Michael Vaughn

WASHINGTON, DC-Last month we spoke with Walker & Dunlop SPV and head of FHA Healthcare Finance Michael Vaughn about the shifting state of health care real estate finance at the Department of Housing and Urban Development. The biggest change, in his opinion, which we reported on in detail, was the recently formalized regulations put in place by HUD for a refi component of its hospital finance program. The refi program went live in March after a February 5th publication date for the regulations.

But there have been other changes, albeit more subtle, that Vaughn discussed as well. Here, we pick up the conversation.

HUD’s LEAN 232/223(a)(7) program, Vaughn says, has seen gradual improvements and changes “but nothing has radically changed. Their model is continuous improvement.” One change in this program was the recent release of new loan documents for regulatory agreement, but these weren’t a sea change from what was in place a year ago, Vaughn says. “The queue is at a reasonable level too,” he reports.

At HUD’s 232 New Construction program, the queue is unfortunately longer, he says. “It is running almost a year,” because Vaughn says, HUD is being very careful about projects that they do approve.

One reason for that, he speculates, is that HUD has gotten in trouble with borrowers that haven’t had a good level of experience in a particular area – such as assistance living. “So basically if you haven’t developed an – to continue this example – assisted living project before, HUD won’t approve the loan or the project.”

That all said, “the program continues to be active, issuing same number of commitments as they had in previous years.”