Changes ahead for Ginnie Mae and FHA’s manufactured housing program

The Title I manufactured housing program is getting an overhaul

Ginnie Mae and the Federal Housing Administration are looking to take a bigger bite out of manufactured housing finance.

In a request for input the agencies published at the end of July, FHA and Ginnie Mae detailed an array potential changes to make the manufactured housing Title I program more palatable for lenders.

Potential changes include raising loan limits or adjusting the lender eligibility requirements. The FHA asked for feedback on changing “loan features, underwriting standards, or processes,” while Ginnie Mae wondered if adjusting pooling requirements would make its program more competitive.

The FHA’s Title I program — currently the only game in town for government-backed financing of manufactured homes titled as personal property — has a maximum loan amount of $93,000 for a manufactured home and land. For a chattel loan, the maximum is $70,000. That’s significantly less than the average sales price of a new manufactured home, which the Urban Institute found was $108,100 in 2021.

The federal duo — Ginnie Mae is a corporation within HUD, securitizing loans made under FHA’s programs, among other federal agencies — made a strong case that its manufactured housing programs have some room for improvement. FHA’s financing of manufactured homes under its Title I program has dwindled, even when production increased.

Although overall manufactured homes production increased from 2020 to 2021, the amount originated under FHA’s Title I program decreased from $1.7 million in 2020 to $101,500 in 2021, the agencies found. That year, only three such loans were originated.

Ginnie Mae’s portfolio of manufactured housing mortgage-backed securities, at $189 million at the end of 2021, is not even half what it was about 20 years ago. In 2002 the agency held $477 million in manufactured housing securities.

“The government financing programs managed by FHA and Ginnie Mae are not playing a meaningful role in the financing of manufactured housing even at current production levels,” the RFI acknowledged.

Senior FHA officials suggested they would take a look at improving the program in July. The potential changes come as the Biden administration has placed manufactured housing at the center of its plan to boost affordable housing. Both of the government-sponsored enterprises are looking at ways to finance manufactured housing titled as personal property. 

As of now, FHA’s maximum loan term is 20 years for a chattel loan, 15 years for a lot, or 25 years for a combination of the two. The manufactured home must be a principal residence. The loan cannot be used to finance furnishings — but it can be used for built-in appliances, equipment and wall-to-wall carpeting.

Currently, manufactured housing pools must have an original principal balance of $1 million, made up of at least eight loans. Those loans can have different maturity dates, but they have to be within five years of each other. At least half of the pool’s original principal amount must be loans with the same original term as the loan with the latest maturity date.

Ginnie Mae will accept responses to the request for input until September 26.

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