Overview of the FHA 242 Program
Established in 1968, HUD is authorized to provide FHA
Section 242 Hospital Mortgage Insurance to urgently-needed
hospitals to facilitate affordable loans for nonprofit,
government-owned, and for-profit borrowers. HUD views
the FHA 242 Program as the government's ultimate tool
in facilitating the cost-effective modernization of
America's hospitals. To date, over 350 FHA 242 insurance
commitments have been issued in 42 states exceeding
$13 billion in financing. Beneficiaries have included
hospitals of all sizes and geographic locations from
rural critical access hospitals to some of the largest
urban tertiary care facilities in the country. Currently,
the program has over 80 loans outstanding, totaling
more than $6 billion. The program may be used for start-up
or existing hospitals to finance construction, modernization,
equipment, refinancing (limited to 80% of the insured
loan amount), remodeling, expansion and acquisition.
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Low interest loans
via municipal bonds and direct mortgage loans
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Loans can fund up to 100% of project
costs |
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Easy capital access |
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HUD's loan portfolio generally
consists of non-rated hospitals |
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Strong project and financing oversight
from experienced professionals at HUD, HHS and the
Division of Engineering Services |
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Upfront program costs
can be amortized in the mortgage loan and are generally
recaptured in total in 1-2 years from annual interest
rate savings |
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Manageable financial and operating
covenants |
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Debtor in Possession Financing |
Our Commitment to the
FHA Section 242 Program
As a firm, InnoVative Capital has been at the forefront
of programmatic changes involving the substance and
application of the FHA 242 program. Whether by underwriting
the first FHA Section 242 transaction secured by a long-term
lease rather than a mortgage, obtaining HUD financing
for a proprietary start-up hospital, structuring the
largest FHA insured loan for a CAH, or by serving as
faculty at hospital industry seminars, the results of
our efforts support not only current and future clients,
but the future of the entire hospital sector.
Underwriting, Mortgage
Banking and Lending
Commencing with our CFO
HELPER®,
InnoVative Capital’s proprietary system of underwriting
FHA 242 Applications generates our own analytical reports,
credit narratives, market reviews and project adequacy
sufficiency studies. This accelerates the HUD process
by immediately identifying transactional strengths and
weaknesses, with an action plan for a successful deal.
We direct all aspects of the FHA loan underwriting,
in coordination with the project development team, to
help ensure a successful financing.
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