Remember that HUD can be made to be a guaranteed outcome because
of the statutory requirements that fall on HUD that would not fall on a
commercial lender or institutional placement (i.e.: the commercial bank
and/or institutional investor can say "no" for whatever reason
they like, while HUD cannot).
Commercial banks are players in senior housing, but you should
only consider them for permanent financing because the commercial bank
will tie up all of your assets (called
"cross-collateralization") to support the construction loan
and require personal recourse on the loan (HUD is non-recourse!).
Commercial banks are supposedly faster at underwriting a transaction but
our experience is that underwriting takes a while whether you are
dealing with HUD or a commercial banker. The commercial bank may
offer a more competitive interest rate than a HUD mortgagee, but the
collateral requirements make commercial bank loans for anything other
than permanent financing hard to swallow.
Institutional placements represent the highest amount of practical
leverage - the capital markets are deciding the issue based on a myriad
of factors and issues. Timing is important. Most
institutional placements are non-recourse and do not require the
cross-collateralization provisions that commercial banks live on.
Institutional placements can take as long as HUD, but can end up giving
you a greater amount of financial investment leverage depending upon how
your capital funding plan is structured (we hope you contact Rainmaker
for your structured finance needs).
If you are not sure how to proceed, then please do contact a
RMC consultant.
