//FHA loan delays from government shutdown loom larger for seniors

FHA loan delays from government shutdown loom larger for seniors

While most single-family Federal Housing Administration lending is somewhat insulated from the government shutdown, the impasse is doing more to hurt funding in niches like nursing home loans and reverse mortgages.

Areas where lending is noticeably slowed because FHA staff have been furloughed include reverse mortgages taken out by borrowers 62 and older, and commercial/multifamily products, a category that includes senior-living-facility financing, said Justin Burch, a managing director at The Collingwood Group.

Section 232

“The FHA has a skeleton crew to approve commitment authority, but there are delays in that, and there’s risk in that delay for those sectors,” said Burch, who is the head of the federal housing practice at Collingwood, a consultancy owned by Situs.

“It’s impacted elderly citizens and that’s obviously disturbing,” said Steve Kennedy, a senior managing director at nursing home lender Lancaster Pollard. He said the unprecedented length of the shutdown, and the possible added strain on cost from higher rates, are concerns for him.

“Some projects that are on hold require substantial rehabilitation and already face other pressures, so this kind of strain on the cost of capital adds to the challenge,” he said. “The last few shutdowns were in stable or declining interest rate environments.”

As the shutdown has progressed, FHA lending on nursing homes has gone from being delayed to almost a full stop, according to Jim Levine, an attorney and shareholder at law firm Baker, Donelson, Bearman, Caldwell & Berkowitz. Levine’s practice is focused on areas that include FHA-insured loans.

“There’s no one at HUD working unless it’s a true emergency,” he said.

Original Source