FHA Expansion Sought For Mfg Homes

Between 60 and 70 percent of the roughly 400,000 manufactured housing loans made in 2007 were mortgages, according to a press briefing Tuesday by the Manufactured Housing Institute and Rep. Joe Donnelly, an Indiana Democrat on the House Financial Services Committee. The volume was just a “sliver” of the overall mortgage market.

Shipments of new manufactured homes are expected to rise to up to 105,000 this year from about 96,000 in 2007, when they accounted for more than 10 percent of all new home sales. In 2000, shipments of factory-built homes were 250,000, according to the call.

Florida, California and Arizona, which accounted for around 30 percent of all manufactured home shipments during the past three years, have seen a decline in shipments.

The glut of site-built home inventory has also hindered the progress made in the Gulf Coast area. However, the institute forecast continued strength in that area, other than Florida, and improved financing environment or manufactured homes in 2008.

There are roughly 8.7 million manufactured homes nationwide housing 18 million people, the institute said. The homes appeal to a large segment of the emerging markets, while many baby boomers are also choosing them as second homes.

The institute is focused on improving capital flow to manufactured housing by modernizing Federal Housing Administration’s Title I and Title II programs and cooperating with the government-sponsored housing enterprises for the development of wider loan choices — including acquisition of manufactured housing personal property loans — and more flexible underwriting, MHI said in announcement.

The FHA Title 1 program, which involves home-only loans for the manufactured homes on either leased or owned land, has seen its loan volumes drop “precipitously” to less than 1,500 loans per year for the last several years, compared to 40,000 in 1992, primarily because it is outdated, said Brian Cooney, MHI senior vice president, in the call.

The FHA Manufactured Housing Loan Modernization Act would reform the FHA Title 1 program to boost loan limits on manufactured homes from the current $48,600 to approximately $70,000 and then index them on an annual basis. It would mandate loan-by-loan insurance and increase the Title I up-front insurance, the institute said.

“We believe [President Bush] will sign it into law,” Donnelly said in the call. “We feel this is going be a real shot in the arm for manufactured housing,” and help solve “part of our housing problem.”

MHI announced it has also called on Congress to make FHA loans available for manufactured housing condominiums and to enable FHA to serve more borrowers living in manufactured housing and in land-lease communities.