The Application Process
All hospitals considering Section 242 mortgage insurance will need to understand HUD’s application process. The steps
in this process are described below.
Preliminary Review
- The first step is for HUD to perform a preliminary review of the hospital and the proposed project with information
provided by the hospital and DPMC.
Pre-Application Meeting
- If the hospital passes the preliminary review, DPMC and representatives of the hospital are invited to HUD headquarters
for a pre-application meeting.
Application Submission
- Should the hospital have a satisfactory pre-application meeting, DPMC and hospital may develop an application according to
HUD guidelines. For information on the contents of an application, please refer to the Applicant’s Guide.
Underwriting
- Once HUD/HHS receives a complete application, a client service team, made up of HUD and HHS staff members, performs an
underwriting analysis of the proposed application.
Commitment
- If the hospital and project meet HUD’s requirements and the FHA Commissioner approves the application, a commitment for
mortgage insurance is issued.
Closing
- Following commitment, HUD counsel assists DPMC, hospital and their legal representatives to close the loan.
Construction
- During construction, HHS staff members monitor and approve loan draws and perform monthly site visits.
Final Endorsement
- Once construction is completed and the final draw has been made, the final mortgage amount is established and amortization
begins.
