24 CFR Part 232, Subpart A - Eligibility Requirements

This rule updates HUD fees for multifamily housing and residential healthcare facilities, and updates and streamlines the Section 232 program regulations that govern the financing of the purchase and installation of fire safety equipment in insured healthcare facilities, which have not been substantially updated in over 20 years. This final rule gives HUD flexibility in raising or lowering fees, and for residential healthcare facilities, streamlines the loan application process by eliminating unnecessary requirements, conforming needed requirements to current industry practices, and allowing for HUD to centralize the loan application process.

This proposed rule is a cost-savings measure to update HUD's regulations regarding the payment of FHA insurance claims in debentures. Section 520(a) of the National Housing Act affords the Secretary discretion to pay insurance claims in cash or debentures. Although HUD has given mortgagees the option to elect payment of FHA insurance claims in debentures in some sections of HUD's regulations, HUD has not paid an FHA insurance claim under these regulations using debentures in approximately 5 years. This proposed rule would amend applicable FHA regulations to bring consistency in determining the method of payment for FHA insurance claims.

FHA insures mortgage loans to facilitate the construction, substantial rehabilitation, purchase, and refinancing of multifamily housing under the National Housing Act, and nursing homes, intermediate care facilities, board and care homes, and assisted-living facilities (collectively residential healthcare facilities) under section 232 of the National Housing Act (the Section 232 program). Through this rule, HUD proposes to update HUD fees for multifamily housing and residential healthcare facilities and to update and streamline the Section 232 program regulations that govern the financing of the purchase and installation of fire safety equipment in the insured healthcare facilities, which have not been substantially updated in over 20 years. The proposed changes would give HUD flexibility in raising or lowering fees, and for residential healthcare facilities, streamline the loan application process by eliminating unnecessary requirements, conforming needed requirements to current industry practices, and allowing for HUD to centralize the loan application process.

On September 16, 2014, HUD published an interim rule that revised the financial reporting deadlines for operators participating in FHA's program for insurance of health care facilities under section 232 of the National Housing Act (Section 232 program) to bring them in-line with the reporting periods prescribed in HUD's Uniform Financial Reporting Standards, to which owners and borrowers participating in the Section 232 program are subject. HUD received no public comments in response to its solicitation of comment in the September 16, 2014, rule, and is therefore adopting the interim rule without change.

On September 16, 2014, HUD published an interim rule that revised the financial reporting deadlines for operators participating in FHA's program for insurance of health care facilities under section 232 of the National Housing Act (Section 232 program) to bring the operators in-line with the reporting periods prescribed in HUD's Uniform Financial Reporting Standards. In accordance with HUD's regulations implementing its Uniform Financial Reporting Standards, HUD is providing notice that it has issued guidance on the manner in which the reports by operators are to be submitted to HUD.

Through a final rule published on September 7, 2012, HUD revised the regulations for FHA's program for insurance of health care facilities under section 232 of the National Housing Act (Section 232 program). In the September 7, 2012, final rule, HUD retained the longstanding requirement that owners and borrowers participating in the Section 232 program submit audited financial statements to HUD, and added the requirement that operators of Section 232 facilities also submit financial statements to HUD on a quarterly and annual basis. However, the September 7, 2012, rule placed operators on a different submission deadline than that required of owners. This interim rule revises the financial reporting deadlines for operators to bring them in-line with the reporting periods prescribed in HUD's Uniform Financial Reporting Standards, to which owners and borrowers are subject.

On September 7, 2012, HUD published a final rule that revised the regulations governing the insurance of healthcare facilities under section 232 of the National Housing Act (Section 232). HUD's Section 232 program insures mortgage loans to facilitate the construction, substantial rehabilitation, purchase, and refinancing of nursing homes, intermediate care facilities, board and care homes, and assisted-living facilities. The amendments made by the September 7, 2012, final rule updated the Section 232 regulations to reflect current policy and practices, improve accountability and strengthen risk management in the program. The final rule provided an applicability date of April 9, 2013, for certain of the updated requirements. This final rule amendment changes the applicability date to July 12, 2013, for the purpose of allowing more time to transition to the new requirements.

This rule amends the regulations governing FHA's Section 232 Healthcare Mortgage Insurance program (Section 232 program) by establishing the criteria and process by which FHA will accept and pay a partial payment of a claim under the FHA mortgage insurance contract. The Section 232 program insures mortgage loans to facilitate the construction, substantial rehabilitation, purchase, and refinancing of nursing homes, intermediate care facilities, board and care homes, and assisted-living facilities. Through acceptance and payment of a partial payment of claim, FHA pays the lender a portion of the unpaid principal balance and recasts a portion of the mortgage under terms and conditions determined by FHA, as an alternative to the lender assigning the entire mortgage to HUD. Partial payment of claim also allows FHA-insured healthcare projects to continue operating and providing services.

In 2010 through 2011, HUD commenced and completed the process of revising regulations applicable to, and closing documents used in, FHA insurance of multifamily rental projects, to reflect current policy and practices in the multifamily mortgage market. This final rule results from a similar process that was initiated in 2011 for revising and updating the regulations governing, and the transactional documents used in, the program for insurance of healthcare facilities under section 232 of the National Housing Act (Section 232 program). HUD's Section 232 program insures mortgage loans to facilitate the construction, substantial rehabilitation, purchase, and refinancing of nursing homes, intermediate care facilities, board and care homes, and assisted-living facilities. This rule revises the Section 232 program regulations to reflect current policy and practices, and improve accountability and strengthen risk management in the Section 232 program.

This proposed rule would amend the regulations governing FHA's Section 232 Healthcare Mortgage Insurance program (Section 232 program). The Section 232 program insures mortgage loans to facilitate the construction, substantial rehabilitation, purchase, and refinancing of nursing homes, intermediate care facilities, board and care homes, and assisted-living facilities. The amendments proposed by this rule would reduce risk to the FHA insurance fund by establishing the criteria and process by which FHA will accept and pay a partial payment of the claim under the FHA mortgage insurance contract. Through acceptance and payment of a partial payment of claim, FHA pays the lender a portion of the unpaid principal balance and recasts a portion of the mortgage under terms and conditions determined by FHA, as an alternative to the lender assigning the entire mortgage to HUD. Partial payment of claim would also allow FHA insured healthcare projects to continue operating and providing services.