Section 232 Updates – SMAC Conference 2012

Report
Office of Residential Care Facilities
SECTION 232 UPDATES
1
Tim Gruenes
Workload Manager, ORCF
Minneapolis HUD Office
2
OHP/ORCF – Who We Are
•OHP (Office of Healthcare Programs) –
Roger Miller – DAS
•ORCF (Office of Residential Care
Facilities)
•Hospitals (242)
3
OHP/ORCF – Who We Are
•ORCF – Director – Michael Vaughn (as
of mid-June will be Kelly Haines
• Production: Director – Roger Lewis (Seattle)
• Asset Mgmt: Director – Kelly Haines (St. Louis)
• Policy: Director – John Hartung (St. Louis)
4
OHP/ORCF – Who We Are
•Designated Lender Relations Liaison
is Mary Walsh – Ft. Worth:
• Work with Lenders
• Submissions for Development and Asset Mgmt
• Measures of lender submission quality and risk profile
• LQMD –
• Lender Qualification
• Post Closing Monitoring Activities
5
A Much Brighter Picture!!!!
•2010: Loads of Applications, Hoping
for more resources in 2011.
•2011: More Applications, We were in
worse shape (total queue topped out
over 400 projects).
•Now: Next Few Slides……..
•We’ve hired staff and added
contractors…..
6
Activity
F Y ‘12
(5/31/12)
FY 2011
FY 2010
FY 2009
Applications
Received
359/479
708
768
271
Commitments
546/728
473
318
132
7
Office of Residential Care Facilities
Queue Volume
QUEUE VOLUME
as of
12/31/11
as of
1/31/12
as of
2/29/12
as of
3/31/12
as of
5/31/12
135
77
54
13
8
0
5
2
5
1
223a7
27
19
21
22
15
232 Other
41
40
42
36
21
203
141
119
76
45
223f Regular
Queue
223f
Portfolio
Queue
TOTAL
8
Office of Residential Care Facilities
Inflow & Outflow
Application Inflow & Outflow
Sept.
2011
Oct.
2011
Nov.
2011
Dec.
2011
Jan.
2012
Feb.
2012
March
2012
New
Applications
Received
16
33
45
51
31
48
54
223f
10
11
20
24
14
20
17
223a7
6
19
25
23
16
26
33
Other
0
3
0
4
1
2
4
43
61
57
69
64
74
76
Firm
Commitments
Issued
9
Section 232 Lean Phase II
LEAN PHASE II
• Goals: End of Queue, Commitments issued within 30 days of
application, closings within 45 days
• Adherence to these performance standards will increase the program’s
attractiveness for high quality borrowers and facilities.
• Focus on both Internal and External production elements.
• Identifying Internal Bottlenecks
• Tracking through Internal Delay categories in Visual Management Report
• Making necessary changes in resource allocation, process steps
• Other Queue
• Working with OGC and ORM to remove obstacles to production flow
• Setting expectations for Underwriting processing times
10
Section 232 Lean Phase II
LEAN PHASE II (cont’d)
• Setting expectations for completeness of Lender submissions
• Lender Narrative should address all issues/conclusions
• HUD (or contractor) UW should be able to proceed without delay
• Tracking through External Delay categories in Visual Management Report
• Working with Lenders to reduce delays (Mary Walsh)
• Working with OGC/Lenders Counsel to reduce closing delays
• Reduction of Queue should reduce stale underwriting/document/legal
delays
11
Section 232 Lean Phase 2
External Delay Categories
External Delay Categories
1a. NOI: Market/vacancy/payer mix (2)
4c. AR
1b. Cap Rate (1)
4d. Master Lease
1c. Incorrect/ineligible costs (2)
5a. Typographical errors
2a. Quality of Care/surveys
5b. Calculations/Math Errors (1)
2b. 2530 or other Derog Issues (2)
5c. Missing Exhibits (13)
2c. Operations (2)
5d. Not using standard lean standard
templates/forms or obsolete
2d. DEC findings (2)
5e. Error in identifying Green Lane or NonGreen Lane criteria (a7)
2e. Failure to identify portfolio (3)
5f. Incorrect Amortization values (a7)
3a. Environmental (2)
6a. Updates to Financials (10)
3b. Obsolescence
6b. 2530
3c. Property Condition/Reserves
(2)
6c. A/R
4a. Corp, Structure, Title
6d. Master Lease
4b. Litigation status/Other (1)
6e. Legal
(4)
12
Section 232 Underwriting
New Construction Risk Mitigation
Risk Mitigation for 232 New Construction
Market analysis must support strong demand
Financial strength of the developer/owner/operator
Relevant experience of the developer/owner/operator
Conservative lease up
Substantial operating deficit reserve
Requirement for significant cash investment by strong
ownership
13
What’s New?
