Glossary

Section 232 (232 LEAN)

Also known as: 232 LEAN, 232, LEAN

The HUD/FHA mortgage insurance program for skilled nursing facilities, assisted living facilities, and board-and-care homes, processed through HUD's dedicated LEAN program track and underwritten around the licensed healthcare or personal-care operator's facility-level financial performance rather than a conventional residential market-rent analysis.

Because Section 232 collateral generates revenue through a licensed healthcare or personal-care operation, reimbursed through some combination of private pay, Medicare, and Medicaid, rather than through ordinary residential leases, underwriting under the LEAN track requires current state licensure and, where applicable, Medicare/Medicaid certification, and evaluates the operating lease between the real estate owner and the licensed facility operator alongside metrics unique to the healthcare sector: occupancy, payor mix, and facility-level operating margin. The real estate owner and the licensed operator are frequently separate legal entities bound by an operating lease, meaning a HUD-insured 232 loan effectively underwrites two interdependent risks at once -- the durability of the real estate and the financial and regulatory health of the operator running the business inside it -- a dual analysis with no direct equivalent in HUD's conventional apartment programs. 232 loans are available for both new construction and substantial rehabilitation, structured similarly to 221(d)(4), and for refinancing existing, stabilized healthcare facilities, structured similarly to 223(f), with terms up to 35 years for the stabilized track.