American Trust Corporation

FHA Insurance Programs Section 232
New Construction/Substantial Rehab - Skilled Care, Assisted Living, Board & Care Facilities

Purpose: Provides mortgage insurance for the construction or rehabilitation of skilled nursing, intermediate care, board and care, and assisted living facilities. Additions to existing facilities financed utilizing other FHA programs (See Section 232 Pursuant to Section 223(f) and Section 241). Independent living units can comprise up to 25% of the total number of beds or units in a facility and operating deficit escrows and debt service reserves will be required.

Eligible Borrowers: Profit motivated, non-profit and public owners are eligible.

Maximum Term: 40 years plus a construction period.

Maximum Loan:
New Construction:
The lesser of:
(1) 90% of FHA's value (95% for private non-profits)
(2) Amount of debt serviced by 90% of the estimated NOI attributable to realty (95% for non-profits)
(3) 100% of mortgagable costs less grants, public loans and tax credits

Substantial Rehabilitation:
The lesser of:
(1) 90% of FHA's value (95% for private non-profits)
(2) Amount of debt serviced by 90% of the estimated NOI attributable to realty (95% for non-profits)
(3) If owned - 100% of hard and soft costs plus the lesser of existing debt or 90% of existing value (95% for non-profits). To be acquired - 90% of hard and soft costs (95% for non-profits) plus 90% of the lesser of purchase price or existing value (95% for non-profits)
(4) 100% of mortgagable costs less grants, public loans and tax credits

NOI & Value Calculation: In determining underwritten NOI, management fees are not included; however, a proprietary income amount, typically equal to 10% to 25% (depending on the level of care) is deducted to arrive at an underwritten NOI for debt service coverage and loan to value sizing tests.

Personal Liability: None. Non-Recourse.

Prepayment: Typically either: (i) closed for 10 years then open to prepayment at par, or (ii) closed for five years then open to prepayment at 105 in year six, declining 1% per year.

FHA Application Fees: 0.3% of loan amount.

Mortgage Insurance Premium: FHA resets on a yearly basis the annual MIP which historically has ranged from 50 to 60 basis points per year. Once set, the MIP does not vary for the life of the loan.

Secondary Financing: Permitted in form of surplus cash note.

FHA Inspection Fees:
0.5% of loan amount (new construction)
0.5% of costs associated with construction (sub rehab)

Funding: Qualifies for Ginnie Mae guaranteed mortgage-backed securities or direct placement, or may be used to credit enhance tax-exempt bonds.

Interest Rate: Subject to market conditions.

Territory: Nationwide

The program has the following additional parameters:
The FHA Section 232 mortgage insurance program is one of the most attractive credit enhancement programs available for taxable and tax-exempt financing of new construction and rehabilitation of nursing homes, intermediate care facilities, assisted living facilities, and board and care (personal care) facilities. Under the FHA Section 232 program, FHA insures each construction loan disbursement as an advance is made and, upon “Final Endorsement,” it insures the permanent mortgage. The mortgagor may also choose insurance upon completion of construction.
FHA is the only 40 year, fixed rate, level amortization, non-recourse health care facility finance program in existence.

In its pre-qualifying review, American Trust Corporation will estimate both the loan amount and the fees and costs associated with the transaction. Actual loan amounts and actual fees and expenses may vary from the pre-qualifying estimates. A pre-qualifying estimate is not a commitment to make a loan.

Application Fee: $2,500 non-refundable inspection/loan processing fee payable to American Trust Corporation with the loan application, will be credited to origination fee at closing

Origination Fee: 1%

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	FHA Insurance Programs Section 232 New Construction/Substantial Rehab - Skilled Care, Assisted Living, Board & Care Facilities Purpose: Provides mortgage insurance for the construction or rehabilitation of skilled nursing, intermediate care, board and care, and assisted living facilities. Additions to existing facilities financed utilizing other FHA programs (See Section 232 Pursuant to Section 223(f) and Section 241). Independent living units can comprise up to 25% of the total number of beds or units in a facility and operating deficit escrows and debt service reserves will be required. Eligible Borrowers: Profit motivated, non-profit and public owners are eligible. Maximum Term: 40 years plus a construction period. Maximum Loan: New Construction: The lesser of: (1) 90% of FHA's value (95% for private non-profits) (2) Amount of debt serviced by 90% of the estimated NOI attributable to realty (95% for non-profits) (3) 100% of mortgagable costs less grants, public loans and tax credits Substantial Rehabilitation: The lesser of: (1) 90% of FHA's value (95% for private non-profits) (2) Amount of debt serviced by 90% of the estimated NOI attributable to realty (95% for non-profits) (3) If owned - 100% of hard and soft costs plus the lesser of existing debt or 90% of existing value (95% for non-profits). To be acquired - 90% of hard and soft costs (95% for non-profits) plus 90% of the lesser of purchase price or existing value (95% for non-profits) (4) 100% of mortgagable costs less grants, public loans and tax credits NOI & Value Calculation: In determining underwritten NOI, management fees are not included; however, a proprietary income amount, typically equal to 10% to 25% (depending on the level of care) is deducted to arrive at an underwritten NOI for debt service coverage and loan to value sizing tests. Personal Liability: None. Non-Recourse. Prepayment: Typically either: (i) closed for 10 years then open to prepayment at par, or (ii) closed for five years then open to prepayment at 105 in year six, declining 1% per year. FHA Application Fees: 0.3% of loan amount. Mortgage Insurance Premium: FHA resets on a yearly basis the annual MIP which historically has ranged from 50 to 60 basis points per year. Once set, the MIP does not vary for the life of the loan. Secondary Financing: Permitted in form of surplus cash note. FHA Inspection Fees: 0.5% of loan amount (new construction) 0.5% of costs associated with construction (sub rehab) Funding: Qualifies for Ginnie Mae guaranteed mortgage-backed securities or direct placement, or may be used to credit enhance tax-exempt bonds. Interest Rate: Subject to market conditions. Territory: Nationwide The program has the following additional parameters: The FHA Section 232 mortgage insurance program is one of the most attractive credit enhancement programs available for taxable and tax-exempt financing of new construction and rehabilitation of nursing homes, intermediate care facilities, assisted living facilities, and board and care (personal care) facilities. Under the FHA Section 232 program, FHA insures each construction loan disbursement as an advance is made and, upon “Final Endorsement,” it insures the permanent mortgage. The mortgagor may also choose insurance upon completion of construction. FHA is the only 40 year, fixed rate, level amortization, non-recourse health care facility finance program in existence. In its pre-qualifying review, American Trust Corporation will estimate both the loan amount and the fees and costs associated with the transaction. Actual loan amounts and actual fees and expenses may vary from the pre-qualifying estimates. A pre-qualifying estimate is not a commitment to make a loan. Application Fee: $2,500 non-refundable inspection/loan processing fee payable to American Trust Corporation with the loan application, will be credited to origination fee at closing Origination Fee: 1%
		What We Do Lending Programs Property Types Application Forms

		Global Financing Solutions Short Term Commercial Float to Fixed Small Loan Programs Hard Money Loans Credit Tenant Financing Mezzanine Multifamily Office Health Care Financing Hotel & Resort Financing Auto, Marine & Equipment Financing Mobile Home Park FHA & Fannie Mae Products Self Storage Retail Industrial SBA Programs Factoring and Business Finance Small and Rural Hospital Finance


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