HUD’s New Guidelines For Manufactured Homes, Includes Reverse Mortgages

image Last week HUD issued Mortgagee Letter 2009-16 which provides guidance on changes to manufactured housing requirements for new and existing construction were made by the Housing and Economic Recovery Act of 2008.  ML 09-16 addresses the changes that can be implemented immediately.

HUD defines a manufacture home as a structure that is transportable in one or more sections, and is designed and constructed to the Federal Manufactured Construction and Safety Standards and is so labeled. To be eligible for FHA mortgage insurance, all manufactured homes must comply with the following:

  1. Have a floor area of not less than 400 square feet;
  2. Be constructed after June 15, 1976, in conformance with the Federal Manufactured Home Construction and Safety Standards, as evidenced by an affixed certification label in accordance with 24 CFR 3280.11(manufactured homes produced prior to that date are ineligible for insured financing);
  3. Be classified as real estate (but need not be treated as real estate for purposes of state taxation);
  4. The mortgage must cover both the manufactured unit and its site and shall have a term of not more than 30 years from the date amortization begins;
  5. Built and remains on a permanent chassis;
  6. Designed to be used as a dwelling with a permanent foundation built to FHA criteria; and
  7. The finished grade elevation beneath the manufactured home or, if a basement is used, the grade beneath the basement floor shall be at or above the 100-year return frequency flood elevation.

Modular construction is also a factory-built home, but is treated the same as stick-built housing.

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According to ML 09-16, under the authority granted by HERA, individual manufactured housing units in condominium projects are now eligible for FHA insurance.  I’ve never seen anything like this before but apparently it exists.

However, until updated guidance on the processing of condominium project approvals is published, manufactured housing condominium project approval is subject to the requirements of HUD Handbook 4150.1, Chapter 11.

The Spot Loan Approval process as defined in Mortgagee Letter 1996-41 is not applicable, all manufactured housing project approval requests must be processed by the Homeownership Center that has geographical authority over the property to be insured.  To read a copy of the rest of ML 09-16 click the link below.

Mortgagee Letter 2009-16

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  • What is different? Its seems like everything is the same as it has been? Except the possiblity to do a manufactured home in a condo setting? Which sounds like its still open to the understanding of Chapter 11.

  • As far as I could tell it was only the HERA mention regarding individual manufactured housing units in condominium projects.

    If anyone has lots of experience with manufactured housing & HECMs let us know if you notice anything different.

  • There are two manufactured home projects in my area where title is held in condominium. I am a loan officer and tried contacting HUD’s Ownership Center on how to get these projects approved, but they were unable to help me. When I spoke to my lender on the same issue, they told me the HOAs of these projects need to contact the HUD’s Ownership Center and get approval on their own. I guess until we hear further from HUD, or the next mortgagee letter on this issue, the LOs pretty much have their hands tied behind their backs.. Has anyone else tried getting approval for a project yet?

  • One other requirement is the manufactured home had to have been directly shipped from the manufacter to the property location. Manufactured home does not qualify for a Reverse Mortgage if the manufactured home has been re-located to another location. Unless something has changed, this is my understanding. Anyone care to reply?

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