HUD Announces Manufactured Housing Policy Guidance:

HUD Announces Manufactured Housing Policy Guidance: On May 21, 2009, the US Department of Housing and Urban Development released Mortgagee Letter 2009-16 on Federal Housing Administration (FHA) mortgage insurance eligibility for manufactured housing. The Housing and Economic Recovery Act of 2008 authorized HUD to make changes to manufactured housing for new and existing construction. FHA states that a manufactured home is a structure that is transportable in one or more sections, and is designed to be constructed to the Federal Manufactured Construction and Safety Standards and is so labeled. While modular housing is also factory built, FHA treats it as stick-built housing.

To be eligible for FHA insurance the manufactured home units and land must be classified as real estate although they need not be treated as real estate for state tax purposes. The borrower is required to have a 3.5 percent cash investment in the transaction and land equity may be used to satisfy this requirement. Gift funds from eligible sources are also permitted for the down payment. Individual units in condominium projects are now eligible for FHA insurance; however, the Spot Loan Approval process is not applicable.