April 14, 2020
Affordable Housing Alert
Author(s): Edward J. Campbell
HUD has issued interim guidance for its Section 232 insured health care programs to address limitations on third-party site visits in light of the COVID-19 pandemic. These temporary modifications to established processes for on-site inspections have been adopted by HUD’s Office of Residential Care Facilities (ORCF) in an effort to continue supporting the financing of the health care facilities during these difficult times. Mortgagee Letter 20-10 provides best practices and procedural modifications for third-party site inspections for Section 232 FHA insured health care facilities.
Procedural modifications apply to third-party inspections in cases where the inspector is unable to access the interior of the building and/or travel to the subject site. These modifications are applicable to inspections with an effective date within 45 days of the issuance of Mortgagee Letter 20-10. Site inspections covered by the Mortgagee Letter 20-10 include:
More detailed information on the required portfolio of pictures and documentation required to be reviewed in connection with preparation of a PCNA or an ESA can be found in Mortgage Letter 20-10 and its accompanying addendum.
ORCF is now waiving the requirement for a lender underwriter site visit in cases where the lender is unable to gain interior access to the building and/or travel to the project site. If a site visit cannot be conducted, the underwriter must view the portfolio of pictures for the project, as previously described, and conduct phone interviews with pertinent facility staff.
Due to the COVID-19 National Emergency, ORCF will no longer be granting waivers for appraisals that have expired.
ORCF is permitting monthly construction inspection meetings to be performed through a live virtual inspection of the building areas and construction that would normally be viewed in the inspection using a video app, in lieu of an in-person inspection. This applies to inspections to be conducted within 45 days of the issuance of Mortgagee Letter 20-10.
The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.
Affordable Housing Alert | 04.13.20