12 U.S.C. § 1715w — Mortgage insurance for nursing homes, intermediate care facilities, and board and care homes
submitted 92 years ago by Pub. L. 86-372 to r/title-12-BANKS-AND-BANKING · 2,908 words · no verdicts yet
This section authorizes mortgage insurance for nursing homes, intermediate-care facilities, board-and-care homes, and assisted-living facilities. It defines those facilities, sets financing and State-certification rules, and authorizes loans for required fire-safety equipment.
(a) Purpose. The section supports nursing homes for people needing skilled nursing and related medical care but not hospital care, including daytime nonresident care; intermediate-care facilities and board-and-care homes for people needing minimum continuous care; and assisted-living facilities for frail elderly people. (b) Definitions. A “nursing home” is a State*-licensed or regulated public, proprietary, or private nonprofit facility for convalescents or others not acutely ill or needing hospital care but needing skilled nursing and related medical services directed or performed by licensed persons. An “intermediate care facility” is a licensed or regulated proprietary or private nonprofit facility for people with incapacitating infirmities who need minimum continuous care but not continuous medical or nursing services. Either term may include Secretary-authorized daytime facilities for elderly and other independent people. “Mortgage” means a first mortgage on fee-simple real estate or a qualifying lessor’s or lessee’s interest under a renewable lease of at least 99 years or a lease extending at least 10 years beyond mortgage maturity. “First mortgage” includes customary first liens securing advances or purchase-price debt, related credit* instruments, trust mortgages, indentures, deeds of trust, and a security interest in initial equipment. “Mortgagor” has the meaning in section 1713(a). A “board and care home” is a residential facility providing room, board, and continuous protective oversight, regulated under section 1616(e) of the Social Security Act, in a State shown to the Secretary to comply with that section when application is made. An “assisted living facility” is a licensed or regulated public, proprietary, or private nonprofit facility that provides supportive help with daily activities and may provide home health care, offers separate dwelling units that may have full kitchens and bathrooms, and has common rooms and facilities suitable for those services. “Frail elderly person*” has the meaning in section 8011(k) of title 42. (c) Authorization. The Secretary may insure mortgages, including construction advances, on prescribed terms and may commit to insure before execution or disbursement. (d) Conditions. The Secretary may insure a mortgage covering a new or rehabilitated nursing home, assisted-living facility, intermediate-care facility, addition, combination of these, or board-and-care home, including operating equipment. (1) The mortgagor must be Secretary-approved. The Secretary may regulate charges, financing, and, for a corporation, capital and return; the Secretary may buy up to $100 of stock or an interest for that purpose from the General Insurance Fund, redeemable at par when obligations end. (2) Principal cannot exceed 90 percent of estimated property or project value, or 95 percent for a qualifying private nonprofit, including installed operating equipment and qualifying solar or energy-conservation measures. (3) The mortgage must fully amortize through periodic payments within Secretary-set terms and bear an interest rate agreed by borrower and mortgagee; the Secretary may not interfere with their ability to set that rate. (4)(A) For nursing homes and intermediate-care facilities, the Secretary generally must receive a State-agency certification that the facility is needed and that reasonable minimum licensing and operating standards are in force, plus assurance that they will be enforced. If no agency exists or it cannot certify need, the State must commission and pay for an independent market-need and feasibility study following American Institute of Certified Public Accountants principles, assessing marketwide effects and relationships to other facilities and services, excess beds, demographics, alternative delivery systems, and reimbursement; the study must be acceptable to the Secretary and, if not prepared by the State, prepared by a Secretary-approved financial consultant selected by the State or applicant. The applicant may reimburse the State. For a small intermediate-care facility for mentally retarded or developmentally disabled people, or a board-and-care home for fewer than 10 people, the responsible State program agency may instead give written support identifying the need. (B) For a board-and-care home, the Secretary must receive the appropriate State licensing agency’s verification that the State complies with section 1616(e) of the Social Security Act. (C) For an assisted-living facility, alone or combined with another facility, the Secretary must find financing and other resources sufficient for the required units and supportive services; receive assurance that no unit will house more than one person without all occupants’ consent; and receive assurances from the licensing agency that applicable standards will be met. (e) Releases. The Secretary may release part of the mortgaged property from the lien on prescribed terms. (f) Other law. Listed subsections of section 1713 apply, with references to section 1713 treated as references to this section. (g) Regulations. After consulting the Secretary of Health and Human Services about health and medical matters, the Secretary must issue needed regulations for intermediate-care facilities. (h) Consultation. The Secretary must also consult Health and Human Services about the need for and availability of intermediate-care