Manufactured Home Lending Update

Nationally Manufactured Housing made up of nearly a quarter of all new homes sold for less than $200,000 last year.

Now, notice that I said ‘Manufactured Home’ versus ‘Mobile Home’. What is the difference? It has do with the building codes in which the home was constructed. Prior to 1976 non-site built homes are called ‘Mobile Homes’ and post 1976 are called ‘Manufactured Housing’. There are also ‘Modular Buildings’ which are constructed to a commercial building code and are fairly rare in residential use in Arizona.

Recently FHA made some changes to manufactured housing lending guidelines, something that has not been done since 1992.

There are two types of loans available for manufactured or mobile homes. These are for homes in which the buyer does not secure the loan with the land (personal property or Chattel loan) or a regular conventional loan.

Because buyers of manufactured homes are typically seen as a higher risk, lenders typically charge up to a full ¾ point more for manufactured home loan versus a site built home. This obviously puts downward pressure on the manufactured home price or resale value.

In the past Fannie Mae and Freddie Mac would not buy ‘Chattel’ loans, which means that few lenders would make these types of loans.

However, recent changes by FHA now indicate that they would insure up to 90% of the lender’s losses on each loan, making it more likely lenders will make these types of loans. FHA has raised the limits it will insure to $70,000 from $48,600 for chattel loans and $92,900 from $64,800 on a loan involving both a home and land.

This is great news for the manufactured housing market. This should entice more institutions to make loans for manufactured housing. If you are working with a buyer or a seller, it is imperative that the agent has a lender that is a SPECIALIST in manufactured home lending. This type of lending is very complicated and you need someone very experience and knowledgeable.