The Mortgage Bankers Association (MBA), the Community Home Lenders of America (CHLA), and the Manufactured Housing Institute (MHI) submitted a joint letter advocating for more mortgage financing options for manufactured homes to the U.S. Department of Agriculture (USDA).
The letter, sent specifically to USDA’s Rural Housing Service (RHS), addresses a proposed rule aiming to expand financing options for manufactured home buyers and supports three key changes it would make.
The proposed rule was published in the Federal Register in August, and had its comment period extended to Oct. 31 earlier this month.
USDA’s RHS proposes key changes for manufactured home financing
The proposal intends to allow the USDA “to give borrowers increased purchase options within a competitive market and increase adequate housing,” alongside enhancing customer experiences within the single-family housing loan program.
The associations lauded the RHS for three new recommendations, including an update to current regulatory language to meet ownership requirements for energy-efficient manufactured and modular home financing.
A second change recommends removing administrative requirements from the regulations for the review and approval of applications from manufactured housing dealers for direct loans.
Finally, RHS recommends revising the definition of “manufactured home” in the regulations to remove references to RHS Thermal Performance standards for direct loans.
“MHI, MBA, and CHLA are interested in working with RHS to explore the causes and solutions for RHS manufactured home loans so significantly trailing the ratio of manufactured home loans in the single-family home markets,” said Scott Olson, executive director of CHLA, in a statement.
Manufactured homes could help solve affordability woes
In their letter, the associations committed to expanding financing options for manufactured housing to help address challenges consumers are facing from steep housing costs, low inventory levels and rising mortgage rates.
“In 2022, the price for an average manufactured home was $127,250, while the average price of site-built homes was around $413,000,” the letter said. “And, the average income of a manufactured home buyer was about $35,000, while the average income of a site-built home buyer was over $100,000.”
The RHS’ most common manufactured home loan option is the Guaranteed Loan Program (GLP), which guaranteed more than 71,000 loans in fiscal year 2022 and more than 37,000 loans in fiscal year 2023. However, manufactured homes make up a very small share of the total figures, the associations pointed out.
“Unfortunately, the RHS GLP guaranteed only 146 manufactured homes in 2022 and 177 manufactured homes in 2023,” the letter stated.
“Manufactured home loans constituted only a miniscule portion of RHS guaranteed loans – 0.2% of RHS guaranteed loans in 2022 and 0.5% of RHS guaranteed loans in 2023 – even though manufactured homes consistently make up around 10% of new single-family home starts.”
While the associations signal general support for the proposed rule in the Federal Register, they also recognize that the proposed changes are not fundamental.
“MHI, MBA, and CHLA do not consider these actions ‘game changers’ – but they are constructive, and we commend RHS for proposing them,” the letter reads. “MHI, MBA and CHLA would also like to work with you to identify other potential impediments to the ability of RHS direct and guaranteed loans to achieve their full potential with regard to financing manufactured home loans.”
The U.S. Department of Housing and Urban Development (HUD) is also turning its attention toward the needs of rural areas recently. HUD created proposals to expand broadband internet access to a greater number of rural communities.