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| The U.S. Department of Housing and Urban Development issued updated lending guidelines for manufactured homes financed with loans insured by the Federal Housing Administration.The updates were part of the Housing and Economic Recovery Act of 2008, which was enacted in July 2008, according to Mortgagee Letter 2009-16 issued today.
Borrowers must have at least a 3.5 percent cash investment in the purchase of a manufactured home, though land equity is also acceptable. The portion of the structure that is considered personal property can also be considered toward the owner’s investment. In addition, gifts are allowed. Borrowers can be replenished for their cash invested during construction as long as canceled checks or paid receipts are provided. Otherwise, the borrower may not receive more than $500 cash back. The maximum term on FHA financing for manufactured homes is 30 years. When a property has been owned less than six months, the lower of the total cost or appraised value will be used on construction-permanent loans. But appraised value is used when the property has been owned more than six months. Manufactured homes that have been permanently erected on a property for more than one year must comply with HUD 4155.1 3. In order to be eligible for FHA insurance, a manufactured home must have at least 400 square feet of floor area and been constructed after June 15, 1976, in compliance with the Federal Manufactured Home Construction and Safety Standards. It must be on a permanent foundation built to FHA criteria and designed to be used as a dwelling. The elevation of the finished grade beneath the basement or home must be at least as high as the 100-year flood mark, and a perimeter enclosure must be utilized. FHA mortgages encompass the unit and the site, which must be classified as real estate. A manufactured unit previously installed at another location is ineligible for FHA Title II insurance. Loan files will need to include an Engineer’s Certification on Foundation Compliance completed by a licensed professional engineer or registered architect. However, no certificate is required when an existing FHA loan is being refinanced or the transaction is an FHA REO sale. A HUD-92051 Compliance Inspection Report is required on new construction. Manufactured homes cannot be financed with FHA loans if they are in Flood Zones A or V. Termite inspections requirements for manufactured homes are the same as for stick-built homes. Factory-built modular homes are not limited to manufactured housing programs and are treated like stick-built homes. |
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