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FHA 242 Mortgage Insured Ginnie Mae
RZED Bonds |
| Critical Access Hospital Modernization Project |
InnoVative Capital's Role:
FHA Mortgage Banker and Financial Advisor |
Effingham County Hospital Authority
Springfield, GA |
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HUD/FHA 242 Mortgage Insurance
FHA 242 mortgage insurance can improve access to capital and lower borrowing rates for hospitals seeking debt refinancing and project financing. |
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Overview
Established in 1968, HUD provides FHA Section 242 mortgage insurance to urgently-needed hospitals to facilitate affordable loans for nonprofit, government-owned, and for-profit borrowers. FHA Section 242 mortgage insurance credit enhances low-interest loans to new or existing hospitals for major capital projects, including: expansion, replacement, remodeling, and equipment purchases, as well as debt refinancings.
FHA 242 mortgage insured loans have funded the long-term borrowing needs of hospitals ranging from 15-bed critical access hospitals to 1,000-bed teaching facilities. Geographically diversified, HUD has issued FHA 242 mortgage insurance commitments across the United States in rural and urban settings.
Advantages of FHA 242:
| Attractive Loan Terms |
| No maximum loan amount |
| 25-year amortization with fixed interest rates |
| Upfront costs of issuance may be capitalized in the mortgage loan |
| Maximum Leverage with Minimal Cash Outlay |
| HUD underwrites at a loan to value of 90% |
| Project loans can fund up to 100% of project costs |
| Cashless loan closings are possible |
| Multiple Funding Options |
| Ginnie Mae collateralized mortgage loans |
| Ginnie Mae collateralized taxable bonds |
| FHA 242 mortgage insured tax-exempt bonds |
| FHA 242 Credit Enhancement |
| Full faith and credit of the U.S. backs FHA 242 insured mortgage loans and guarantees each hospital reimbursement obligation |
| FHA 242 mortgage insured loans may achieve ratings of AA or AAA |
| FHA 242 mortgage insured loans are rated AA or AAA with Ginnie Mae securitization |
| With FHA 242, non-rated and low-rated hospitals can access long-term loans at interest rates unattainable elsewhere for comparable credits |
| Lower interest rates improve financial feasibility and debt capacity |
| Fair Underwriting Parameters and Professional Program Administration Promote a Diverse FHA Loan Portfolio |
| No requirement for hospital credit rating |
| Industry-friendly financial covenants |
| FHA 242 is not subject to federal or state funding caps |
| Centralized loan underwriting in Washington, D.C., fosters universal lending practices |
Since 2000, InnoVative Capital has been at the forefront of programmatic changes involving the substance and application of the FHA 242 Program. Our results support not only our clients, but the future of the program itself.
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Develop, Structure
& Finance |
| We manage the entire process |
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| Client Testimonial: |
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| “InnoVative Capital developed Effingham Hospital’s project financing on its own initiative and then approached our CEO and CFO, with a proposal that they could finance a $30 million hospital modernization project using FHA 242 mortgage insurance. With the full support of our board, as our financial advisor, their strategic planning led our team of consultants, set our capital budget, and worked through an arduous county approval process. As our mortgage banker, they structured our record-low 3.63% Build America Bond financing. Their community outreach educated our board and County Commissioners and led to the passage of a County tax. Throughout the FHA underwriting process, InnoVative Capital gave us confidence we would receive HUD’s approval. This outcome is very satisfying for our hospital and the people of Effingham County.” |
Richard R. Rafter | Chairman
Effingham Hospital Authority |
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| OTHERS PROMISE. WE DELIVER. |
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$40,500,000 |
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FHA 223 a-7 Insured
Ginnie Mae Loan |
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FHA 242 Debt Refinancing |
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Morehead Memorial Hospital |
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Eden, NC |
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InnoVative Capital's Role: |
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FHA Mortgage Banker |
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[ case study ] |
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Joint Management &
Lease Agreement |
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Community Hospital Affiliation |
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Emanuel Medical Center |
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Swainsboro, GA |
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InnoVative Capital's Role: |
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Financial Advisor |
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[ case study ] |
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$85,000,000 |
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FHA 242 Insured Ginnie Mae Loan |
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Replacement Community Hospital |
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Meadows Regional Medical Center |
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Vidalia, GA |
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InnoVative Capital's Role: |
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FHA Mortgage Banker and Financial Advisor |
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[ case study ] |
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$40,000,000 |
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FHA 242 Insured
Ginnie Mae Loan |
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Replacement Critical Access Hospital |
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The Memorial Hospital |
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Craig, CO |
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InnoVative Capital's Role: |
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FHA Mortgage Banker |
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[ case study ] |
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$46,000,000 |
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FHA 242 Mortgage Insured
Tax-Exempt Bonds |
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Replacement
District Hospital |
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Matagorda Regional Medical Center |
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Bay City, TX |
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InnoVative Capital's Role: |
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FHA Mortgage Banker and
Financial Advisor |
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[ case study ] |
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$18,500,000 |
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FHA 242 Insured
Ginnie Mae Loan |
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Replacement Critical Access Hospital |
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Shoshone Medical Center |
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Kellogg, ID |
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InnoVative Capital's Role: |
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FHA Mortgage Banker |
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[ case study ] |
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$6,500,000 |
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FHA 241 Insured
Ginnie Mae Loan |
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Skilled Nursing Facility
Renovation |
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Shorefront Geriatric Center |
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Brooklyn, NY |
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InnoVative Capital's Role: |
