94-2466. Assisted Living Facilities Under Section 232  

  • [Federal Register Volume 59, Number 23 (Thursday, February 3, 1994)]
    [Unknown Section]
    [Page 0]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 94-2466]
    
    
    [[Page Unknown]]
    
    [Federal Register: February 3, 1994]
    
    
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    DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
    24 CFR Part 232
    
    [Docket No. R-94-1695; FR-3374-P-01]
    RIN 2502-AF89
    
     
    
    Assisted Living Facilities Under Section 232
    
    AGENCY: Office of the Assistant Secretary for Housing--Federal Housing 
    Commissioner, HUD.
    
    ACTION: Proposed rule.
    
    -----------------------------------------------------------------------
    
    SUMMARY: This rule proposes to amend the regulations to implement 
    statutory authority to insure assisted living facilities for the care 
    of frail elderly persons, as authorized by section 511 of the Housing 
    and Community Development Act of 1992. This proposed rule would also 
    expand current regulations to include the refinancing of conventional 
    (non-FHA insured) nursing homes, intermediate care facilities, assisted 
    living facilities or board and care homes under section 223(f) of the 
    National Housing Act, and to insure additions to existing such 
    projects. Finally, this proposed rule would make conforming changes 
    required by the Housing and Community Development Act of 1992, and 
    would make minor technical changes to the regulations to remove 
    ambiguity and reflect long-standing Departmental policy.
    
    DATES: Comments due date: April 4, 1994.
    
    ADDRESSES: Interested persons are invited to submit comments regarding 
    this proposed rule to the Rules Docket Clerk, room 10276, Office of 
    General Counsel, Department of Housing and Urban Development, 451 
    Seventh Street, SW., Washington, DC 20410-0500. Comments should refer 
    to the above docket number and title. A copy of each comment submitted 
    will be available for public inspection and copying between 7:30 a.m. 
    and 5:30 p.m. weekdays at the above address. Facsimile (FAX) comments 
    are not acceptable.
    
    FOR FURTHER INFORMATION CONTACT: Linda D. Cheatham, Director, Office of 
    Insured Multifamily Housing Development, 451 Seventh Street, SW, 
    Washington, DC 20410-0500, telephone: (202) 708-3000; the 
    telecommunications device for the deaf (TDD) telephone number is (202) 
    708-4594. (These are not toll-free numbers.)
    
    SUPPLEMENTARY INFORMATION:
    
