FHA’s manufactured housing loan program gets a facelift

Changes include an expansion of allowable income sources for borrowers vying for a FHA-insured manufactured housing loan

Manufactured housing is a topic that has gained some steam on Capital Hill as of late, with the White House announcing earlier in the year that it intends to address the lack of affordable housing in the nation by upping the available supply of MH.

In September, Biden’s administration also called on state and local governments to “reduce zoning and financing barriers to these kinds of housing – housing that allows families to achieve homeownership and build wealth.”

With renewed attention towards the manufactured housing space, the FHA moved this week to provide updated guidance to its Title I loan program, making it easier to understand and use for lenders. (The Title I program insures mortgage loans made by private lending institutions to finance the purchase of a new or used manufactured home.)

According to a press release published by the administration, this is the first consolidation of policies for the Title I program in almost 40 years, and will remove the need for lenders to refer to more than 120 separate policy documents.

One of the updates to the program is enhanced value determinations, which will now “use a sales comparison approach” and allow for qualified FHA roster appraisers to perform valuations, the FHA said.

How Freddie Mac is addressing affordable housing challenges

As part of Freddie Mac’s mission to provide liquidity, stability, affordability and equality to the housing market, Freddie Mac created its Housing Solutions team in 2020 to reduce barriers to homeownership and provide solutions to some of the nation’s toughest housing challenges. 

Presented by: Freddie Mac

Additionally, the administration is expanding allowable income sources for borrowers “consistent with the criteria for income and property valuations used in real-estate mortgage financing.”

The roster of updates also mentions that student loan debt will be calculated on par with FHA’s Title II mortgage insurance programs and that the administration will allow the use of gift funds from eligible sources. The changes can be implemented immediately but must be implemented for loans closed on and after May 9, 2022, the FHA said.

“This nation is in an affordable housing crisis and manufactured housing will be a key part of the solution,” said Lopa Kolluri, principal deputy assistant secretary for housing and the FHA.  “Our new and updated Title I 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 to easier for lenders to offer financing through the Title 1 program.”

Concurrently, the FHA published updated requirements for its Title I property improvement loan program “to make the requirements of this program consistent with current lending practices,” the FHA said.

FHA’s property improvement program provides financing that “improve livability of utility of a property through a secured on unsecured loan,” the press release said.

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