service for those clients.”

The Columbus, Ohio-based firm has been the top HUD Lean lender since fiscal year 2010 with 521 loans totaling $3.97 billion over that seven-year period.

“We look forward to continuing to use the HUD Lean program as a valuable debt financing option for our clients in addition to our full range of investment banking, mortgage banking, private equity, balance sheet financing and M&A advisory services.” said Matt.

Source: U.S. Department of Housing and Urban Development , Office of Healthcare Programs, Section 232 – LEAN, Number of Initial Endorsements and Mortgage Amounts by lender at Firm Commitment, FYE2016 ( Sept 30, 2016).