How would HUD treat projects involving for-profit owners that have formed non-profit operating entities?
Both the for-profit borrower and the non-profit operator would need to be underwritten using for-profit mortgage criteria (i. e. factoring in taxes, management fees, etc.). As such, the underwriting would need to rely on comparable for-profit operated properties. See 4232.1 REV-1, Production, Chapter 3.2.
The underwriting of the non-profit operator would need to show that the operating entity, or a principal or principals of the operating entity, have a successful operating track record, especially with projects similar in scope and services to the subject facility, significant project operating experience, a positive track record of compliance with regulatory requirements, as well as a solid financial and operational history. -- Dec-19
Is it acceptable for the lender to use a single UCC financing statement (filed in the local land records and the Secretary of State’s office where the owner/operator is organized) to perfect its security interest in the owner/operator’s personal property (equipment, furniture, etc.)? Or does HUD require the lender to file two UCC financing statements, one for the borrower’s collateral and one for the operator’s collateral? On owner/operator transactions, if lender determines that a single UCC financing statement covering all UCC Collateral is appropriate under applicable law, HUD will accept such a financing statement. Please see paragraph I.A.2 of the Request for Endorsement (HUD-92455-ORCF) and the Lender’s Certificate (HUD-92434-ORCF) which contains identical language.