When a nursing home chain collapsed last year, its default on $146 million in loans became the biggest loss in the 60-year-history of a HUD loan-guarantee program, according to a new investigative report.
The New York Times reported Friday on Rosewood Care Centers’ backing by a Department of Housing and Urban Development that insures some 15% of U.S. nursing homes.
While HUD officials told the newspaper the Chicago company’s demise was an “outlier,” the Times outlined a lack of record keeping and oversight around HUD’s nursing home loan insurance program. It has left some worried about its future.
The program helps senior care facilities secure lower-cost loans, promising to cover them if the owners balk. The program now guarantees $20 billion in mortgages for more than 2,300 nursing homes, the Times said.
At Rosewood, owners never filed required financial statements with HUD. Investor Rabbi Zvi Feiner purchased Rosewood and its 13 nursing and assisted living facilities in late 2013.
He has since been sued in connection with Rosewood and other investments, with vendor plaintiffs going after debts and investors claiming misappropriation.
Last August, Rosewood defaulted on $146 million in mortgages. HUD paid off the loan but also went to court and won receivership for the properties. The agency now plans to auction them off, though officials estimate they are only worth $95 million.