Insurance of mortgages covering new or rehabilitated hospitals, including equipment; terms and conditions
In order to carry out the purpose of this section, the Secretary is authorized to insure any mortgage which covers a new or rehabilitated hospital, including equipment to be used in its operation, subject to the following conditions:
The mortgage shall be executed by a mortgagor approved by the Secretary. The Secretary may in his discretion require any such mortgagor to be regulated or restricted as to charges and methods of financing, and, in addition thereto, if the mortgagor is a corporate entity, as to capital structure and rate of return. As an aid to the regulation or restriction of any mortgagor with respect to any of the foregoing matters, the Secretary may make such contracts with and acquire for not to exceed $100 such stock or interest in such mortgagor as he may deem necessary. Any stock or interest so purchased shall be paid for out of the General Insurance Fund, and shall be redeemed by the mortgagor at par upon the termination of all obligations of the Secretary under the insurance.
The mortgage shall involve a principal obligation in the amount requested by the mortgagor if such amount does not exceed 90 percent of the estimated replacement cost of the property or project including—
equipment to be used in the operation of the hospital, when the proposed improvements are completed and the equipment is installed; and
a solar energy system (as defined in subparagraph (3) of the last paragraph of section 1703(a) of this title
) or residential energy conservation measures (as defined in section 8211(11)(A) through (G) and (I) of title 42)
See References in Text note below.
in cases where the Secretary determines that such measures are in addition to those required under the minimum property standards and will be cost-effective over the life of the measure.
The mortgage shall—
provide for complete amortization by periodic payments within such term as the Secretary shall prescribe; and
bear interest at such rate as may be agreed upon by the mortgagor and the mortgagee.
The Secretary shall require satisfactory evidence that the hospital will be located in a State or political subdivision of a State with reasonable minimum standards of licensure and methods of operation for hospitals and satisfactory assurance that such standards will be applied and enforced with respect to the hospital.
The Secretary shall establish the means for determining need and feasibility for the hospital, if the State does not have an official procedure for determining need for hospitals. If the State has an official procedure for determining need for hospitals, the Secretary shall require that such procedure be followed before the application for insurance is submitted, and the application shall document that need has also been established under that procedure.
The Secretary shall not insure any mortgage or approve any modification of an existing mortgage insured pursuant to this section or section 1715n(f) of this title
if such insurance or modification is to be made in connection with a guarantee, as authorized pursuant to section 1721 of this title
, of a trust certificate or other security which is exempt from Federal taxation or which is to be used to collateralize obligations which are so exempt, except that the Secretary shall not refuse to insure such a mortgage or approve such a modification solely on the basis that such insurance or modification is to be made in connection with a guarantee, as authorized pursuant to section 1721 of this title
, of a trust certificate or other security which is exempt from Federal taxation or which is to be used to collateralize obligations which are so exempt if—
a written application for such insurance or modification submitted at the express direction of the hospital has been submitted to the appropriate office of the Department of Health and Human Services prior to March 29, 1979; or
in the case of a nonprofit mortgagor which is seeking refinancing or modification of an existing mortgage insured pursuant to this section or section 1715n(f) of this title
, the mortgagor (i) had engaged an investment banker for the purpose of obtaining such refinancing or modification, or had undertaken or arranged for the undertaking of a market or feasibility study with respect to the advisability of obtaining such refinancing or modification, and had made written notification of its interest in such refinancing or modification to the Department of Health and Human Services or the Department of Housing and Urban Development prior to June 7, 1979
; and (ii) receives from the programs established under titles XVIII [42 U.S.C. 1395
et seq.] and XIX [42 U.S.C. 1396
et seq.] of the Social Security Act a percentage of its total revenue which is greater than 125 per centum of the national average for hospitals which derive revenue from such titles.
This paragraph shall not limit the authority of the Secretary to approve a mortgage increase on any mortgage eligible for insurance under this paragraph at any time prior to final endorsement of the loan for insurance; except that such mortgage increase may not be approved for the cost of constructing any improvements not included in the original plans and specifications approved by the Department of Health and Human Services unless approved by the Secretary of Housing and Urban Development and by the Secretary of Health and Human Services.
To the extent that a private nonprofit or public facility mortgagor is required by the Secretary to provide cash equity in excess of the amount of the mortgage to complete the project, the mortgagor shall be entitled, at the option of the mortgagee, to fund the excess with a letter of credit. In such event, mortgage proceeds may be advanced to the mortgagor prior to any demand being made on the letter of credit.
[June 27, 1934, ch. 847], title II, § 242, as added [Pub. L. 90–448, title XV, § 1501], Aug. 1, 1968, [82 Stat. 599]; amended [Pub. L. 91–609, title I], §§ 109, 110(a), Dec. 31, 1970, [84 Stat. 1772]; [Pub. L. 93–383, title III, § 304(i)], Aug. 22, 1974, [88 Stat. 678]; [Pub. L. 95–128, title III, § 308], Oct. 12, 1977, [91 Stat. 1135]; [Pub. L. 96–88, title V, § 509(b)], Oct. 17, 1979, [93 Stat. 695]; [Pub. L. 96–153, title III, § 315], Dec. 21, 1979, [93 Stat. 1117]; [Pub. L. 96–399, title III, § 310(h)], Oct. 8, 1980, [94 Stat. 1643]; [Pub. L. 97–35, title III, § 339H], Aug. 13, 1981, [95 Stat. 418]; [Pub. L. 98–181, title I] [title IV, §§ 404(b)(15), 436], Nov. 30, 1983, [97 Stat. 1210], 1222; [Pub. L. 98–479, title II], §§ 201(a)(1), 204(a)(13), Oct. 17, 1984, [98 Stat. 2227], 2232; [Pub. L. 100–242, title IV], §§ 411(a), 412(a)–(d), Feb. 5, 1988, [101 Stat. 1905], 1906; [Pub. L. 108–91], §§ 2(a), 3(a), Oct. 3, 2003, [117 Stat. 1158]; [Pub. L. 109–240, § 2], July 10, 2006, [120 Stat. 515]; [Pub. L. 113–76, div. L, title II, § 233], Jan. 17, 2014, [128 Stat. 634].)