    I. Background
    
        Currently, under section 232 of the National Housing Act (NHA), and 
    the accompanying regulations at 24 CFR part 232, the Department insures 
    mortgages for nursing homes, intermediate care facilities, and board 
    and care homes. Section 511 of the Housing and Community Development 
    Act of 1992, Public Law 102-550, approved October 28, 1992 (1992 HCD 
    Act), amends section 232 of the NHA by authorizing FHA mortgage 
    insurance for assisted living facilities. In compliance with section 
    511 of the 1992 HCD Act, this proposed rule would revise 24 CFR part 
    232 to make assisted living facilities for the care of the frail 
    elderly eligible for mortgage insurance.
        Under the NHA and this proposed rule, the term ``assisted living 
    facility'' means a public facility, proprietary facility, or facility 
    of a private nonprofit corporation that:
        (1) Is licensed and regulated by the State or if there is no State 
    law providing for such licensing and regulation by the State, by the 
    municipality or other political subdivision in which the facility is 
    located;
        (2) Makes available to residents supportive services to assist the 
    residents in carrying out activities of daily living such as bathing, 
    dressing, eating, getting in and out of bed or chairs, walking, going 
    outdoors, using the toilet, laundry, home management, preparing meals, 
    shopping for personal items, obtaining and taking medications, managing 
    money, using the telephone, or performing light or heavy housework, and 
    which may make available to residents home health care services, such 
    as nursing, and therapy; and
        (3) Provides separate dwelling units for residents, each of which 
    may contain a full kitchen or bathroom, and includes common rooms and 
    other facilities appropriate for the provision of supportive services 
    to residents of the facility.
        Under the NHA and this proposed rule, the term ``frail elderly'' 
    has the same meaning as the term in section 802(k) of the Cranston-
    Gonzalez National Affordable Housing Act (NAHA). Section 802(k)(8) 
    defines ``frail elderly'' as meaning an elderly person who is unable to 
    perform at least three activities of daily living adopted by the 
    Secretary. (The term ``activity for daily living'' means an activity 
    regularly necessary for personal care and includes bathing, dressing, 
    eating, getting in and out of bed and chairs, walking, going outdoors, 
    and using the toilet.)
        An assisted living facility may be free-standing, or part of a 
    complex that includes a nursing home, an intermediate care facility, a 
    board and care facility or any combination of the above. However, in 
    compliance with section 511 of the 1992 HCD Act, this proposed rule 
    would not authorize mortgage insurance for an assisted living facility 
    unless the Secretary determines that the level of financing acquired by 
    the mortgagor and any other resources available for the facility are 
    sufficient to ensure that the facility contains dwelling units and 
    facilities for the provision of supportive services; the mortgagor 
    provides satisfactory assurances that no dwelling unit in the facility 
    will be occupied by more than one person without the consent of all 
    such occupants; and the appropriate state licensing agency for the 
    state, municipality or other political subdivision in which the 
    facility is or is to be located provides adequate assurances that the 
    facility will comply with any applicable standards and requirements for 
    such facilities.
        Section 511 of the 1992 HCD Act also amends section 223(f) of the 
    NHA. In accordance with section 511, this proposed rule would authorize 
    the refinancing of an existing assisted living facility. This proposed 
    rule would also expand the section 232 program to include the 
    refinancing of conventional projects under section 223(f) of the 
    National Housing Act. Section 409 of the Housing and Community 
    Development Act of 1987 amended section 223(f) of the NHA to cover the 
    refinancing of existing debt of an existing nursing home, existing 
    intermediate care facility, existing board and care facility 
    (collectively referred to as ``residential care facility), or any 
    combination of the above.
        However, after section 409 of the Housing and Community Development 
    Act of 1987 was enacted, the Department only implemented section 409 
    for existing FHA-insured residential care facilities. (On August 31, 
    1988 (53 FR 33735), the Department added insurance for existing 
    residential care facilities that are currently FHA-insured.) HUD's 
    decision not to implement section 409 in its entirety was based on the 
    fact that HUD had no experience in underwriting existing residential 
    care facilities. By limiting the insurance for refinanced transactions 
    to currently FHA-insured projects with a known track record (annual 
    inspections, availability of audited financial statements, etc.), the 
    Department could more adequately protect the General Insurance Fund.
        However, the House Conference Report for the NAHA (H.R. 101-943, 
    101st Cong. 2d Sess, at 524) emphasizes Congress's intent that the 
    Department fully implement section 409 to include conventional (non-FHA 
    insured) projects. Accordingly, the Department is now expanding the 
    program to include mortgages for the purchase and refinancing of 
    existing residential care facilities with non-FHA insured mortgages 
    under section 232 pursuant to section 223(f).
        To implement further statutory changes, this proposed rule would 
    make projects consisting of an addition to an existing (non-FHA 
    insured) nursing home, board and care facility, intermediate care 
    facility, or assisted living facility eligible for mortgage insurance 
    under section 232 of the NHA. Moreover, this proposed rule would 
    increase the loan-to-value ratio for private nonprofit mortgagors from 
    90 percent to 95 percent, and would make conforming changes for fire 
    safety equipment for assisted living facilities.
        In addition to statutory changes, this proposed rule would make 
    minor technical amendments to part 232. Specifically, this proposed 
    rule would move the definition of substantial rehabilitation from 
    Sec. 232.902(b) to the definitional section of the regulations (section 
    232.1), and revise the definition of substantial rehabilitation to 
    reflect the requirement that rehabilitation must involve two or more 
    major building components. The current wording ``more than one building 
    component'' could be erroneously interpreted.
        Moreover, the word ``additions'' would be removed from the 
    definition of substantial rehabilitation. The placement of 
    ``additions'' in Sec. 232.902(b) of the existing regulations has caused 
    confusion because it incorrectly suggests that the cost of an addition 
    to an existing building can be used in calculating the 15 percent of 
    value criterion. The term ``additions,'' as used in Sec. 232.902(b) was 
    intended to mean an addition of a new project element in a residential 
    care facility, such as a whirlpool bath, safety railing, etc. The 
    Department wants to emphasize that these revisions to the definition of 
    substantial rehabilitation do not reflect a policy change, but are 
    technical changes which reflect the Department's long standing 
    administrative policy.
        Finally, this proposed rule would increase the loan-to-value ratio 
    for private nonprofit mortgagors from 85 percent to 90 percent for the 
    purchase or refinance of a residential care facility which does not 
    involve substantial rehabilitation.
    