facilities in the area proposed. (i) Fire-safety loans. (1) On prescribed terms, the Secretary may commit to insure and insure loans by financial institutions or approved mortgagees to buy and install fire-safety equipment required by the 1967 Life Safety Code of the National Fire Protection Association, later editions specified by Health and Human Services, or other approved codes or requirements for Social Security Act title XVIII or XIX providers or State mandates under section 1616(e). (2) A loan qualifies if it does not exceed the Secretary’s reasonable fully installed equipment cost; has an agreed interest rate; has a Secretary-satisfactory maturity; is made by a section 1703-eligible institution or a section 1709(b)(1)-approved mortgagee; meets prescribed terms and restrictions; and, for a board-and-care home, concerns a home in a State verified to comply with section 1616(e). (3) Listed paragraphs of section 1715k(h) apply, with “home improvement loans” read as these loans. (4) Listed subsections of section 1703 apply, with references to that section or title read as references to this subsection. (j) Processing. The Secretary must set schedules and deadlines for processing and approving, or notifying disapproval of, applications and annually report them to Congress with the Department’s compliance during the year.
The purpose of this section is to assist in the provision of facilities for any of the following purposes or for a combination of such purposes:
The development of nursing homes for the care and treatment of convalescents and other persons who are not acutely ill and do not need hospital care but who require skilled nursing care and related medical services, including additional facilities for the nonresident care of elderly individuals and others who are able to live independently but who require care during the day.
The development of intermediate care facilities and board and care homes for the care of persons who, while not in need of nursing home care and treatment, nevertheless are unable to live fully independently and who are in need of minimum but continuous care provided by licensed or trained personnel, including additional facilities for the nonresident care of elderly individuals and others who are able to live independently but who require care during the day.
The development of assisted living facilities for the care of frail elderly persons.
For the purposes of this section—
the term “nursing home” means a public facility, proprietary facility or facility of a private nonprofit corporation or association, licensed or regulated by the State* (or, if there is no State law providing for such licensing and regulation by the State, by the municipality or other political subdivision in which the facility is located), for the accommodation of convalescents or other persons who are not acutely ill and not in need of hospital care but who require skilled nursing care and related medical services, in which such nursing care and medical services are prescribed by, or are performed under the general direction of, persons licensed to provide such care or services in accordance with the laws of the State where the facility is located;
the term “intermediate care facility” means a proprietary facility or facility of a private nonprofit corporation or association licensed or regulated by the State (or, if there is no State law providing for such licensing and regulation by the State, by the municipality or other political subdivision in which the facility is located) for the accommodation of persons who, because of incapacitating infirmities, require minimum but continuous care but are not in need of continuous medical or nursing services;
the term a 1 “nursing home” or “intermediate care facility” may include such additional facilities as may be authorized by the Secretary for the nonresident care of elderly individuals and others who are able to live independently but who require care during the day;
the term “mortgage” means a first mortgage on real estate in fee simple, or on the interest of either the lessor or lessee thereof (A) under a lease for not less than ninety-nine years which is renewable, or (B) under a lease having a period of not less than ten years to run beyond the maturity date of the mortgage. The term “first mortgage” means such classes of first liens as are commonly given to secure advances (including but not limited to advances during construction) on, or the unpaid purchase price of, real estate under the laws of the State in which the real estate is located, together with the credit* instrument or instruments, if any, secured thereby, and any mortgage may be in the form of one or more trust mortgages or mortgage indentures or deeds of trust, securing notes, bonds, or other credit instruments, and, by the same instrument or by a separate instrument, may create a security interest in initial equipment, whether or not attached to the realty. The term “mortgagor” shall have the meaning set forth in section 1713(a) of this title;
the term “board and care home” means any residential facility providing room, board, and continuous protective oversight that is regulated by a State pursuant to the provisions of section 1616(e) of the Social Security Act [42 U.S.C. 1382e(e)], so long as the home is located in a State that, at the time of an application is made for insurance under this section, has demonstrated to the Secretary that it is in compliance with the provisions of such section 1616(e);
the term “assisted living facility” means a public facility, proprietary facility, or facility of a private nonprofit corporation that—
is licensed and regulated by the State (or if there is no State law providing for such licensing and regulation by the State, by the municipality or other political subdivision in which the facility is located);
