HUD 232 State Approvals

The nature of care provided by facilities covered under the HUD 232 loan program requires greater oversight than other FHA-insured mortgages. As such, approval must be granted from the state where the facility is located. Below are some of the state-required approvals:

Certificate of Need (CON)

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Some states require a new CON for HUD 232 projects which is submitted to OCRF by the lender. If a state does not require a new CON for acquisition, refinancing, and substantial rehabilitation projects, a lender must provide a copy of the original CON and a state-issued statement that a new CON is not required.

If required, facilities must obtain a CON from the appropriate state agency. If the state cannot or does not do the above, a lender must provide the OCRF with an acceptable alternative which includes financial and market information.

Market Need and Feasibility Study

In the absence of an authorized state agency, the state can perform an independent market need and feasibility study. Afterwards, the borrower can reimburse the state for the study’s cost. This study must assess market needs, provide demographic details, discuss the project’s impact on nearby healthcare projects, and discuss available healthcare alternatives (among other things). In addition, this study must meet American Institute of Certified Public Accountants standards.