    II. Other Matters
    
    A. Executive Order 12866
    
        This proposed rule was reviewed by the Office of Management and 
    Budget (OMB) under Executive Order 12866, Regulatory Planning and 
    Review. Any changes made to the proposed rule as a result of that 
    review are clearly identified in the docket file, which is available 
    for public inspection in the office of the Department's Rules Docket 
    Clerk, room 10276, 451 Seventh Street SW., Washington DC.
    
    B. Regulatory Flexibility Act
    
        The Secretary in accordance with the Regulatory Flexibility Act (5 
    U.S.C. 605(b)), has reviewed and approved this proposed rule, and in so 
    doing certifies that this proposed rule does not have a significant 
    economic impact on a substantial number of small entities. 
    Specifically, the proposed rule expands eligible projects for FHA 
    mortgage insurance to include assisted living facilities, and additions 
    to existing projects, neither of which are expected to have a 
    significant economic impact on a substantial number of small entities.
    
    C. Environmental Impact
    
        A Finding of No Significant Impact with respect to the environment 
    has been made in accordance with HUD regulations at 24 CFR part 50, 
    which implement section 102(2)(C) of the National Environmental Policy 
    Act of 1969. The finding is available for public inspection during 
    regular business hours in the Office of General Counsel, the Rules 
    Docket Clerk, room 10276, 451 Seventh Street SW., Washington, DC 20410.
    
    D. Executive Order 12612, Federalism
    
        The General Counsel, as the Designated Official under section 6(a) 
    of Executive order 12612, Federalism, has determined that the policies 
    contained in this proposed rule will not have substantial direct 
    effects on states or their political subdivisions, or the relationship 
    between the Federal government and the states, or on the distribution 
    of power and responsibilities among the various levels of government. 
    Specifically, the proposed rule is directed to owners of residential 
    care facilities, and will not impinge upon the relationship between the 
    Federal Government and State and local governments. As a result, the 
    proposed rule is not subject to review under the order.
    
    E. Executive Order 12606, The Family
    
        The General Counsel, as the Designated Official under Executive 
    Order 12606, The Family, has determined that this proposed rule does 
    not have potential for significant impact on family formation, 
    maintenance, and general well-being, and, thus, is not subject to 
    review under the order. No significant change in existing HUD policies 
    or programs will result from promulgation of this proposed rule, as 
    those policies and programs relate to family concerns.
    
    F. Regulatory Agenda
    
        This proposed rule was listed as item no. 1510 in the Department's 
    Semiannual Agenda of Regulations published on October 25, 1993 (58 FR 
    56402, 56424) in accordance with Executive Order 12866 and the 
    Regulatory Flexibility Act.
    
    G. Paperwork Reduction Act
    
        The amendments that would be made to 24 CFR part 232 by this 
    proposed rule would not add any additional information collection 
    burden than that already approved by the Office of Management and 
    Budget under the Paperwork Reduction Act.
    
        The Catalog of Federal Domestic Assistance program number is 
    14.129.
    
