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From first call to commitment: HUD's hospital loan process

Adding up HUD's own medians for projects from fiscal 2015 to 2021, a hospital loan took about 239 days from the start of preliminary review to commitment, roughly 8 months, before closing and any construction. The longest stretch is the hospital's own: getting a complete application in.

  1. Preliminary review

    22 days median

    HUD reviews three years of audited statements and the project outline and says whether to proceed. A negative letter bars a new request for a year unless circumstances change (24 CFR 242.16(a)(5)).

    Range 5 to 85 days. HUD's target: 10 business days.

  2. To the pre-application meeting

    32 days median

    The hospital, its lender and HUD walk through the project, the refinancing and anything that could affect eligibility. Optional for 223(f), at HUD’s discretion (24 CFR 242.16(a)(6)).

    Range 17 to 113 days.

  3. To a complete application

    105 days median

    The lender submits the application: market need and feasibility study (usually with a CPA firm), plans and specifications for construction, the capital debt documents for a refinance.

    Range 32 to 290 days. HUD's target: 10 business days to confirm completeness.

  4. To the commitment

    80 days median

    HUD underwrites and issues a commitment good for 90 days, extendable to 180 (24 CFR 242.17(c)).

    Range 27 to 225 days. HUD's target: 120 days for 242 and 241; 90 for 223(f); 30 for 223(a)(7).

After the commitment

Closing and initial endorsement follow, then construction draws for a 242 or 241(a), and final endorsement when the work is done and costs are certified. A 223(f) without repairs is insured on completion at closing. Amortization starts after construction, and the 25-year term runs from there (24 CFR 242.27).

Before the preliminary review

HUD's Office of Hospital Facilities publishes a self-assessment and pre-screening page, and says it can't pre-qualify start-up or physician-owned hospitals. The eligibility screen runs the regulation's hard tests on your own audited numbers first.

Sources

Median and range times and processing targets: HUD Office of Hospital Facilities, 2022 Lender Training (August 3, 2022), FY2015-FY2021 projects. Rules: 24 CFR 242.16, 242.17 and 242.27. HUD's program page: hud.gov healthcare programs.

Planning the timeline?

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