| Abstract: | The Department proposes to modify its regulations governing the maximum mortgage principal amount that it will insure for a new or rehabilitated hospital. Under its existing regulations, the Department can insure a mortgage in any amount that does not exceed 90 percent of HUD's estimate of the replacement cost of the hospital (including major movable equipment). Under the proposal, however, the loan to replacement cost ratio would vary for insured mortgages on projects where the replacement cost exceeds 100 million dollars. In essence, the mortgagor's equity requirements would be required to increase as the principal obligation sought to be insured increased. This proposal is intended to (a) mitigate the possibility of large-scale defaults in future years; (b) ensure the long-term adequacy of the Department's insurance fund, and (c) avoid undue concentration of insurance commitments in a relatively small number of projects. |