    List of Subjects in 24 CFR Part 232
    
        Fire prevention, Health facilities, Loan programs--health, Loan 
    programs--housing and community development, Mortgage insurance, 
    Nursing homes, Reporting and recordkeeping requirements.
    
        Accordingly, 24 CFR part 232 would be amended as follows:
        1. The authority citation for 24 CFR part 232 would continue to 
    read as follows:
    
        Authority: 12 U.S.C. 1715b, 1715w, 1715z(9); 42 U.S.C. 3535(d).
    
        2. The title of 24 CFR part 232 would be revised to read as 
    follows:
    
    PART 232--MORTGAGE INSURANCE FOR NURSING HOMES, INTERMEDIATE CARE 
    FACILITIES, BOARD AND CARE HOMES, AND ASSISTED LIVING FACILITIES.
    
        3. Section 232.1 would be amended by revising paragraph (j) and by 
    adding new paragraphs (m), (n), and (o) to read as follows:
    
    
    Sec. 232.1  Definitions.
    
    * * * * *
        (j) Project means a nursing home, intermediate care facility, 
    assisted living facility or board and care home, or any combination of 
    nursing home, intermediate care facility, assisted living facility or 
    board and care home, approved by the Commissioner under provisions 
    under this subpart. A project may include such additional facilities as 
    may be authorized by the Secretary for the nonresident care of elderly 
    individuals and others who are able to live independently but who 
    require care during the day.
    * * * * *
        (m) Assisted Living Facilities means a public facility, proprietary 
    facility, or facility of a private nonprofit corporation that is used 
    for the care of the frail elderly, and that:
        (1) Is licensed and regulated by the State or if there is no State 
    law providing for such licensing and regulation by the State, by the 
    municipality or other political subdivision in which the facility is 
    located;
        (2) Makes available to residents supportive services to assist the 
    residents in carrying out activities of daily living such as bathing, 
    dressing, eating, getting in and out of bed or chairs, walking, going 
    outdoors, using the toilet, doing laundry, preparing meals, shopping 
    for personal items, obtaining and taking medications, managing money, 
    using the telephone, or performing light or heavy housework, and which 
    may make available to residents home health care services, such as 
    nursing and therapy;
        (3) Provides separate dwelling units for residents, each of which 
    may contain a full kitchen or bathroom, and includes common rooms and 
    other facilities appropriate for the provision of supportive services 
    to residents of the facility.
        (n) Frail elderly persons means an elderly person who is unable to 
    perform at least three activities of daily living. Activity of daily 
    living means an activity necessary on a regular basis for personal care 
    and includes bathing, dressing, eating, getting in and out of beds and 
    chairs, walking, going outdoors and using the toilet.
        (o) Substantial rehabilitation consists of repairs, replacements 
    and improvements:
        (1) The cost of which exceeds the greater of fifteen percent (15%) 
    of the Project's value after completion of all repairs, replacements, 
    and improvements; or
        (2) That involve the replacement of two or more major building 
    components. For purposes of this definition, the term major building 
    component includes:
        (i) Roof structures;
        (ii) Ceiling, wall, or floor structures;
        (iii) Foundations;
        (iv) Plumbing systems;
        (v) Heating and air conditioning systems; and
        (vi) Electrical systems.
        4. A new Sec. 232.7 would be added to the end of the undesignated 
    center heading, ``APPLICATION AND CERTIFICATION'', in subpart A, to 
    read as follows:
    
    Subpart A--Eligibility Requirements
    
    * * * * *
    
    Application and Certification
    
    * * * * *
    
    
    Sec. 232.7  Additional requirements for assisted living facilities.
    
        In the case of an assisted living facility, or any such facility 
    combined with any other home or facility, the Secretary shall not 
    insure any mortgage under this part unless:
        (a) The Secretary determines that the level of financing acquired 
    by the mortgagor and any other resources available for the facility 
    will be sufficient to ensure that the facility contains the dwelling 
    units and facilities for the provision of supportive services in 
    accordance with Sec. 232.1(m);
        (b) The mortgagor provides assurances satisfactory to the Secretary 
    that no dwelling unit in the facility will be occupied by more than one 
    person without the consent of all such occupants; and
        (c) The appropriate state licensing agency for the state, 
    municipality or other political subdivision in which the facility is or 
    is to be located provides such assurances as the Secretary considers 
    necessary that the facility will comply with any applicable standards 
    and requirements for such facilities.
        5. Section 232.30 would be revised to read as follows:
    
    
    Sec. 232.30  Maximum mortgage amounts for new construction and 
    substantial rehabilitation.
    