makes available to residents supportive services to assist the residents in carrying out activities of daily living, such as bathing, dressing, eating, getting in and out of bed or chairs, walking, going outdoors, using the toilet, laundry, home management, preparing meals, shopping for personal items, obtaining and taking medication, managing money, using the telephone, or performing light or heavy housework, and which may make available to residents home health care services, such as nursing and therapy; and
provides separate dwelling units for residents, each of which may contain a full kitchen and bathroom, and which includes common rooms and other facilities appropriate for the provision of supportive services to the residents of the facility; and
the term “frail elderly person*” has the meaning given the term in section 8011(k) of title 42.
The Secretary is authorized to insure any mortgage (including advances on such mortgage during construction) in accordance with the provisions of this section upon such terms and conditions as he may prescribe and to make commitments for insurance of such mortgage prior to the date of its execution or disbursement thereon.
In order to carry out the purposes of this section, the Secretary is authorized to insure any mortgage which covers a new or rehabilitated nursing home,,2 assisted living facility, or intermediate care facility, including a new addition to an existing nursing home, assisted living facility, or intermediate care facility and regardless of whether the existing home or facility is being rehabilitated, or any combination of nursing home, assisted living facility, and intermediate care facility or a board and care home, 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 an amount not to exceed 90 per centum of the estimated value of the property or project, or 95 percent of the estimated value of the property or project in the case of a mortgagor that is a private nonprofit corporation or association (under the meaning given such term for purposes of section 1715l(d)(3) of this title), including—
equipment to be used in the operation of the home or facility or combined home and facility when the proposed improvements are completed and the equipment is installed; or
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) 3 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 terms 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 not promulgate regulations or establish terms or conditions that interfere with the ability of the mortgagor and mortgagee to determine the interest rate; and 4
With respect to nursing homes and intermediate care facilities and combined nursing home and intermediate care facilities, the Secretary shall not insure any mortgage under this section unless he has received, from the State agency designated in accordance with section 604(a)(1) or section 1521 3 of the Public Health Service Act [42 U.S.C. 291d (a)(1), 300m] for the State in which is located the nursing home or intermediate care facility or combined nursing home and intermediate care facility covered by the mortgage, a certification that (i) there is a need for such home or facility or combined home and facility, and (ii) there are in force in such State or in the municipality or other political subdivision of the State in which the proposed home or facility or combined home and facility is to be located reasonable minimum standards of licensure and methods of operation governing it. No such mortgage shall be insured under this section unless the Secretary has received such assurance as he may deem satisfactory from the State agency that such standards will be applied and enforced with respect to any home or facility or combined home and facility located in the State for which mortgage insurance is provided under this section. If no such State agency exists, or if the State agency exists but is not empowered to provide a certification that there is a need for the home or facility or combined home and facility as required in clause (i) of the first sentence, the Secretary shall not insure any mortgage under this section unless (i) the State in which the home or facility or combined home and facility is located has conducted or commissioned and paid for the preparation of an independent study of market need and feasibility that (I) is prepared in accordance with the principles established by the American Institute of Certified Public Accountants; (II) assesses, on a marketwide basis, the impact of the proposed home or facility or combined home and facility on, and its relationship to, other health care facilities and services, the percentage of excess beds, demographic projections, alternative health care delivery systems, and the reimbursement structure of the home, facility, or combined home and facility; (III) is addressed to and is acceptable to the Secretary in form and substance; and (IV) in the event the State does not prepare the study, is prepared by a financial consultant who is selected by the State or the applicant for mortgage insurance and is approved by the Secretary; and (ii) the State complies with the other provisions of this subparagraph that would otherwise be required to be met by a State agency designated in accordance with section 604(a)(1) or section 1521 3 of the Public Health Service Act. The proposed mortgagor may reimburse the State for the cost of the independent feasibility study required in the preceding sentence. In the case of a small intermediate care facility for the mentally retarded or developmentally disabled, or a board and care home housing less than 10 individuals, the State program agency or agencies responsible for licensing, certifying, financing, or monitoring the facility or home may, in lieu of the requirements of clause (i) of the third sentence, provide the Secretary with written support identifying the need for the facility or home.
