On September 30, 2009 we closed a $6,353,000 loan for Nazareth Inn, a 150 unit elderly housing project in New Orleans, LA and a $5,580,000 loan for Nazareth Inn II, a 120 unit elderly project located next door. The loans were insured under the Section 221(d)(4) substantial rehabilitation program and were structured on an “insurance upon completion” basis. The commitments for mortgage insurance, issued by HUD in December 2007, was part of a complex financing that included low-income housing tax credits and short-term bank debt that the borrower used to acquire the project in January 2008. After the rehabilitation was completed and the contractor and borrower certified their costs to HUD earlier this year, we obtained HUD approval for mortgage increases on both loans totaling approximately $600,000; with the higher loan amounts, the sponsor was able to recover some of the additional rehabilitation costs it incurred without having to commit additional equity.

The “Nazareths” are sponsored by Providence Community Housing, a not-for-profit organization established in 2006 for the purpose of rebuilding housing in New Orleans in the wake of Hurricane Katrina. For additional information about our ongoing work with Providence and our initial efforts on the Nazareth financings, please see our posts Four Years After Katrina: The Restoration and Renewal Continues in our News section and Sims Helps New Orleans Seniors Return Home With Tax Credits and HUD Financing in our Case Studies section.