        The mortgage for a project involving proposed new construction or 
    substantial rehabilitation by a profit motivated mortgagor shall 
    involve a principal obligation not in excess of 90 percent of the 
    Commissioner's estimate of the value of the project, including 
    equipment to be used in the operation, when the proposed improvements 
    are completed and the equipment is installed. The mortgage for a 
    project involving proposed new construction or substantial 
    rehabilitation by a private nonprofit mortgagor shall involve a 
    principal obligation not in excess of 95 percent of such value, 
    including equipment.
        6. Section 232.32 would be amended by revising the section heading, 
    the introductory paragraph, and paragraphs (b) and (c) to read as 
    follows:
    
    
    Sec. 232.32  Adjusted mortgage amount--substantial rehabilitation 
    projects.
    
        In addition to the limitations of Sec. 232.30, a mortgage having a 
    principal amount computed in compliance with the applicable provisions 
    of this subpart, and which involves a project to be substantially 
    rehabilitated, shall be subject to the following additional 
    limitations:
    * * * * *
        (b) Property subject to existing mortgage. If the mortgagor owns 
    the project subject to an outstanding indebtedness, which is to be 
    refinanced with part of the insured mortgage, the maximum mortgage 
    amount shall not exceed:
        (1) The Commissioner's estimate of the cost of the repair or 
    rehabilitation; plus
        (2) such portion of the outstanding indebtedness as does not exceed 
    90 percent (95 percent for a private nonprofit mortgagor) of the 
    Commissioner's estimate of the fair market value of such land and 
    improvements prior to the repair or rehabilitation; or
        (c) Property to be acquired. If the project is to be acquired by 
    the mortgagor and the purchase price is to be financed with a part of 
    the insured mortgage, the maximum mortgage amount shall not exceed 90 
    percent (95 percent for a private nonprofit mortgagor) of:
        (1) The Commissioner's estimate of the cost of the repair or 
    rehabilitation; and
        (2) The actual purchase price of the land and improvements, but not 
    in excess of the Commissioner's estimate of the fair market value of 
    such land and improvements prior to the repair or rehabilitation.
        7. In Sec. 232.39, a new paragraph (c) would be added as follows:
    
    
    Sec. 232.39  Construction standards.
    
    * * * * *
        (c) An assisted living facility shall be one or more free-standing 
    structures (architecturally independent of any other structure), an 
    entity of an existing structure such as a board and care home, or 
    connected to a main building or identifiable separate portions of one 
    or more free-standing structures containing not fewer than five 
    residential efficiency, one-bedroom or two-bedroom units. Residential 
    unit means a separate apartment or unit for one or more persons. An 
    assisted living unit must contain a full bathroom and may contain a 
    kitchenette or a full kitchen depending on the design and market. A 
    kitchen is not required in each unit; however, the facility must have a 
    central kitchen and group dining facilities. The assisted living 
    facility or designated portion of the structure shall not contain any 
    nursing home or intermediate care beds, but may contain board and care 
    beds. In addition, assisted living facilities must meet State and local 
    licensing requirements, governmental building codes, and other 
    occupancy standards.
        8. A new Sec. 232.42a would be added to subpart A to read as 
    follows:
    
    
    Sec. 232.42a  Additions to existing projects.
    
