WASHINGTON -- A delay of at least several months is expected before the Department of Housing and Urban Development implements a law allowing nursing homes with uninsured mortgages to refinance with federal insurance, a HUD spokesman said Friday.

The delay could jeopardize the ability of issuers to refinance at favorable rates hundreds of millions of dollars in tax-exempt small-issue industrial development bonds and 501(c)(3) bonds that were issued in the early 1980s and are backed by repayment of the loans, housing market participants said.

The department has not moved ahead because it is awaiting two reports, according to the spokesman. One is a study HUD commissioned from the accounting firm of Price Waterhouse on the health of the Federal Housing Administration insurance fund. The other is an audit -- expected to take several monts -- by the HUD inspector general on the program under which HUD insures nursing home loans.

Once HUD receives those reports, it will begin drafting regulations covering the refinancings, the spokesman said. That process could take several more months.

But housing market participants said the studies and the rulemaking were merely delaying tactics. The department does not want to implement the three-year-old law, they said.

HUD's reasons for holding off on implementation "are pure and total nonsense," said Steven Rother, president of Related Mortgage Corp. "This appears to be a way to delay and forestall what they have never wanted to do in the first place."

"We would like to see them move much more quickly," said Ken Stuart, assistant vice president of the AAHA Development Corp., a division of the American Association of Homes for the Aged. "It's such a simple change we didn't really feel rulemaking was necessary."

The housing market participants also warned that the delay opens up the possibility market conditions may not be favorable for the refinancings by the time HUD is ready to let them go forward. Refinancing the loans with FHA insurance would improve interest rates and credit ratings on the 501(c)(3) bonds and tax-exempt commercial IDBs backing the loans. Issued in the early 1980s, some of the bonds carry coupons as high as 14%.

"The longer HUD delays, the greater the risk that interest rates will rise," said Robin S. Salomon, a lobbyist with the law firm of Brownstein, Zeidman & Schomer. "It may make the deals less economical or just not do-ble."

Before 1987, Federal Housing Administration insurance was available only for new construction or renovation of nursing homes and did not extent to refinancings. Nursing homes with uninsured mortgage loans that wanted to refinance once interest rates dropped had difficulty doing so.

Congress passed legislation in 1987 allowing insurance on nursing home refinancings, but HUD never implemented the statute. When Congress drafted the omnibus housing bill passed late last year, it inserted a provision that directs the department to end the delay and begin writing the regulations.

Even with the 1990 provision, it still took months for HUD to agree to implement the law. Housing industry officials said several weeks ago that HUD told them they would move forward, though the department itself did not say so publicly until last week.

Congress, meanwhile, is keeping up the pressure on the department. Earlier this month Sen. Alfonse M. D'Amato, R-N.Y., wrote to HUD asking the department to explain why it had not implemented the law earlier.

Sen. D'Amato, the leading Republican on the Senate Banking Committee housing and urban affairs subcommittee, sent the letter because he "wanted to make sure this thing stayed up on the priority list," a committee aide said. "The letter is intended as a reminder Congress is still interested in this."

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