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Manufactured homes industry claims federal law inhibits growth

Implementation of a law passed more than a decade ago has stymied lending to buyers of manufactured homes, according to representatives for the industry. In a hearing Wednesday before the House Financial Services Committee, John Bostick, chairman of the Manufactured Housing Association for Regulatory Reform, plans to testify that the Department of Housing and Urban Development failed to implement key provisions of the law, leading to a situation where manufactured homes retain a reputation for being mere trailers as opposed to homes. Bostick claims a failure to change this reputation has pushed Ginnie Mae to announce higher loan securitization requirements for manufactured homes when compared to other types of FHA-insured loans. The industry said the Manufactured Housing Improvement Act of 2000 was created by Congress to streamline regulatory burdens on the industry and open up financing to homeowners who wanted manufactured homes. But professionals claim that since then HUD's activities have undermined the value of manufactured homes, making it harder for buyers to obtain financing on nontraditional homes. "Specifically, FHA Title I manufactured housing lenders must have minimum net worth of at least $10 million — as compared with $2.5 million for site-built lenders — plus 10% of the dollar amount of all outstanding manufactured housing mortgage-backed securities," according to Bostick's prepared testimony. He further alleges Fannie Mae and Freddie Mac continue to discriminate against manufactured homebuyers despite being instructed by Congress to develop loans that can be sold to the secondary mortgage market. Back in November, Kevin Clayton, CEO of Clayton Homes and the leader of the Manufactured Housing Institute, said the industry is in an uphill battle, dealing with lost business to the subprime lending boom in the early part of last decade, which allowed more families to move into traditional site-built homes, killing business for manufactured homes. Write to Kerri Panchuk.

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