| Statutory Requirements |
| Does the hospital have the ability to grant a mortgage, according to organizational or formation documents? | | No | Yes |  | |
| To be eligible for the program, HUD requires that the lender have a first lien position on the hospital's real estate. Please see the information icon to the right for limited exceptions to this requirement. |
| Using Net Book value to approximate the replacement cost of the hospital's net property, plant and equipment, is Loan-to-Value less than or equal to 90%? | | No | Yes | | |
| If the hospital does not meet LTV using the net book value of PPE, and net PPE understates the value of the property, LTV may be met by providing an appraisal. The appraisal must be prepared by a qualified health care appraiser approved by HUD and licensed in the State in which the hospital is located. The appraisal must be prepared in accordance with OHF guidelines. In your professional opinion, will the hospital meet HUD's 90% LTV requirement with an appraisal? | | No | Yes | | |
| It does not appear that your facility will meet HUD's Loan-to-Value requirement. Please see the information icon to the right for more information on the requirement and how to calculate LTV. |
Please note that, if you submit a Preliminary Review package to OHF and are invited to submit an application for mortgage insurance, you will be required to submit an acceptable appraisal demonstrating that the 90% maximum LTV requirement is met. Please also note that the appraisal must be prepared by a qualified health care appraiser approved by HUD and licensed in the State in which the hospital is located. The appraisal must be prepared in accordance with OHF guidelines. |
| Regulatory Requirements |
| Has the hospital’s construction project started? | | No | Yes | | |
| While HUD permits varying levels of construction activity to occur prior to application submission, such construction activity must be approved prior to its commencement. Unfortunately, if construction is already underway, the facility will not qualify for mortgage insurance. |
| Environmental |
| Is the hospital located in a Floodway or Coastal Barrier? | | No | Yes | | |
| HUD performs an environmental review, consistent with state, local and federal guidelines, on each new project. Where environmental concerns are raised, typically HUD and the hospital team are able to address those issues. However, if the facility is located in a floodway or coastal barrier, HUD will not entertain the proposal. |
| Financials |
| Does the hospital meet HUD’s Debt Service Coverage Ratio requirement? | | No | Yes | | |
| In HUD's experience, the historical debt service coverage ratio and operating margin are critical indicators of success. In order to be eligible for the program, HUD requires that the hospital record a three-year average debt service coverage ratio of 1.25x. Please see the information icon to the right, and the embedded spreadsheet, to assist in the calculation of the DSC. |
| Does the hospital meet HUD’s operating margin requirement? | | No | Yes | | |
| In HUD's experience, the historical operating margin and debt service coverage ratio are critical indicators of success. HUD requires at least breakeven operations in order to qualify for the program. Please see the information icon to the right, and the embedded spreadsheet, to assist in the calculation of the operating margin. |
| Collateral |
| Is the hospital able to pledge all of its integral operational components to the Lender? | | No | Yes | | |
HUD asks that the mortgage property include all of the hospital's integral operating components, and cover all of the property used in the operation of the hospital, including real estate and other assets. Please see the information icon for more detail. You have indicated that the hospital is unable to pledge critical real estate or assets. While the hospital may request that HUD allow exclusions of non-critical assets from the collateral, if the hospital is unable to pledge critical items, it will not qualify for the program. |
| Compliance |
| Is the hospital in substantial compliance with federal and state regulations governing the operation and reimbursement of hospitals, including Stark and anti-kickback regulations? | | No | Yes | | |
| In order to be eligible for the program, the hospital must be in substantial compliance with federal and state regulations governing the operation and reimbursement of hospitals. |
| Is the hospital accredited by the Joint Commission or does it have "deemed status"? | | No | Yes | | |
| In order to be eligible for mortgage insurance through HUD, the hospital must be accredited and/or have deemed status. Additionally, the hospital must participate in Medicare and Medicaid programs. |
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Please answer all questions before pressing the "Guidance" button. Thank you for you interest in HUD's Hospital Mortgage Insurance Program. |
Unfortunately, based on your responses, it appears that your project does not meet one or more of the statutory and/or regulatory requirements required by HUD to qualify for hospital mortgage insurance. If you would like additional clarification, please contact the Underwriting Director (paul.a.giaudrone@hud.gov) for more information. Thank you for you interest in HUD's Hospital Mortgage Insurance Program. |
Based on your inputs, the Pre-Screening tool has not identified any major statutory or regulatory hurdles for your proposal. While meeting the pre-screen criteria does not predict or guarantee the success of any potential application, it is an important step in the process. HUD encourages you to contact the Underwriting Director (paul.a.giaudrone@hud.gov) to discuss your project. If you decide to further pursue financing through the Hospital Mortgage Insurance Program, please understand that your proposal will undergo a thorough underwriting review by staff to determine whether HUD may issue a commitment for the project. Thank you for you interest and we look forward to hearing from you. |