One major default is used to blast a very profitable arm of the government.
I don’t know if anyone noticed the June 3 lead article in The New York Times business section, but the reporter, Matthew Goldstein, should have talked to more people.
One company, Rosewood Care Centers, defaulted on $146 million in loans secured by 13 skilled nursing and assisted living facilities in Illinois and Missouri. According to the story, it now demonstrates the “problems plaguing the HUD program.” Plaguing? Give me a break.
Yes, it may have been likely that the buyer of these facilities in 2013 had few financing options given the two states’ reimbursement history, but that is one reason why HUD is supposed to be there as a lender. But to blast the program which 1) has a very low historical default rate over 30 years, 2) has a 65-basis point mortgage insurance premium for every loan just in case of a default, which was not even mentioned in the article, and 3) is actually one of the few profitable agencies of the federal government is well, slanted journalism. But, as you know, the Times has never liked the skilled nursing industry anyway and this may just be part of the quota of anti-SNF stories.
Look, I am in no way defending the owners of Rosewood and what they may or may not have done to cause the default, but costing taxpayers a lot of money? Hogwash.