To date, the LEAN refinance and acquisition program has had reasonable success. Since its inception and through this past May 29, it has seen:

• 116 applications;
• 56 commitments; and
• 34 closings.

For new-construction, substantial-rehabilitation and Section 241(a)-supplemental loans, as of May 29, the program has seen:

• 23 applications;
• 11 market-acceptance letters;
• One commitment; and
• One closing.

LEAN features

There are many details related to LEAN processing for senior-housing health-care programs. Some highlights include:

• Only FHA-approved lenders with a Multifamily-Accelerated-Processing license and LEAN-approved underwriters can participate.
• HUD-assigned LEAN underwriters review the program's applications, rather than the previously employed method of using a group of technical reviewers.
• LEAN provides a central method of processing and a central set of rules.
• LEAN greatly reduces the overall timeframe for reviewing transactions and achieving a closing.
• A preapplication remains available for new-construction, substantial-rehabilitation and Section 241(a)-supplemental loans, but it is encouraged only when new beds are added to a facility.

Also, appraisal requirements are now in line with health-care-industry standards. These include:

• No proprietary earnings adjustment;
• Market cap rate;
• Use of market replacement reserves and a market management fee; and
• A land value determined by the highest and best use, instead of proposed use.

Also, for loans involving new construction, early commencement is available at any time once the lender starts the process. Blended-rate transactions have been phased out under LEAN and will now become either refinances or substantial-rehabilitation loans, depending on the specific transaction.

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