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FHA Mortgage Banker |
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[ case study ] |
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$29,000,000 |
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FHA 242 Insured
Ginnie Mae Loan |
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Replacement Critical Access Hospital |
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North Valley Hospital |
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Whitefish, MT |
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InnoVative Capital's Role: |
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FHA Mortgage Banker |
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[ case study ] |
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$31,000,000 |
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FHA 242 Mortgage Insured
Ginnie Mae RZED Bonds |
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Critical Access Hospital Modernization Project |
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Effingham County Hospital Authority |
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Springfield, GA |
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InnoVative Capital's Role: |
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FHA Mortgage Banker and
Financial Advisor |
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[ case study ] |
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$24,000,000 |
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Hospital Revenue Bonds |
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Community Hospital
Renovation and Expansion |
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Ohio Valley General Hospital |
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McKees Rocks, PA |
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InnoVative Capital's Role: |
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Financial Advisor |
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[ case study ] |
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$3,500,000 |
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FHA 232 Mortgage Insured
Tax-Exempt Bonds & Sub Debt |
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New Assisted Living Facility |
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Somerset at University Place |
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Winston-Salem, NC |
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InnoVative Capital's Role: |
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FHA Mortgage Banker |
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[ case study ] |
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$50,000,000 |
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Hospital Revenue Bonds |
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Tertiary Care Facility
Renovation and Expansion |
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Memorial Health University Medical Center |
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Savannah, GA |
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InnoVative Capital's Role: |
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Financial Advisor |
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[ case study ] |
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$6,860,000 |
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FHA 232 Insured
Ginnie Mae Loan |
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Skilled Nursing Home
Renovation and Refinancing |
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Citrus Health and
Rehabilitation Center |
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Inverness, FL |
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InnoVative Capital's Role: |
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FHA Mortgage Banker |
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[ case study ] |
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$19,200,000 |
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Hospital Revenue Bonds |
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Community Hospital
Refinancing and Expansion |
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Daviess County Hospital |
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Washington, IN |
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InnoVative Capital's Role: |
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Financial Advisor |
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[ case study ] |
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$33,000,000 |
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FHA 242 Insured
Ginnie Mae Loan |
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Start-Up For-Profit Hospital |
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Summit Hospital |
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Phenix City, AL |
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InnoVative Capital's Role: |
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FHA Mortgage Banker |
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[ case study ] |
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$37,000,000 |
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FHA 242 Insured
Ginnie Mae Loan |
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Community Hospital
Debt Refinancing & Expansion |
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Knox Community Hospital |
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Mt. Vernon, OH |
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InnoVative Capital's Role: |
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FHA Mortgage Banker and
Financial Advisor |
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[ case study ] |
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$20,000,000 |
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USDA Direct Loan |
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Community Hospital Renovation |
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DeSoto Memorial Hospital |
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Arcadia, FL |
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InnoVative Capital's Role: |
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Financial Consultant |
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[ case study ] |
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$59,000,000 |
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Doctors’ Hospital
Non-Rated Hospital Revenue Bonds |
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Start-Up Non-Profit Hospital |
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Doctors’ Hospital |
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Bridgeport, TX |
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InnoVative Capital's Role: |
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Financial Advisor |
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[ case study ] |
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$7,675,000 |
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FHA 232 Insured
Ginnie Mae Loan |
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Start-Up Skilled Nursing Facility |
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Stone Oak Care Center |
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San Antonio, TX |
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InnoVative Capital's Role: |
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FHA Mortgage Banker |
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[ case study ] |
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The Tax Support of Independent Community Hospitals
by Alan P. Richman
Healthcare Financial
Management Magazine |
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Increasingly, community hospitals are under pressure to survive. Independence and prosperity are not mutually exclusive for many community hospitals, as long as they receive a little revenue support for new facilities and additional physicians. Dedicated limited taxes can provide the lifeline hospitals need to preserve community healthcare and enhance the local economy.
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