MBA Urges HUD to Take Opportunities on Manufactured Housing

Mike Sorohan

February 27, 2018

The Mortgage Bankers Association, in a Feb. 26 letter to HUD, said manufactured housing offers the agency with opportunities to help meet the nation's affordable housing needs and urged it to take a more flexible regulatory approach.

MBA Senior Vice President of Public Policy and Member Engagement Pete Mills told HUD Secretary Ben Carson that the agency's current review of existing and planned manufactured housing rules will ensure that the nation meets its affordable housing needs, particularly for low- to moderate-income families.

MBA offered recommendations that focus on safely and appropriately expanding consumer eligibility, eliminating unnecessary industry burdens and lowering costs for both lenders and consumers. MBA noted several relevant HUD requirements are outdated, have increased compliance costs and have created unnecessary burdens for lenders, suppliers, and builders. "These issues have led to additional costs being passed onto consumers," MBA said.

MBA recommended removing a restriction that requires manufactured housing to meet FHA insurance-eligible mortgages be directly transported from the manufacturer or the dealership to the site on which the unit will be insured and have not been installed or occupied previously at any other site. MBA said this requirement is "unnecessarily restrictive, as lenders can obtain a structural engineer's report to ensure the foundation meets the necessary guidelines." Removing this restriction and replacing it with an engineer's foundation and structural inspection following the move would provide access to existing manufactured homes that borrowers cannot currently purchase through FHA loans. "MBA recommends that HUD eliminate the one-time move restriction and replace it with a requirement for an inspection following a move," MBA said.

Tiered Pricing
MBA said the current Tiered Pricing rule dis-incentivizes lenders from originating smaller balance loans and should be eliminated. "MBA recommends that the Tiered Pricing structure be eliminated and that lenders be allowed greater flexibility with respect to the Mortgage Charge Rate," MBA said.

Engineer's Certification for Foundation
MBA recommends HUD streamline the process by which the engineer's certification is obtained, thereby reducing costs for lenders and consumers. "There are likely a number of options for reducing this cost without jeopardizing the safety of the properties or the borrowers residing within them," MBA said.

Title Evidence Required for Conveyance
MBA recommends HUD require all manufactured home title evidence to be completed at closing and make that process a condition of closing so that it is completed properly at that time.

Flood Elevation
MBA recommends flood elevation requirements on existing manufactured homes be harmonized with those of other types of existing construction.

"Opportunities exist to improve HUD's procedures and requirements for manufactured housing, which in turn should benefit both homebuyers and lenders," Mills said.

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