COLUMBUS, Ohio--()--The U.S. Department of Housing and Urban Development (HUD) announced that its LEAN mortgage insurance program to finance seniors housing properties set a new record for its 2012 fiscal year ending Sept. 30, shattering the previous record set last year of $3.29 billion by more than 66%.
“A combination of factors are driving the enormous volume of activity through the HUD program”
Seven hundred and six loans were closed totaling $5.47 billion, making the LEAN program the largest single source of debt capital to the seniors housing industry. Forty-eight lenders closed loans within the program, but the largest volume of activity was generated by Lancaster Pollard, who closed 98 loans in 26 states totaling $738.6 million or 13.5% of total program volume.
“A combination of factors are driving the enormous volume of activity through the HUD program,” said Brian Pollard, senior managing director of Lancaster Pollard. “Certainly, the historically low rate environment has been the primary driver of demand because no other funding source better captures the benefits of this rate environment. But there have been other contributors as well, including improved timing of the HUD process and continued depressed activity by many of the traditional lenders to this space.”
According to Pollard, the HUD LEAN program and its personnel deserve much of the credit for the success of the program in recent years. The program, which was developed during 2008, has truly improved the underwriting, application and post-closing loan surveillance process. Consistency and timeliness, always concerns of prior years, have improved dramatically under LEAN.
“This isn’t your dad’s HUD program and the improvements under LEAN have made HUD a legitimate first stop for capital to providers of all sizes,” Pollard said. “HUD is listening to their stakeholders and providing meaningful responses. One such example is their decision to hire private sector subcontractors to process applications in an attempt to reduce the size of the backlog of applications waiting for HUD review (the “queue” as it became known), which has worked better than most could have imagined.
“We are obviously pleased with the overall growth of the program. With the expectation of continued low rates and consolidation of ownership, we believe activity within the LEAN program will remain robust for years to come. The HUD programs have always been an important part of our funding platform, but their prominence in recent years has grown and we are currently working on $1.4 billion of HUD loans through various stages of processing. While much of the activity is comprised of refinance or acquisition loans, we expect growing demand for new construction or substantial rehabilitation funding, especially given the well documented dearth of new development funding in the backdrop of a growing senior population. HUD has truly become a mainstream option and we are happy to be an active participant in helping to make it so.”
Editor’s Note: For infographics on FY2012 HUD LEAN Program lending activity, visit http://www.lancasterpollard.com/news/LP-HUD-LEAN-leader. More information can be found on HUD’s website: http://portal.hud.gov/hudportal/HUD?src=/federal_housing_administration/healthcare_facilities/section_232/lean_processing_page/underwriting_guidance_home_page, then select FY 2012 Lean Closings near the bottom of the page.
About Lancaster Pollard
Lancaster Pollard helps health care, senior living and affordable housing organizations position for future success by providing wide-ranging financing solutions. The firm offers a full range of investment banking, mortgage banking and investment advisory services and has one of the largest groups of financial professionals dedicated to health care in the country. As a leading underwriter of bonds and mortgage loans under various programs, Lancaster Pollard has earned a reputation for delivering sound financial advice and the most cost-effective financing options available in the market.
Lancaster Pollard consists of three affiliated companies and has regional offices in Atlanta, Austin, Kansas City, Los Angeles and Philadelphia. Lancaster Pollard & Co. underwrites debt securities and is a registered broker/dealer with the Securities and Exchange Commission (SEC) and a member in good standing of the Financial Industry Regulatory Authority (FINRA), Municipal Securities Rulemaking Board (MSRB) and Securities Investor Protection Corporation (SIPC). Lancaster Pollard Mortgage Company provides mortgage insurance to support capital funding initiatives through government agencies, including the Department of Housing and Urban Development/Federal Housing Administration (HUD/FHA), Government National Mortgage Association (GNMA), Fannie Mae, and U.S. Department of Agriculture (USDA). Lancaster Pollard Investment Advisory Group, an SEC-registered investment advisor, helps nonprofit organizations create the financial means to last the life of their missions by managing total financial risk rather than just investment-associated risk. For more information, visit www.lancasterpollard.com.