The Cal-Mortgage Loan Guarantee Insurance Program will probably begin processing new loan applications as early as February, ending a moratorium that began Sept. 3, a California official said recently.
The moratorium on accepting new applications occurred in the aftermath of a technical default by Triad Healthcare. The Encino, Calif.-based health system last summer missed a payment securing a $167.4 million certificate of participation refunding issue.
Gregory Roth, chief deputy director for the Office of Statewide Health Planning and Development, which oversees the Cal-Mortgage program, said the moratorium on new applications has given Cal-Mortgage "a time-out so we could get a clear look at ourselves and at the real risks in our portfolio."
Since 1969, Cal-Mortgage has insured loans through a fund built from Cal-Mortgage fees and premiums, backed by the full faith and credit of the state. Cal-Mortgage has outstanding about 210 insured projects valued at $2.02 billion.
Cal-Mortgage dipped into a debt service reserve fund to make a $9 million interest payment due Aug. I to Triad's certificate holders. Triad is Cal-Mortgage's largest borrower, representing 8.27% of the program's portfolio.
Roth said there are "positive signals" that the Triad default is being resolved. Triad will be able to make its next debt service payment" in February, Roth said. Triad recently brought aboard new management and is "making changes," he said.
In a related development, Dennis Fenwick was named deputy director of Cal-Mortgage, effective Nov. 15. A former California deputy attorney general, Fenwick replaced Vincent P. Brown, who was appointed chief of administration for the California Department of Finance on Sept. 20.