        A mortgage which covers an addition to an existing project is 
    eligible for insurance under this part, provided that, if there is a 
    mortgage on the existing project, such mortgage must be refinanced 
    under this part. The mortgage amount for an addition in all cases shall 
    be determined under section 232.30. If the existing project requires 
    substantial rehabilitation then the mortgage amount for refinancing the 
    existing facility shall be determined under Secs. 232.30 and 232.32. If 
    the existing project does not require substantial rehabilitation then 
    the mortgage amount for refinancing the existing facility shall be 
    determined under Sec. 232.903. The resulting determination for the 
    mortgage on the addition and the resulting determination for the 
    refinanced mortgage on the existing project must be blended and both 
    the addition and the existing project must be subject to the same 
    mortgage.
        9. Section 232.89 would be revised to read as follows:
    
    
    Sec. 232.89  Reduction in mortgage amount.
    
        If the principal obligation of the mortgage exceeds 90 percent (95 
    percent for a private nonprofit mortgagor) of the total amount as shown 
    by the certificate of actual cost plus the value of the land (the cost 
    shown by the certificate of actual cost in rehabilitation cases), the 
    mortgage shall be reduced by the amount of such excess prior to final 
    endorsement for insurance.
        10. Section 232.90 would be amended by revising the section 
    heading, the introductory paragraph, and paragraphs (b) and (c) to read 
    as follows:
    
    
    Sec. 232.90  Substantial rehabilitation projects.
    
        In the event the mortgage is to finance substantial rehabilitation, 
    the mortgagor's actual cost of the substantial rehabilitation may 
    include the items of expense permitted by new construction in 
    accordance with this part and the applicable cost certification 
    procedure described therein will be required; provided such mortgage 
    shall be subject to the following limitations:
    * * * * *
        (b) Property subject to existing mortgage. If the insured mortgage 
    is to include the cost of refinancing an existing mortgage acceptable 
    to the Commissioner, the amount of the existing mortgage or 90 percent 
    (95 percent for a private nonprofit mortgagor) of the Commissioner's 
    estimate of the fair market value of the land and existing improvements 
    prior to the repair or rehabilitation, whichever is the lesser, shall 
    be added to the actual cost of the repair or rehabilitation. If the 
    principal obligation of the insured mortgage exceeds the total amount 
    thus obtained, the mortgage shall be reduced by the amount of such 
    excess, prior to final endorsement for insurance.
        (c) Property to be acquired. If the mortgage is to include the cost 
    of land and improvements, and the purchase price thereof is to be 
    financed with part of the mortgage proceeds, the purchase price or the 
    Commissioner's estimate of the fair market value of land and existing 
    improvements prior to repair or rehabilitation, whichever is the 
    lesser, shall be added to the actual cost of the repair or 
    rehabilitation. If the principal obligation of the insured mortgage 
    exceeds the applicable 90 percent (95 percent for a private nonprofit 
    mortgagor) of the total amount thus obtained, the mortgage shall be 
    reduced by the amount of such excess prior to final endorsement for 
    insurance.
        11. Section 232.500 would be amended by revising the introductory 
    paragraph (c)(1), and paragraph (d), to read as follows:
    
    
    Sec. 232.500  Definitions.
    
    * * * * *
        (c)(1) Fire safety equipment means equipment that is purchased, 
    installed, and maintained in a nursing home, intermediate care 
    facility, assisted living facility, or board and care home and that 
    meets the following standards for the applicable occupancy:
    * * * * *
        (d) Fire safety loan means any form of secured or unsecured 
    obligation determined by the Commissioner to be eligible for insurance 
    under this subpart and, in the case of an assisted living facility or a 
    board and care home, made with respect to such a home located in a 
    State which the Secretary has determined is in compliance with the 
    provisions of section 1616(e) of the Social Security Act.
    * * * * *
        12. Section 232.505 would be amended by revising paragraph (b) to 
    read as follows:
    
    
    Sec. 232.505  Application and application fee.
    
    * * * * *
        (b) Filing of application. An application for insurance of a fire 
    safety loan for a nursing home, intermediate care facility, assisted 
    living facility or board and care home shall be submitted on an 
    approved HUD form by an approved lender and by the owners of the 
    project to the local HUD office.
    * * * * *
        13. Section 232.615 would be amended by revising paragraph (b) to 
    read as follows:
    
    
    Sec. 232.615  Eligible borrowers.
    
