Modern

manufactured
homes
are
an
unusual
feature
of
today’s
housing
market,
the
rare
homeownership
opportunity
that
is
both
lower-cost
and
high-quality.
Thanks
to
the
efficiencies
baked
into
the

construction
processes
of
manufactured
homes,
these
factory-built
houses
are
both
faster
and
less
expensive
to
build
than
site-built
homes,

saving
buyers
between
$50,000
to
$100,000
per
unit.

However,
despite
these
advantages,
the

manufactured
housing
market
is
struggling—not
from
a
lack
of
willing
buyers,
but
rather,
because
there
haven’t
been
any
functioning
federal
programs
and
few
lenders.
The
result
is
that
safe
and
affordable
financing
is
out
of
reach
for
tens
of
thousands
of
credit-ready
homebuyers
looking
to
purchase
a
manufactured
home.

Yet
help
might
be
on
the
way.
New
changes
from
the


Federal
Housing
Administration
(FHA)
and


Ginnie
Mae,
which
insure
and
guarantee
loans,
could
help
open
an
untapped
market
for
lenders
looking
to
expand
their
businesses
and
improve
access
to
credit
for
buyers
of
manufactured
homes.

Unlike
site-built
homes,
which
are
always
titled
as
real
estate,
over
40%
of
manufactured
housing
is
titled
as
personal
property
(the
same
way
a
car
is
titled).
When
a
manufactured
home
is
titled
as
personal
property,
a
mortgage
cannot
be
used,
so
the
next
best
option
is
to
take
out
a
personal
property
loan,
known
in
the
industry
as
a
“home-only”
or
“chattel”
loan.

Demand
for
home-only
financing
is
strong;
in
2019,
there
were
more
than

200,000
home-only
loan
applications.
Nevertheless,
in
2021,
only

36%
of
completed
home-only
loan
applications
were
approved;
this
64%
denial
rate
has
remained
relatively
unchanged
over
the
last
four
years.
Credit
standards
for
home-only
applicants
are
much
higher
than
for
buyers
seeking
a
mortgage,
and
this
helps
explain
the
high
denial
rates.
For
example,
research
shows
that
a
home-only
loan
applicant
with
a
super-prime
credit
score
(720
or
higher)
is

less
likely
to
be
approved
for
financing
than
a
mortgage
loan
applicant
with
a
subprime
credit
score
(580
to
619).
And
when
buyers
of
manufactured
homes
are
unable
to
secure
a
loan,
they
must
eitherscrape
together
the
cash
on
their
own
or
resort
to
seller
financing—or
forgo
the
purchase
altogether.

Yet

tough
credit
standards
are
only
one
of
several
reasons
the
demand
for
home-only
loans
is
not
being
met.
Much
of
this
market
dysfunction
is
also
attributable
to
a
lack
of
lenders.
Just
five
lenders
originated
more
than

75%
of
all
home-only
loans
from
2018
to
2022,
four
of
whom
specialize
in
home-only
lending.
Mindful
of
the
dangers
of
such
an
uncompetitive
market
and
consumer
challenges
with
getting
safe
and
affordable
financing,
the
FHA
and
Ginnie
Mae
jointly
announced
late
last
month

a
series
of
updates
designed
to
get
more
lenders
to
participate
in
the
Title
I
Manufactured
Home
Loan
and
Title
I
Loan
Securitization
programs,
the
only
federal
programs
that
help
lenders
to
make
home-only
loans.

To
date,
Title
I
programs
have
been
grossly

underutilized,
due
largely
to
outdated
program
requirements
and
guidelines.
However,
the
recently
announced
updates
should
help
to
reduce
these
barriers
to
lender
participation,
paving
the
way
for

new
entrants
into
a
market
that
is
desperate
for
more
finance
companies
and
uniquely
positioned
to
help
address
the
nation’s
unprecedented
affordable
housing
crisis.

The
home-only
lending
market
presents
several
major
opportunities.
For
lenders,
the
market
offers
the
prospect
of
a
new
and
growing
line
of
business.
The
FHA
has
an
opportunity
to
extend
its
considerable
manufactured
housing
expertise
to
strengthen
a
critical
market.
In
addition,
government-sponsored
enterprises
(GSEs)
could
play
an
important
role
and
better
fulfill
their
congressionally

mandated
Duty
to
Serve
by
beginning
to
purchase
home-only
loans
to
boost
lender
participation
and
the
supply
of
financing.
And
for
the
housing
market
writ
large,
federal
programs
can
increase
the
availability
and
affordability
of
manufactured
homes
and
consumer
access
to
safe,
affordable
financing
for
the
nation’s
most
affordable
pathway
to
homeownership.

Aware
of
these
opportunities
as
well
as
the
worrying
shortage
of
home-only
lenders,
leaders
from
the
manufactured
housing
sector,
including
nonprofit
and
for-profit
lenders;
federal
officials
from
a
range
of
government
agencies;
and
other
industry
representatives
convened
in
Washington,
D.C.,
in
February
to
discuss
the
changes
FHA
and
Ginnie
Mae
are
making
and
the
next
steps
to
best
grow
the
home-only
loan
market.
Attendees
of
the
closed-door
meeting,
which
was
hosted
by
the
Lincoln
Institute
of
Land
Policy
and
The
Pew
Charitable
Trusts,
agreed
that
the
most
effective
way
to
address
the
current
lack
of
home-only
lenders
is
to
establish
functioning
FHA
and
GSE
loan
programs
that
can
attract
additional
loan
originators.

Although
FHA
and
GSE
programs
that
can
standardize
the
home-only
market
are
crucial
to
growing
that
market,
so
too
is
lender
participation.
The
more
loan
originators
who
are
willing
and
able
to
serve
home-only
buyers,
the
more
likely
the
home-only
market
will
thrive,
fueling
a
virtuous
cycle
of
consumer
demand
that
can
grow
new
lending
opportunities
and
increase
access
to
affordable
homeownership.

Jim
Gray
is
a
Senior
Fellow
at
the
Lincoln
Institute
of
Land
Policy.
Rachel
Siegel
is
a
senior
officer
with
The
Pew
Charitable
Trusts’
housing
policy
initiative.

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