HUD Section 232 Final Rule on Partial Payment of Claims

The Department of Housing and Urban Development (HUD) has issued a final rule, effective January 7, 2013, to establish the criteria and process by which the Federal Housing Administration (FHA) will accept and pay a partial payment of a claim under the FHA Section 232 mortgage insurance program, which insures mortgage loans to facilitate the construction, substantial rehabilitation, purchase, and refinancing of nursing homes, intermediate care facilities, board and care homes, and assisted-living facilities. Through acceptance and payment of a partial payment of claim, FHA pays the lender a portion of the unpaid principal balance and recasts a portion of the mortgage under terms and conditions determined by FHA, as an alternative to the lender assigning the entire mortgage to HUD. Partial payment of claim also allows FHA-insured healthcare projects to continue operating and providing services. To view the entire rule, go to the Federal Register website.