​Most long term care loans, outside of HUD, are short-term loans that need to be recapitalized after their maturity rate, so the need for refinancing is great, says NIC’s Hargrave. With the constriction in financing, “one of the big worries among many investors right now is that [this situation is] going to lead to higher default rates. Some properties need to refinance or they go into default, and if there’s no financing available” the company is in a very difficult position, says Hargrave.

NIC tracks loan performance, measuring the number of loans that are current on payments versus the percentage in restructuring, delinquency, or foreclosure. “The theory that the lack of financing would be leading toward higher default rates is not yet quite playing out in our industry,” says Hargrave. “In our sector the percentage of performing loans remains high.” In the first quarter of 2009, 98.7 percent of loans were current, or performing, so the nonperforming rate was 1.3 percent.

“That’s a pretty low nonperforming rate,” says Hargrave. Compared to last year, it has gone down from 99.3 percent. “What that speaks to is we’re starting to see some movement in terms of the percentage of nonperforming loans in our sector, but not to the same [extent] as you’ve seen in other forms of real estate. The regular forms of commercial real estate have seen pretty dramatic rises” in non-performing loan rates.