HUD’s Accountability Rule included regulations requiring operators of FHA insured healthcare facilities (Sec 232) to submit their owner certified financial statements to HUD 60 days after each calendar quarter and 90 days after year end.  The requirement is effective for projects with fiscal years commencing on or after December 2, 2014.

For the great majority of Section 232 projects (that are on a calendar year), this reporting requirement begins with the first quarter of 2015.  For these projects, the first quarter financials will be due at the end of May, 2015 (60 days from the 1st quarter end).

HUD is implementing this process in the following manner:

  • Servicing lenders will establish a system for receiving quarterly operator financials on the projects they service.  PDFs of such financial statements will be uploaded to the HUD Healthcare Portal (via ORCF’s website here) by servicing lenders or the operators (at the lender’s option).
  • If the operator uploads the financial statements to the HUD Healthcare Portal, the servicing lender will receive a notification via email and via the portal that a financial statement has been submitted on a project that they service.
  • Servicing lenders will enter 23 key data elements (see below) on each loan they service into the HUD Healthcare Portal.  This will be done each quarter and at year end.
    • FHA Number
    • Lender ID
    • Operator Owner
    • Period Ending
    • Months in Period
    • Financial Statement Type
    • Units in Facility
    • Operating Cash
    • Investments
    • Reserve for Replacement Escrow Balance
    • Accounts Receivable
    • Current Assets
    • Current Liabilites
    • Total Revenues
    • Rent/Lease Expense
    • Depreciation Expense
    • Amortization Expense
    • Total Expenses
    • Net Income
    • Reserve for Replacement Deposit
    • FHA Insured Principal Payment
    • FHA Insured Interest Payment
    • Mortgage Insurance Premium


  • The HUD Healthcare Portal will calculate five ratios based on this information as defined in Asset Management, Chapter four of HUD Handbook 4232.1 (working capital, debt service coverage, days cash on hand, average payment period, and change in receivables).  After entering the key data elements, servicing lenders will immediately be able to view the ratios for the project.
  • Further information will be available on ORCF’s website soon on the procedure for addressing projects that are exhibiting problematic ratios.

Please note the following:

  • This requirement will apply to all Section 232 projects.  Operators are defined as Mortgagors on projects with no operating lease and as Lessees on projects with an operating lease.
  • This Notice does not alter the long standing requirement of audited annual financial statements by Mortgagors.
  • HUD intends to provide several training sessions for lenders and operators in mid-March.
  • Your servicing lender should contact you to begin and explain the process.