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232/223f Streamline Refinance/Purchase

HUD Loan Committee Memorandum

To: Loan Committee

|From: |OHP Underwriter: | |

| |Workload Manager: | |

Date:

Subject: Firm Commitment for Name of Project, FHA Number

Recommendation: Firm Commitment Rejection

|Location: | |

|Transaction: | Refinance | Purchase |

|Lender: | |

|Lender’s UW: | |

|Lender’s UW Trainee: | |

|Mortgagor: | |

|Operator: | |Operating Lease? | |

|Parent of Operator: | |

|Management Agent: | |

|License Holder: | Mortgagor | Operator | Management Agent |

|Type of Facility: | |Skilled Nursing: | |beds | |units |

| | |Assisted Living: | |beds | |units |

| | |Board & Care: | |beds | |units |

| | |Dementia Care: | |beds | |units |

| | |Independent: | |beds | |units |

| | |Total: | |beds | |units |

|Mortgage Amount: |$ |LTV Ratio: |% |Market Value per Bed: |$ |

|Principal & Interest: |$ |Cap Rate: |% |Mortgage Amount per Bed: |$ |

|Interest Rate: |% |DSC Ratio: | |Expenses per Bed: |$ |

| | |(with MIP) | | | |

|Term: |years | | | | |

|Year Built: | | | |Remaining Economic Life: |years |

| | | | | | |

OHP Underwriter Comments/Adjustments (as applicable):

| Gross Income: |$ | |Occupancy Rate: |% |

|Effective Gross Income: |$ | |Expense Ratio: |% |

|Expense & Repl. Res.: |$ | | | |

|Net Operating Income: |$ | | | |

OHP Underwriter Comments/Adjustments (as applicable):

|Repairs | | |Replacement Reserves | |

| Critical: |$ | |Initial Deposit: |$ |

| Non-Critical: |$ | |Annual Deposit: |$ |

| Borrower Proposed: |$ | |Annual Deposit per Bed: |$ |

|Total: |$ | | | |

|Repairs per Bed: |$ | |Other Escrow/Reserves | |

| | | |(Type): |$ |

| | | |(Type): |$ |

OHP Underwriter Comments/Adjustments (as applicable):

|CMS Rating |Overall | |Health |Nursing |Quality |

|# of stars: | | | | | |

OHP Underwriter Comments/Adjustments (as applicable):

| |Yes |No |Comments: |

|Underserved Area: | | | |

|Allocated Debt: | | | |

|A/R Financing: | | | |

|Portfolio: | | |If Yes: 1 of __ | |

|Master Lease: | | | |

|Waivers: | | | |

|(list, as applicable) | | | |

PROJECT ANALYSIS

If charts are outdated when they are pulled from the queue, have Lender do the updates

❖ Mortgage Determinants table from Lender Narrative:

|Fair Market Value: |$ |

|Debt Service: |$ |

|Transaction Costs: |$ |

OHP Underwriter Comments/Adjustments (as applicable):

❖ Sources and Uses Chart from Lender Narrative:

|Estimated Sources | |

|Loan Amount | $ |

|Deposits received for HUD Exam Fee | $ |

|Deposits received for Reports | $ |

|Total Sources | $ |

| | |

|Estimated Uses | |

|Existing Debt Balance-Wachovia Bank acquisition loan |$ |

|Repayment of Investor debt |$ |

|Initial Deposit to Reserve Fund | $ |

|Estimate of Repair Cost (Critical & Non Critical) | $ |

|FHA Inspection Fee | $ |

|Financing Fee | $ |

|Legal & Organizational | $ |

|Third Party Fees | $ |

|Title & Recording | $ |

|FHA Exam Fee | $ |

|First Year MIP | $ |

|Placement/GNMA Custodian Fee | $ |

|Total Uses | $ |

OHP Underwriter Comments/Adjustments (as applicable):

❖ Market Value Summary chart of Subject from Lender Narrative:

|Market Value Summary |

|Approach |Appraisal |Underwriter |

|Income | | |

|Comparison | | |

|Cost | | |

|Conclusion: | | |

OHP Underwriter Comments/Adjustments (as applicable):

❖ “Key Data” section of the Expense Analysis (Subject) chart from Lender Narrative, under the Historic Comparison of Expenses section

(Per Resident Day)

| | | | | | | | |

|Net Operating Income | | | | | | | |

|Expense Ratio | | | | | | | |

|Occupancy | | | | | | | |

|Total Units | | | | | | | |

[Note: New Lender Narrative has more comprehensive chart]