With respect to board and care homes, the Secretary shall not insure any mortgage under this section unless he has received from the appropriate State licensing agency a statement verifying that the State in which the home is or is to be located is in compliance with the provisions of section 1616(e) of the Social Security Act [42 U.S.C. 1382e(e)].
With respect to assisted living facilities or any such facility combined with any other home or facility, the Secretary shall not insure any mortgage under this section unless—
the Secretary determines that the level of financing acquired by the mortgagor and any other resources available for the facility will be sufficient to ensure that the facility contains dwelling units and facilities for the provision of supportive services in accordance with subsection (b)(6);
the mortgagor provides assurances satisfactory to the Secretary that each dwelling unit in the facility will not be occupied by more than 1 person without the consent of all such occupants; and
the appropriate State licensing agency for the State, municipality, or other political subdivision in which the facility is or is to be located provides such assurances as the Secretary considers necessary that the facility will comply with any applicable standards and requirements for such facilities.
The Secretary may consent to the release of a part or parts of the mortgaged property or project from the lien of any mortgage insured under this section upon such terms and conditions as he may prescribe.
The provisions of subsections (d), (e), (g), (h), (i), (j), (k), (l), and (n) of section 1713 of this title shall apply to mortgages insured under this section and all references therein to section 1713 of this title shall refer to this section.
The Secretary shall prescribe such regulations as may be necessary to carry out the provisions of this section relating to intermediate care facilities, after consulting with the Secretary of Health and Human Services with respect to any health or medical aspects of the program which may be involved in such regulations.
The Secretary shall also consult with the Secretary of Health and Human Services as to the need for and the availability of intermediate care facilities in any area for which an intermediate care facility is proposed under this section.
The Secretary is authorized upon such terms and conditions as he may prescribe to make commitments to insure and to insure loans made by financial institutions or other approved mortgagees to nursing homes, assisted living facilities, and intermediate care facilities or to board and care homes to provide for the purchase and installation of fire safety equipment necessary for compliance with the 1967 edition of the Life Safety Code of the National Fire Protection Association (or any subsequent edition specified by the Secretary of Health and Human Services) or other such codes or requirements approved by the Secretary of Health and Human Services as conditions of participation for providers of services under title XVIII and title XIX of the Social Security Act [42 U.S.C. 1395 et seq., 1396 et seq.] or as mandated by a State under the provisions of section 1616(e) of such Act [42 U.S.C. 1382e(e)].
To be eligible for insurance under this subsection a loan shall—
not exceed the Secretary’s estimate of the reasonable cost of the equipment fully installed;
bear interest at such rate as may be agreed upon by the mortgagor and the mortgagee;
have a maturity satisfactory to the Secretary;
be made by a financial institution or other mortgagee approved by the Secretary as eligible for insurance under section 1703 of this title or a mortgagee approved under section 1709(b)(1) of this title;
comply with other such terms, conditions, and restrictions as the Secretary may prescribe; and
in the case of board and care homes, be made with respect to such a home located in a State with respect to which the Secretary has received from the appropriate State licensing agency a statement verifying that the State in which the home is or is to be located is in compliance with the provisions of section 1616(e) of the Social Security Act [42 U.S.C. 1382e(e)].
The provisions of paragraphs (5), (6), (7), (9), and (10) of section 1715k(h) of this title shall be applicable to loans insured under this subsection, except that all references to “home improvement loans” shall be construed to refer to loans under this subsection.
