FHA Proposes Plan to Adjust Manufactured Home Loan Limits | News by edition
The Federal Housing Administration (FHA) has released a proposed rule for adjusting limits on loans that finance manufactured homes that qualify as personal property.
FHA’s Title I Manufactured Home Loan Program insures loans used to finance manufactured homes that qualify as personal property. These loans can be used to purchase or refinance a manufactured home, land on which to place a manufactured home, or a manufactured home and lot in combination. To qualify, the manufactured home must be used as the borrower’s primary residence.
The proposed rule seeks public comment on the data-based methodology that the FHA suggests be used to calculate loan limits for the program. The comment period is now open and will close on December 19, 2022.
“Adjusting loan limits to current market conditions will make Title I a much more useful source of affordable loan funding for manufactured homes,” Federal Housing Commissioner Julia Gordon said in a statement. “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.”
The rule is the latest action the FHA has taken to promote manufactured homes as an affordable route to homeownership, an important aspect of the Biden-Harris administration’s action plan to address the problem of housing supply.
“The majority of people buying new manufactured homes rely on personal property financing (home loans) rather than conventional mortgages,” the White House said. “This type of financing typically costs more than traditional mortgage financing due to higher interest rates and shorter loan terms….
“[R]Recognizing the cost and development time savings provided by manufactured homes, HUD makes it easier to finance new units and help manufacturers update their designs to meet changing consumer demands,” he said. for follow-up. “This includes working to increase the ease of use of the FHA Title I loan program for manufactured homes, supporting greater securitization of Title I loans through the Ginnie Mae platform, updating the HUD code to enable manufacturers to modernize and expand their production lines and help manufacturers meet the supply chain. problems.”
The proposed rule will be the first update to loan limits for the Title I manufactured home loan program since 2008. The methodology will be used to establish indices to calculate and annually adjust loan limits using sale prices , the number of manufactured home sections and ownership data collected by the US Census Bureau, the FHA said. It also includes separate indexes for single-section prefab houses and multi-section prefab houses.
“HUD proposes to adjust the loan limits for single-section and double-section or multi-section manufactured home loans each year based on changes in the average price indexes for single-section and double-section manufactured homes, respectively. “, indicates the proposed rule. “To determine each index, HUD proposes to use the last 12-month average price data available at the time HUD calculates the adjustment, weighted by the number of manufactured units shipped during that same period.
“Each index would be calculated separately, using shipping and price data for single-section units for the single-section index and shipping and price data for double-section units for the single-section index. double section or higher. HERA Compliant [Housing and Economic Recovery Act]HUD would not decrease loan limits even if an annual index reflects a decline.
Another index would be created for manufactured home lot loans based on median home prices taken from new Census Bureau home sales data. HUD would view these estimates as an “appropriate general indicator” of the changing prices of land to be financed with these types of loans. The limits would be set annually by indexing the loan limit established by HERA in 2008 to growth in median new home prices.
For combined loans, the limits would be determined by adding the loan limits for the manufactured home lots to the loan limit for one or two sections, depending on the nature of the house.
The proposed rule specifically mentions that it does not offer an index for manufactured home improvement loans.
“While HERA has permitted adjustments to the limit of loans that fund the improvement of manufactured homes under the Property Improvement Loan Program, this permission has not been extended to condominiums, row or individual site-built dwellings,” the rule reads. “HUD does not believe that existing Census Bureau data fully reflects changes in the market for manufactured housing improvement loans. prefabricated houses would be subject to inaccuracies.”
The ruler added: “[S]setting different loan limits for this subset of the broader property improvement loan program would cause complications, as the program and the property improvement market make no further distinction between home improvements prefabricated and non-prefabricated houses. Accordingly, HUD intends to issue an Advance Notice of Proposed Rulemaking Seeking Public Comment for comments on the implementation of a Property Improvement Lending Index for Manufactured Homes.