FHA Proposes Changes to Manufactured Homes Rules

The Federal Housing Administration (FHA) has proposed a rule in the Federal Register to increase and index the loan limits for its Title I Manufactured Home Loan Program, a program which insures loans used to finance manufactured homes titled as personal property. The rule seeks public comment on FHA’s proposed data-driven methodology to calculate loan limits for the program on an annual basis. Publication of the rule is the latest step in FHA’s efforts to promote manufactured homes, an important component of the Biden Administration’s May 2022 Housing Supply Action Plan.

“Adjusting loan limits to current market conditions will make Title I a much more useful source of affordable loan financing for manufactured homes,” said FHA Commissioner Julia R. Gordon. “This proposal is the next step in FHA’s ongoing work to support manufactured housing as an affordable and attractive option in a challenging housing market.”

In an effort to compensate for the lack of affordable housing nationwide, the Biden Administration announced its Housing Supply Action Plan earlier this year to ease the burden of housing costs over time, by boosting the supply of quality housing in every community. The Plan includes legislative and administrative actions that will help close America’s housing supply shortfall over the course of five years, beginning with the creation and preservation of hundreds of thousands of affordable housing units in the next three years.

Under the Plan, the Biden Administration will:

• Reward jurisdictions that have reformed zoning and land-use policies with higher scores in certain federal grant processes, for the first time at scale.
• Deploy new financing mechanisms to build and preserve more housing where financing gaps currently exist: manufactured housing (including with chattel loans that the majority of manufactured housing purchasers rely on), accessory dwelling units (ADUs), two- to four-unit properties, and smaller multifamily buildings.
• Expand and improve existing forms of federal financing, including for affordable multifamily development and preservation. This includes making Construction to Permanent loans more widely available by exploring the feasibility of Fannie Mae purchase of these loans; promoting the use of state, local, and Tribal government COVID-19 recovery funds to expand affordable housing supply; and announcing reforms to the Low Income Housing Tax Credit (LIHTC), which provides credits to private investors developing affordable rental housing, and the HOME Investment Partnerships Program (HOME), which provides grants to states and localities that communities use to fund a wide range of housing activities.
• Ensure that more government-owned supply of homes and other housing goes to owners who will live in them–or non-profits who will rehab them–not large institutional investors.
• Work with the private sector to address supply chain challenges and improve building techniques to finish construction in 2022 on the most new homes in any year since 2006.

Loan limits for the Title I Manufactured Home Loan Program were last updated by the Housing and Economic Recovery Act of 2008. The proposed methodology will be used to establish indexes that annually calculate and adjust loan limits using sale prices, number of sections of the manufactured home, and property data collected by the U.S. Census Bureau. FHA’s proposal includes separate indexes for single section manufactured homes and multi-section manufactured homes for the three loan categories covered under the Title I Manufactured Home Loan Program:

• Manufactured Home Loans used for the purchase or refinance of manufactured home only.
• Manufactured Home Lot Loans used for the purchase or refinance of the land where the home will be installed.
• Manufactured Home and Lot Combination Loans used for the purchase or refinance of both the home and the land on which the home will be installed.

Click here to view the FHA’s proposed rule as published in the Federal Register.