OHP Underwriter Comments/Adjustments (as applicable):

❖ Historical Comparison of Net Operating chart from Lender Narrative:

(total $)

[pic]

[Note: New Lender Narrative has more comprehensive chart]

OHP Underwriter Comments/Adjustments (as applicable) – Underwriter must explain material variations:

❖ Capitalization Rate – Comparable Sales chart from Lender Narrative:

[pic]

[Note: New Lender Narrative has more comprehensive chart]

OHP Underwriter Comments/Adjustments (as applicable) – Underwriter must explain material variations:

❖ Unit Mix Chart of Subject from Lender Narrative:

[pic]

OHP Underwriter Comments/Adjustments (as applicable):

❖ Census Mix – Subject History table from Lender Narrative:

(% of beds)

[pic]

❖ Census Mix – Market Comparables table from Lender Narrative:

(% of units)

[pic]

[Note: New Lender Narrative has more comprehensive chart]

OHP Underwriter Comments/Adjustments (as applicable):

❖ Historical Occupancy Analysis from Lender Narrative:

[pic]

[Note: New Lender Narrative has more comprehensive chart]

OHP Underwriter Comments/Adjustments (as applicable) – Underwriter must explain material variations:

❖ Sensitivity Analysis from Lender Narrative: (to maintain a DSC of 1.0)

➢ Medicaid Revenue could decrease by %, and Medicare Revenue could decrease by %

➢ Occupancy could decrease by % ( % occupancy, to % occupancy)

➢ Operating Expenses could increase by % ($ ppd, to $ ppd)

[Note: New Lender Narrative has more comprehensive chart]

OHP Underwriter Comments/Adjustments (as applicable):

PROJECT DESCRIPTION

Avoid allowing one chart to be separated on multiple pages – if required, ensure headers are copied to next page.

|Market Analysis |Accept |Issues |N/A |Comments: If acceptable, briefly state why. If issues noted, briefly summarize, along |

| | |Noted | |with mitigants. Do not leave blank unless N/A! |

|Supply and Demand: | | | | |

|Location/Proximity to | | | | |

|Hospital & Services: | | | | |

|Site: | | | | |

|Neighborhood: | | | | |

|Zoning: | | | | |

|(if non-conforming, a variance is | | | | |

|needed) | | | | |

|Building Description: | | | | |

|Living Unit Description: | | | | |

|Unique Services: | | | | |

|Owner/Operations/Management |

|General – Strength of Project (per punchlist and Lender Narrative) |

| |Accept |Issues |N/A |Comments: If acceptable, briefly state why. If issues noted, briefly |

| | |Noted | |summarize, along with mitigants. Do not leave blank unless N/A! |

|PLI: | | | |Carrier: | |

|OHP UW concluded: PLI was analyzed by Lender; coverage| | | | | |

|meets standards & covers past & potential claims; | | | | | |

|carrier licensed correctly & rating is acceptable | | | | | |

| | | | |AM Best or Demotech Rating: | |

| | | | |Other Comments: |

|Claim History: | | | |Facility Claims per Bed: |$ |

|OHP UW analyzed: claims history for patterns or | | | | | |

|significant claims | | | | | |

| | | | |Parent Claims per Bed: |$ |

| | | | |Other Comments: |

| | | | | |

| Survey Issues: | | | | |

|OHP UW has reviewed: 3 most recent years of surveys, | | | | |

|concerns with instances of actual harm or immediate | | | | |

|jeopardy (discuss any G or higher tags), patterns of | | | | |

|repeat Findings, plans of correction, open Findings, | | | | |

|close-out letters | | | | |

|Owner/Operations/Management - (per punchlist and Lender Narrative) |

|Experience Strength of Principals |

|[OHP UW has concluded: APPS/2530’s cleared; 3+ years of acceptable experience developing, marketing, & operating senior/healthcare facilities] |

| |Accept |Issues |N/A |Comments: If acceptable, briefly state why. If issues noted, briefly summarize, along |

