Manufactured Housing News: FHA Revises Manufactured Home Loan Program to Include Homes Titled as Personal Property
Manufactured housing is a topic that has gained steam on Capitol Hill as of late, with the White House announcement earlier in the year that it intends to address the lack of affordable housing in the nation by upping the available supply of manufactured homes. Biden’s administration also called on state and local governments to “reduce zoning and financing barriers to these kinds of homes — housing that allows families to achieve homeownership and build wealth.”
With renewed attention towards manufactured housing, the Federal Housing Administration (FHA) on 11/9/21 announced the publication of significantly revised and enhanced policies under its Single Family Title 1 Manufactured Home Loan Program for lenders to provide loans for financing of manufactured homes, including those titled as personal property, and the properties on which these homes will reside. Note: The Title 1 Manufactured home loan program provides guidance making it easier to understand and use for lenders. (The Title 1 program insures mortgage loans made by private lending institutions to finance the purchase of a new or used manufactured home).
The enhanced policies will also provide updated guidance that will make the program easier to understand and use for lenders, providing expanded eligibility requirements for loan financing that are consistent with the criteria for income and property valuations used in real estate mortgage financing.
This nation is in an affordable housing crisis and manufactured housing will be a key part of the solution,” said Principal Deputy Assistant Secretary for Housing and the Federal Housing Administration, Lopa P. Kolluri. “Our new and updated Title 1 policies will not only expand access to credit for borrowers seeking loans for quality and affordable personal property manufactured homes, but will also make it easier for lenders to offer financing through the Title 1 program.”
FHA’s new Title 1 policies have now been incorporated into the Single-Family Housing Policy Handbook 4000.1. This is the first consolidation of policies for the Title 1 program in almost 40 years and removes the need for lenders to refer to more than 120 separate policy documents. With these updates, Title 1 Manufactured Home Loan Program requirements now include features that remove financing barriers and expand access to credit, including:
- Enhanced value determinations that use a sales comparison approach, allow for qualified FHA Roster Appraisers to perform valuations.
- Expanded allowable income sources for borrower qualification that are comparable to FHA’s Title 11 mortgage insurance programs; and
- Additional flexibilities which include student loan debt consistent with FHA’s Title 11 mortgage insurance programs and allowing the use of gift funds from eligible sources.
In addition to Title 1 Manufactured Home Loan Program updates, FHA also published updates to the requirements for its Title1 Property Improvement Loan Program to make the requirements of this program consistent with current lending practices. The Title 1 Property Improvement Program is designed to help homeowners finance improvements to improve the livability or utility of a property through a secured or unsecured loan.
Both the Title 1 Manufactured Home Loan Program and Title 1 and Title 1 Property Improvement Loan Program updates may be implemented by lenders immediately but must be implemented for loans closed on and after May 9, 2022.
