How to Analyze FHA‐Insured Mortgage Hospital Bonds

This chapter discusses ways to analyze federal housing administration (FHA)‐insured mortgage hospital bonds. The analyst should carefully review the indenture and any offering statements and discuss each aspect of the transaction with the underwriter. The debt service reserve fund should contain an amount at least equal to maximum annual debt service on the bonds. Conceptually, the FHA‐insured mortgage hospital bonds program can provide a high degree of security to the bond investor. It is a little more complicated than most other revenue bonds with federal and cash flow timing considerations involved. Learning the actual detailed structure of the deal is critical. The answers to the issues discussed in this chapter will aid the credit analyst in assessing the creditworthiness of an FHA‐insured mortgage hospital bond.