•Proposed Rule/Document Revisions:
•Comment Period until 7/2/12
•Webcast today @ 2:30 to 5 EST
•Information on our HUD.GOV website
14
What’s New?
•We Created a Separate Queue for
241a’s
•Preference in Other Queue for projects
with TC’s/Other Grant Funds for
Affordable Units
15
What’s New?
•Elimination of Legal Completeness
Review:
•HUD Legal Review at same time as
Underwriting
•Complete/Full Firm Submittal
imperative given short queue
16
What’s New?
•Initial Screening of Other Queue
Projects:
•Diane Rosinski – Buffalo
•Patrick Berry – Detroit – WLM
•Dated submissions: if no longer
feasible, request refund of app fee
(before HUD assigns appraiser/UW).
17
What’s New? Initial Screening
Continued.
•Projects Placed in one of 3 categories:
• No Revision necessary
• Minor Revisions necessary
• Major Revisions necessary:
• Removed from queue until corrected
• If Corrected, project returns to same spot in queue
relative to other projects – FIFO
• Currently 13 Projects
18
What’s New? Initial Screening
Continued.
•Some items being reviewed:
• Compliance with previous Email Blasts:
Experience, net worth/liquidity, equity investment.
• IOD
• Major Environmental Issues
• Brief review of APPS/2530’s
• Brief review of Forms
19
What’s New?
•Swap Fees: ML 2012-8
•Contact OHP/Contract Closer if Firm
Commitment issued (not closed) and
want to include.
•We’ll be clarifying what we want to see
in future submissions in Email Blast –
until checklists/narratives can be
revised.
20
What’s New?
•Policy Staff Working on Mortgagee
Letters:
•Eligible Debt
•Portfolios/Master Leases
21
What’s New?
•Projects with Common Ownership:
•Per November 2011 Email Blast,
identify on initial request form fro FHA
Number and Certification for Electronic
Submittal.
•If recommending no Master Lease
separate issue – present risk based
reasons to UW.
22
What’s New? Revenue
Funding Cuts.
•If enacted (Medicare recently), reflect in
appraisal and in Underwritten NOI
•If proposed (Illinois):
•If possible to quantify, show in
sensitivity analysis how project may be
affected – can still cover at 1.45 and
1.0 DSCR?
•Discuss owner/operator’s plan to deal
with them if enacted.
23
Section 232 Delinquencies
> 60 Day Delinquencies (earlier in 2012)
18 of 26 are Assisted Living
11 of those 18 are New Construction
8 of 26 are Nursing Homes
6 of those 8 are Refinances, 2 seasoned NC
24
Section 232 Claims FY 2010 - 2012
• Type
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
AL
AL
AL
AL
BC
BC
BC
NH
NH
NH
NH
NH
AL
AL
AL
AL
NH
NH
NH
AL
NH
NH
UPB
Cohort Property
1,514,988
2002
2,111,004 2009
1,125,079
2005
4,933,963
2002
1,231,477
1995
1,613,754
1998
512,990 1997
26,482,547 2003
3,917,200
2002
4,588,799
2001
6,229,592
2000
3,963,459 2008
7,864,276 2000
5,299,558 2008
3,317,582 2009
2,637,155 2003
3,729,042 2001
2,514,427 2008
1,644,127 2003
21,183,217 2006
3,988,697 2003
988,953 2002
City
State Cause
BARSTOW RET.PL. BARSTOW
CA
MAPLEWOOD RIDGE PELHAM
AL
RIVER BIRCH RES. HOLFORD
MN
SUNAPEE COVE
GEORGES
NH
ESSEX MANOR
SUPERIOR
MI
LANDMARK MANOR HAMPTON
PA
LANDMARK MANOR HAMPTON
PA
SOMERSET HOUSE CHICAGO
IL
FOX RIVER PAV.
AURORA
IL
JAMES S TAYLOR
LOUISVILLE KY
WEST ROCK HC
E. N. HAVEN CT
PECAN RIDGE LC
WACO
TX
GARDEN PK VILLAS ESCONDIDO CA
NORTHPORT HLDS NORTHPORT MI
RIVER BEND AL
VALLEY
AL
HEARTLAND PLAZA MOORE
OK
FAIRCHILD MANOR LEWISTON
NY
GOVALLE CARE CTR AUSTIN
TX
NORTHVIEW DV CTR EASTLAND TX
Lenox on the Lake
Lauderhill
FL
SouthPark
Brownwood
TX
San Augustine
San Augustine TX
Market/Owner
Owner
Market/Owner
Owner
Market/Owner
Market/Owner
Market/Owner
Owner/State
Owner/State
Owner
Owner/State
Owner /State
Owner
Market/Owner
Owner
Market/Owner
Owner
Owner
State/Owner
Market/Owner
State/Owner
State/Owner
25
Thank-You!
[email protected]
Or [email protected]
26

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