In last month’s edition, we asserted that one year and change after the 2016 election, under the new administration HUD’s multifamily and healthcare mortgage insurance platforms continued to function effectively. This month, we provide some data from HUD to support our claim.
- FY 2017/16 LEAN (Healthcare) Production: $3.4 Billion / $2.8 Billion
- Average Healthcare Loan Size in FY 2017 – $11 million
- FY 2017/16 Multifamily Production: $14.3 Billion / $10.0 Billion
- Average Multifamily Construction Loan Size in FY 2017 – $22.1 Million
- Average Multifamily Refinancing Loan Size in FY 2017 – $13.3 Million
Dollar volumes above represent loans closed, not mortgage insurance commitments issued. FY stands for Fiscal Year, which runs from October 1 to September 30. The LEAN and Multifamily programs recorded solid increases in production from FY 2016, again testament to competitive interest rates for HUD-insured loans and improved processing timeframes and standardized underwriting platforms. A closer look at the numbers for FY 2017 show what types of deals dominated the mortgage insurance landscape last year.
- Almost 92% of LEAN Healthcare loans were for existing skilled nursing facilities (SNFs) and assisted living facilities (ALFs).
- About $4.5 billion of the total of $14.3 billion in multifamily production was for New Construction/ Substantial Rehabilitation.
Our takeaway: construction risk is more prevalent under LEAN, but multifamily risk may be increasing, especially in certain “hot” markets that are experiencing a lot of new supply coming on line. In 2017, about 340,000 new multifamily units were constructed nationally, a reportedly record year.
Next month marks the halfway point of HUD’s FY 18 – stay tuned to our newsletter for an update on LEAN and multifamily activity, and what the numbers are telling us about HUD’s direction and priorities in Year 2 of the Trump administration.