Manufactured Home Rules Changed for Reverse Mortgages

This Mortgagee Letter provides guidance on manufactured housing eligibility requirements for Federal Housing Administration (FHA) mortgage insurance under Title II of the National Housing Act. Changes to manufactured housing requirements for new and existing construction were made by the Housing and Economic Recovery Act of 2008 (Public Law 110-289, approved July 30, 2008) (HERA). This mortgagee letter addresses those changes that can be implemented immediately.

Manufactured Homes: Eligibility and General Requirements - Title II

A manufactured home is a structure that is transportable in one or more sections, and is designed and constructed to the Federal Manufactured Construction and Safety Standards and is so labeled. To be eligible for FHA mortgage insurance, all manufactured homes must comply with the following:

1. have a floor area of not less than 400 square feet;
2. be constructed after June 15, 1976, in conformance with the Federal Manufactured Home Construction and Safety Standards, as evidenced by an affixed certification label in accordance with 24 CFR 3280.11(manufactured homes produced prior to that date are ineligible for insured financing);
3. be classified as real estate (but need not be treated as real estate for purposes of state taxation);
4. the mortgage must cover both the manufactured unit and its site and shall have a term of not more than 30 years from the date amortization begins;
5. built and remains on a permanent chassis;
6. designed to be used as a dwelling with a permanent foundation built to FHA criteria; and
7. the finished grade elevation beneath the manufactured home or, if a basement is used, the grade beneath the basement floor shall be at or above the 100-year return frequency flood elevation.

Condominium Project Approval

Under authority granted by enactment of HERA, individual manufactured housing units in condominium projects are now eligible for FHA insurance. Until updated guidance on the processing of condominium project approvals is published, manufactured housing condominium project approval is subject to the requirements of HUD Handbook 4150.1, Chapter 11. The Spot Loan Approval process as defined in Mortgagee Letter 1996-41 is not applicable. All manufactured housing project approval requests must be processed by the Homeownership Center that has geographical authority over the property to be insured.