The provisions of subsections (c), (d), and (h) of section 1703 of this title shall apply to loans insured under this subsection, and for the purpose of this subsection references in such subsections to “this section” or “this title” shall be construed to refer to this subsection.
The Secretary shall establish schedules and deadlines for the processing and approval (or provision of notice of disapproval) of applications for mortgage insurance under this section. The Secretary shall submit a report to the Congress annually describing such schedules and deadlines and the extent of compliance by the Department with the schedules and deadlines during the year.
Source credit: (June 27, 1934, ch. 847, title II, § 232, as added Pub. L. 86–372, title I, § 115, Sept. 23, 1959, 73 Stat. 663; amended Pub. L. 87–70, title VI, § 610, June 30, 1961, 75 Stat. 180; Pub. L. 88–560, title I, § 117, Sept. 2, 1964, 78 Stat. 779; Pub. L. 89–117, title XI, § 1108(m), Aug. 10, 1965, 79 Stat. 505; Pub. L. 90–19, § 1(a)(3), May 25, 1967, 81 Stat. 17; Pub. L. 90–448, title III, § 314, Aug. 1, 1968, 82 Stat. 511; Pub. L. 91–152, title I, § 111, Dec. 24, 1969, 83 Stat. 382; Pub. L. 93–204, Dec. 28, 1973, 87 Stat. 883; Pub. L. 93–383, title III, § 304(g), Aug. 22, 1974, 88 Stat. 678; Pub. L. 95–128, title III, § 308(a), Oct. 12, 1977, 91 Stat. 1135; Pub. L. 95–557, title III, § 312, Oct. 31, 1978, 92 Stat. 2099; Pub. L. 96–399, title III, § 310(f), Oct. 8, 1980, 94 Stat. 1643; Pub. L. 98–181, title I [title IV, §§ 404(b)(10), 437], Nov. 30, 1983, 97 Stat. 1209, 1222, 1223; Pub. L. 98–479, title I, § 104(a)(1), Oct. 17, 1984, 98 Stat. 2224; Pub. L. 100–242, title IV, §§ 410(a), (b), 429(e), Feb. 5, 1988, 101 Stat. 1904, 1918; Pub. L. 102–550, title V, § 511(a)–(e), Oct. 28, 1992, 106 Stat. 3784–3786; Pub. L. 105–65, title II, § 216, Oct. 27, 1997, 111 Stat. 1367; Pub. L. 105–276, title II, § 214(a), Oct. 21, 1998, 112 Stat. 2486.)
- 1934Enacted · Pub. L. 86-372 · 73 Stat. 663
- 1961Amended · Pub. L. 87-70 · 75 Stat. 180
- 1964Amended · Pub. L. 88-560 · 78 Stat. 779
- 1965Amended · Pub. L. 89-117 · 79 Stat. 505
- 1967Amended · Pub. L. 90-19 · 81 Stat. 17
- 1968Amended · Pub. L. 90-448 · 82 Stat. 511
- 1969Amended · Pub. L. 91-152 · 83 Stat. 382
- 1973Amended · Pub. L. 93-204 · 87 Stat. 883
- 1974Amended · Pub. L. 93-383 · 88 Stat. 678
- 1977Amended · Pub. L. 95-128 · 91 Stat. 1135
- 1978Amended · Pub. L. 95-557 · 92 Stat. 2099
- 1980Amended · Pub. L. 96-399 · 94 Stat. 1643
- 1983Amended · Pub. L. 98-181 · 97 Stat. 1209, 1222, 1223
- 1984Amended · Pub. L. 98-479 · 98 Stat. 2224
- 1988Amended · Pub. L. 100-242 · 101 Stat. 1904, 1918
- 1992Amended · Pub. L. 102-550 · 106 Stat. 3784
- 1997Amended · Pub. L. 105-65 · 111 Stat. 1367
- 1998Amended · Pub. L. 105-276 · 112 Stat. 2486
A history note hasn’t been published yet. The record shows enactment by Pub. L. 86-372 on 1934-06-27.
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