    * * * * *
        (b) Also eligible as a borrower shall be a profit or nonprofit 
    entity which owns an assisted living facility or board and care home 
    for which HUD has determined that the installation of fire safety 
    equipment is approvable under the definition contained in 
    Sec. 232.500(c).
        14. Section 232.901 would be revised to read as follows:
    
    
    Sec. 232.901  Mortgages covering existing projects are eligible for 
    insurance.
    
        A mortgage executed in connection with the purchase or refinancing 
    of an existing project without substantial rehabilitation may be 
    insured under this subpart pursuant to section 223(f) of the Act. A 
    mortgage insured pursuant to this subpart shall meet all other 
    requirements of this part except as expressly modified by this subpart.
        15. Section 232.902 would be revised to read as follows:
    
    
    Sec. 232.902  Eligible project.
    
        Existing projects (with such repairs and improvements as are 
    determined by the Commissioner to be necessary) are eligible for 
    insurance under this subpart. The project must not require substantial 
    rehabilitation and three years must have elapsed from the date of 
    completion of construction or substantial rehabilitation of the 
    project, or from the beginning of occupancy, whichever is later, to the 
    date of application for insurance. In addition, the project must have 
    attained sustaining occupancy (occupancy that would produce income 
    sufficient to pay operating expenses, annual debt service and reserve 
    fund for replacement requirements) as determined by the Commissioner, 
    before endorsement of the project for insurance; alternatively, the 
    mortgagor must provide an operating deficit fund at the time of 
    endorsement for insurance, in an amount, and under an agreement, 
    approved by the Commissioner.
        16. Section 232.903 would be amended by revising the first sentence 
    in the introductory paragraph (a), the first sentence in paragraph (b), 
    and the first sentence in the introductory paragraph (d), to read as 
    follows:
    
    
    Sec. 232.903  Maximum mortgage limitations.
    
    * * * * *
        (a) Value limit. The mortgage shall involve a principal obligation 
    of not in excess of eighty-five percent (85%) for a profit motivated 
    mortgagor (ninety percent (90%) for a private nonprofit mortgagor) of 
    the Commissioner's estimate of the value of the project, including 
    major movable equipment to be used in its operation and any repairs and 
    improvements. * * *
    * * * * *
        (b) Debt service limit. The insured mortgage shall involve a 
    principal obligation not in excess of the amount that could be 
    amortized by eighty-five percent (85%) for a profit motivated mortgagor 
    (ninety percent (90%) for a private nonprofit mortgagor) of the net 
    projected project income available for payment of debt service. * * *
    * * * * *
        (d) Project to be acquired--additional limit. In addition to 
    meeting the requirements of paragraphs (a) and (b) of this section, if 
    the project is to be acquired by the mortgagor and the purchase price 
    is to be financed with the insured mortgage, the maximum amount must 
    not exceed eighty-five percent (85%) for a profit motivated mortgagor 
    (ninety percent (90%) for a private nonprofit mortgagor) of the cost of 
    acquisition as determined by the Commissioner. * * *
    * * * * *
        Dated: January 21, 1994.
    Nicolas P. Retsinas,
    Assistant Secretary for Housing--Federal Housing Commissioner.
    [FR Doc. 94-2466 Filed 2-2-94; 8:45 am]
    BILLING CODE 4210-27-P
    
    
    

Document Information

Published:
02/03/1994
Department:
Housing and Urban Development Department
Entry Type:
Uncategorized Document
Action:
Proposed rule.
Document Number:
94-2466
Dates:
Comments due date: April 4, 1994.
Pages:
0-0 (1 pages)
Docket Numbers:
Federal Register: February 3, 1994, Docket No. R-94-1695, FR-3374-P-01
RINs:
2502-AF89
CFR: (16)
24 CFR 232.902(b)
24 CFR 232.500(c)
24 CFR 232.1
24 CFR 232.7
24 CFR 232.30
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