On September 29, 2009 we closed a $17,384,389 Section 232 loan for the Hebrew Hospital Home of Westchester. The deal was structured as a note modification and consolidation of the Home’s two existing FHA insured obligations: an $18,432,000 Section 232 loan issued in 1996 to finance construction of a skilled nursing facility in Valhalla, NY and a $2,698,000 supplemental loan issued in 2005 to finance additional construction costs incurred in connection with the 1996 project. Herbert J. Sims & Co. was the senior manager of the 1996 tax-exempt bond issue that funded the $18,432,000 loan and Sims Mortgage Funding, Inc. structured and placed the 2005 taxable debt. The blended interest rate on the FHA-insured notes was 6.59%.

Sims Mortgage Funding, Inc. acted as financial advisor to the Home by 1) conducting an analysis of the feasibility of prepaying their 1996 and 2005 debt, 2) making formal proposals to HUD and the 1996 and 2005 debt issuer to modify and consolidate the FHA-insured loans and to transfer the underlying “collateral” for the 1996 and 2005 debt (the FHA-insured notes) to the new loan upon prepayment, and 3) arranging for the new loan funding, a taxable GNMA mortgage backed security. HUD approved our note modification request in 7 days!

Proceeds from the modified loan were used to prepay the 1996 tax exempt bonds and 2005 taxable debt, cover all transaction costs and new loan placement fees, and fund a 6.5 month debt service escrow that will be used to reimburse the Home for its debt service. As a result of the note modification, total interest costs were reduced by approximately $4.3 million.