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An Option for the Ages: Market Turmoil has put Federal Hospital Mortgage Insurance in the Spotlight. Here’s why it Should Stay There

First few Article Sentences

Much of the recent discussion of federal hospital mortgage insurance has been directed toward smaller facilities that lacked a wide variety of financing options. Rather than being painted as a financing option for a limp economy, however, the Section 242 program should be considered as part of any hospital’s financing discussions – under any market conditions. Its competitive fixed interest rates, 25-year amortization and non-recourse nature make it an excellent choice for small independent hospitals, but also for larger facilities and for systems.

For larger hospitals in particular, FHA 242 may have been off the radar for several decades, especially since the program has only recently become more well-known outside the Northeast, where transactions have historically been concentrated. Started in 1968, the federal hospital mortgage insurance program under the Department of Housing and Urban Development (HUD) has insured over $15 billion in hospital loans. Transaction sizes range from less than $1 million to $756 million. The average loan size of active Section 242 loans is $81.3 million.


Dopoulos, Jason

 

Lancaster Pollard

Facility Financing

July 1, 2010

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