HUD Archives: News Releases

HUD No. 04-020
Lemar Wooley
(202) 708-0685

For Release
March 8, 2004

Health care facilities program experiencing unprecedented growth

WASHINGTON - When the small community of Le Grange, Texas was looking for help to finance a new $28 million medical facility, they found their money saving solution with the Federal Housing Administration, the same agency more and more communities are now turning to for help to build, modernize or expand existing medical facilities. In FY 2003 alone, FHA insured more than $240 million in mortgage loans for seven hospitals in five different states.

Since the program began in 1968, FHA has insured over 320 hospital mortgages in 41 states and Puerto Rico, for a total in excess of $9.4 billion. Clients range from small rural facilities to some of the nation's top teaching hospitals. FHA insurance enables hospitals to enhance their creditworthiness because the United States Government backs their debt.

Housing and Urban Development contributes to the physical health of communities across the nation through its Section 242 program that provides mortgage insurance for hospital construction projects. The program also contributes to the financial well being of communities by helping to create construction jobs, as well as giving hospitals the support needed to contribute to the local economy.

"Often, hospitals insured under Section 242 represent a critical component of the local economy," said HUD Acting Secretary Alphonso Jackson. "These hospitals play roles reaching far beyond providing health care services. It is not uncommon to find they are among a region's largest employers and bring significant purchasing power to the communities in which they are located."

"Insuring a $24.2 million mortgage for St. Mark's Medical Center in La Grange will save them $4.6 million over the life of the loan and create 125 construction jobs," said John C. Weicher, Assistant Secretary for Housing and Federal Housing Commissioner.

Due to the up to 99% loan backing by the federal government, Section 242 hospital projects benefit from enhanced credit ratings, which result in lower mortgage interest rates.

HUD is currently insuring 69 Hospital Mortgage Loans in 14 states and Puerto Rico. Another 34 hospitals in 24 states have loans in the pre-application, review phase. Of those 34 hospitals, 13 are Critical Access Hospitals located in rural areas of 12 different states.

Smaller, rural hospitals also benefit from the program. In May of 2003, HUD announced the first ever commitments under the Section 242 Hospital Insurance program for rural Critical Access Hospitals. The Critical Access Hospital (CAH) program is operated by the Department of Health and Human Services and was authorized by the Congress as an amendment to the Social Security Act in 1997. CAH certification grants hospitals with 25 or fewer beds and located 35 miles from the nearest hospital (15 miles in mountainous terrain) advantages in their Medicare reimbursements, including cost-based payments.

"The Health Care Facilities program has long been associated with large, urban hospitals," explained Jackson. "Our new commitment to rural Critical Access Hospitals is important to ensuring that people in rural communities have access to this program to improve health care delivery. We look forward to the continued expansion of the program into rural America and hope to consider many more of these vitally important hospitals in the coming years."

HUD is the nation's housing agency committed to increasing homeownership, particularly among minorities; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development as well as enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet and


Editors note: For additional information on HUD's Section 242 Program, call (877) 263-0763 or visit our website.

Content Archived: April 22, 2010