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When the proposal for cutting the mortgage insurance premium (MIP) for new construction/rehabilitation projects to 45 points for the next fiscal year was m

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

ade, Federal Housing Administration (FHA) officials at the mortgage bankers’ association multi-family conference were given a standing ovation. Confidence

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

in FHA apartment financing is nearly at its highest. The last fiscal year saw a record number of FHA financed loans and lender volume projections for this

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

year are promising across the board.

Improving Terms

In the recent years, FHA overcame the credit subsidy problem, proving its recognition in u

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

nderwriting inefficiencies that hampered many pending deals. An example is a new policy developed for setting the MIP to enable programs to break even, all

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

owing for the uninterrupted continuation of the Sec 221 (d) (4) program since October 2002. At the start of the policy in 2002, the MIP was at 80 basis poi

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

nts. In January 2004, the MIP was reduced to 50 basis points and It kept being reduced.

The five basis point changes, though not affecting production volu

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

mes significantly, indicate the stability and health of the market for FHA-financed loans. Its importance is high. The tremendous lowering is less importan

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

t than the psychological effect. With plenty at stake in reputation, FHA’s record-breaking volumes for multifamily financing are indicative of its health.

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

Overall $7.36 billion for multifamily loans was insured in 2003, marking an $86 million increase. $2.5 billion of the total was for new construction.

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

Steady Market, Steady Rates

Some lenders feel permanent loan rates will remain low

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

due to soft or recuperating markets. The expectation is for continuing at around 4.4% over the 10-year Treasury bond until mid-year at least. Many predict

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

the production of more loans this year or at least maintaining of current loan production volumes.

This fiscal year is expected to be strong but slowdown

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

is possible after the quick and easy production of Sec 223(a)(7) refinance loans. KeyBank Real Estate Capital is also breaking into FHA majorly. Over 2003,

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

roughly $100 million in FHA loans was produced. This Year, the expected figure is $250 million. FHA is returning with more user-friendliness and as a one

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

stop, one fee, one program. Most FHA offices are now capable of Multifamily accelerated processing (MAP) deals. A new construction deal now takes four to s

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

ix months instead of a year.

Softness in the market continues. But some rehabilitation deals are not as susceptible to vacancy rates. The updated indexing

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

of FHA mortgage limits and help with debt-service coverage restraints was welcomed. Larger loans mean real money. The MAP program is a success with GMACCM

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

totaling $346.8 million in FHA multifamily loans.

The restraints had limited FHA insuring to only $4 billion a year. GMACCM’s FHA production is to remain

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

steady this year. This optimism has lured other lenders to join in. New lenders making their entry include ARCS commercial mortgage, LP and Wachovia Corp.

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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