New Attorney – Timothy Rybicki
Congratulations to Tim Rybicki for passing the Illinois Bar and becoming a full time associate with us. Tim’s bio will be up shortly. In the meantime, his direct dial is 847-324-7982 and his email is TimR@sherlaw.net.
The end of REAC for 232 HUD loans.
The appropriations bill submitted by the U.S. House of Representatives Committee for Transportation Housing and Urban Development noted that inspections by the Real Estate Assessment Center (“REAC”) are duplicative and contradictory with already existing state and federal inspections. We have seen this on several deals where the Illinois Department of Public Health requires an action that REAC considers non-compliant. The Committee directed HUD to issue regulations limiting REAC inspections to only those facilities insured under Section 232 for which there are no state or federal inspections. REAC scores are currently relevant when refinancing under (a)(7) or when applying for an assignment of the HUD mortgage to a new property owner (TPA). The Committee directed FHA to provide a status report on implementation by December 31, 2011.
HUD Section 232 Skilled Nursing Facility Loans to Homes with MI Populations
There were recently two HUD mortgage defaults after Chicago nursing homes were a closed due to IDPH regulatory issues – another default on a far western suburban was due substantially to a lack of attention and resources. Partially in response to these defaults, HUD’s LEAN email blast of September 1, 2011 states that HUD mortgage insurance for nursing homes with mentally ill populations will not be approved except in “extraordinary circumstances” because of concerns that such loans pose a higher risk of default due to “inspection/regulatory regime weaknesses and concerns related to the stability of future funding sources”. Early conversations (and some reading between the lines) seem to indicate that no loans of this nature will be approved, but in the event a borrower can convince HUD of such extraordinary circumstances, the lender must address the concerns raised and such a loan must contain “significant risk mitigation” by means of a lower than normal loan to value, higher than normal debt service coverage ratio and a long term debt service reserve, if needed.
Welcome To The New Website
I put it off as long as I could. After years of insisting that I didn’t need a website because we obtain new clients from referrals, I acquiesced after an attorney mentioned that another law firm “didn’t even have a website”. Ouch! I have learned first hand that the existence of a quality website evidences a level of professionalism that cannot be ignored. So, here it is with information about the firm and the attorneys.