The Department of Housing and Urban Development has applied tighter eligibility standards under new rules for refinancing hospital debt under the Section 242 Hospital Mortgage Insurance Program – a move that would “limit program access to otherwise creditworthy facilities,” the American Hospital Association said on July 27. In a letter to HUD assistant secretary David Stevens, the AHA and nine other groups faulted some of the eligibility standards outlined in a July 1 HUD notice that explained how the agency would implement new hospital debt refinancing standards.
While pleased that the agency is moving toward refinancing that is not limited to new construction or renovation, the AHA said the proposed standards “raise baseline thresholds above those currently used for underwriting inherently riskier (from a real estate perspective) new construction projects,” and warns that they could “exclude hospitals critically in need of relief.” HUD is expected to propose a debt refinancing rule later this year.
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