| | |Noted | |with mitigants. Do not leave blank unless N/A! |

| | | | |[Include name of key principal(s) for each entity] |

|Mortgagor: | | | | |

|Principals: | | | | |

|Operator: | | | | |

|Principals: | | | | |

|Parent of Operator: | | | | |

|Principals: | | | | |

|Management Agent: | | | | |

|Principals: | | | | |

|Administrator: | | | | |

|Owner/Operations/Management - (per punchlist and Lender Narrative) |

|Credit Worthiness |

| |Accept |Issues |N/A |Comments: If acceptable, briefly state why. If issues noted, briefly|

| | |Noted | |summarize, along with mitigants. Do not leave blank unless N/A! |

|Mortgagor: | | | | |

|OHP UW has concluded: credit report is acceptable; no | | | | |

|delinquent federal debt, judgments, legal actions, liens;| | | | |

|no AP over 90 days; no AR over 120 days, unless noted | | | | |

|Operator: | | | | |

|OHP UW has concluded: acceptable credit report; no | | | | |

|delinquent federal debt, judgments, legal actions, liens;| | | | |

|no neg. or declining cash flow; no AP over 90 days; no AR| | | | |

|over 120 days, unless noted | | | | |

|Parent of Operator: | | | | |

|OHP UW has concluded: acceptable credit report; no neg. | | | | |

|or declining cash flow; no AP over 90 days, unless noted | | | | |

|Management Agent: | | | | |

|OHP UW has concluded: acceptable Management Agreement and| | | | |

|HUD forms | | | | |

|Physical Risks |

| |Yes |No |Describe: include mitigation |

|Functional Obsolescence: | | | |

|Market Obsolescence: | | | |

|Unusual Building Characteristices: | | | |

|Environmental Risks |

| |Yes |No |Describe: include mitigation |

|4128 Issues: | | | |

|Lender Identified Issues: | | | |

OHP UNDERWRITER CONCLUSIONS & RECOMMENDATIONS

The below Strengths and Risks categories should include any additional notes to further explain and/or summarize items indicated in the Loan Committee charts and check boxes above. For those items not brought out within the designated choices, please provide additional information in a succinct narrative.

|Strengths |

| |Yes |N/A |Summarize briefly: |

|High Debt Coverage: | | |DSCR: | |

|Low LTV (under 70): | | | LTV: | |

|Experienced Owner/Operator: | | | |

|Substantial Equity Contribution: | | | |

|Market: | | | |

|Additional OHP Underwriter (or Lender) identified strengths – insert more rows if necessary: |

|1. |

|2. |

|3. |

|4. |

|Risks |

| |Yes |N/A |Summarize briefly, including mitigations: |

|Delinquent debt: | | | |

|Star rating: | | | |

|3 or 4 bed wards: | | | |

|Prospective NOI: | | | |

|Market: | | | |

|Additional OHP Underwriter (or Lender) identified risks – insert more rows if necessary: |

|1. |

|2. |

|3. |

|4. |

|Technical Reviewer Comments |

|Review Type |Name of Reviewer |Comments: |

|Appraisal | N/A | | |

|Legal | | |

|Environmental (4128) | | |

|Special Conditions – insert more rows if necessary: |

|1. |

|2. |

|3. |

|4. |

➢ Results of Loan Committee Recommendations (Required to be completed by U/W after Loan Committee):

|Name (UW) | |Accept As Is | |Accept With Revisions | |Reject |

|Name (WLM) | |Accept As Is | |Accept With Revisions | |Reject |

|Renee’ Greenman | |Accept As Is | |Accept With Revisions | |Reject |

|Bill Lammers | |Accept As Is | |Accept With Revisions | |Reject |

|Mark Williams | |Accept As Is | |Accept With Revisions | |Reject |

|Michael Vaughn | |Accept As Is | |Accept With Revisions | |Reject |

➢ Additional Recommendations or Requirements noted by Loan Committee members (as applicable):

|[Include any comments, recommendations, requirements or other notes made by LC members regarding additional items that need adjustments prior to their approval |

|– or overall notes that should be kept with the file regarding LC decisions.] |

|LC Member: |Comments: |

| | |

| | |

| | |

Supporting Documents – including, but not limited to:

➢ Lender’s Underwriting Narrative

➢ Underwriter Punchlist including worksheets

➢ Pictures/Plans of the Property

➢ A location map detailing location of the sales and rent comparables

➢ If relevant, information on competing properties existing in our loan portfolio

➢ All required Waivers

➢ All required technical reviews (Field Reviewer, OHP Desk Review, and Legal Counsel)

➢ Signed HUD 4128

➢ Approved APPS/2530s

(above documents are available on SharePoint for review)

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