Selling Guide

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B2-3-02, Special Property Eligibility and Underwriting Considerations: Factory-Built Housing (12/04/2018)

Introduction

This topic contains information on factory-built housing, including:

 

Manufactured Home Property Eligibility Requirements

Fannie Mae defines a “manufactured home” as any dwelling unit built on a permanent chassis that is attached to a permanent foundation system and evidenced by a HUD Data Plate and HUD Certification label. (For additional information, see B5-2-02, Manufactured Housing Loan Eligibility.)

The table below provides additional manufactured housing property eligibility requirements. For manufactured housing appraisal requirements, see B4-1.4-01, Factory-Built Housing: Manufactured Housing.

Requirements
  The manufactured home must be built in compliance with
  • the Federal Manufactured Home Construction and Safety Standards that were established June 15, 1976, as amended and in force at the time the home is manufactured; and

  • additional requirements that appear in HUD regulations at 24 C.F.R. Part 3280.

Compliance with these standards will be evidenced by the presence of both a HUD Data Plate and the HUD Certification Label. If the original or alternative documentation cannot be obtained for both the Data Plate/Compliance Certificate and the HUD Certification Label, the loan is not eligible for delivery to Fannie Mae.

 

The HUD Data Plate/Compliance Certificate is a paper document located on the interior of the subject property that contains, among other things, the manufacturer’s name and trade/model number. In addition to the data required by Fannie Mae, the Data Plate includes pertinent information about the unit, including a list of factory-installed equipment. The HUD Certification Label, sometimes referred to as a HUD “seal” or “tag,” is a metal plate located on the exterior of each section of the home. The Manufactured Home Appraisal Report (Form 1004C) must show evidence of both the HUD Data Plate/Compliance Certificate and the HUD Certification Label.

 

As an alternative to the original HUD Certification Label, the lender may be able to obtain a verification letter with the same information contained on the HUD Certification Label from the Institute for Building Technology and Safety (IBTS). A duplicate HUD Data Plate/Compliance Certificate may be available from IBTS or by contacting the In-Plant Primary Inspection Agency (IPIA) or the manufacturer. (A list of IPIA offices is posted on HUD’s website.)

  The unit must not have been previously installed or occupied at any other site or location, except from the manufacturer or the dealer’s lot as a new unit.
  The manufactured home must be a one-unit dwelling unit that is legally classified as real property.
  The towing hitch, wheels, and axles must be removed. The dwelling must assume the characteristics of site-built housing.
  The borrower must own the land on which the manufactured home is situated in fee simple, unless the manufactured home is located in a co-op or condo project.
  • For co-ops, both the land and dwelling must be owned by the co-op.

  • For condos, both the land and dwelling, including those located on leasehold estates, must be subject to the condo regime.

Otherwise, mortgages secured by manufactured homes located on leasehold estates are not eligible.

 

Multi-width manufactured homes may be located either on an individual lot or in a project development.

Project approval for mortgage loans secured by multi-width manufactured homes located on individual lots in subdivisions or in PUDs is generally not required. Project approval is required for condo and co-op projects that consist of manufactured homes, and certain condo and all co-op projects must be approved by Fannie Mae. For further information about project approval requirements, see Chapter B4-2, Project Standards.

  Single-width manufactured homes must be located in a Fannie Mae-approved co-op, condo, or PUD project development.
 

The manufactured home must be at least 12 feet wide and have a minimum of 600 square feet of gross living area.

Except for MH Advantage properties, Fannie Mae does not specify other minimum requirements for size, roof pitch, or any other specific construction details for HUD-coded manufactured homes.

  Site preparation for delivery of the manufactured home must be completed.
 

The manufactured home must be attached to a permanent foundation system in accordance with the manufacturer’s requirements for anchoring, support, stability, and maintenance.

The foundation system must be appropriate for the soil conditions for the site and meet local and state codes.

  The manufactured home must be permanently connected to a septic tank or sewage system, and to other utilities in accordance with local and state requirements.
 

If the property is not situated on a publicly dedicated and maintained street, then it must be situated on a street that is community owned and maintained, or privately owned and maintained.

There must be adequate vehicular access and there must be an adequate and legally enforceable agreement for vehicular access and maintenance. See B4-1.3-04, Site Section of the Appraisal Report, for additional information about privately maintained streets.

 

Mortgages secured by existing manufactured homes that have incomplete items, such as a partially completed addition or renovation, or defects or needed repairs that affect safety, soundness, or structural integrity, are not eligible for purchase until the necessary work is completed.

Exceptions to the foregoing may be made only for minor items that do not affect the ability to obtain an occupancy permit — such as landscaping, a driveway, or a walkway – subject to all requirements and warranties for new or proposed construction provided in B4-1.2-03, Requirements for Postponed Improvements.

  Manufactured homes that have an addition or have had a structural modification are eligible under certain conditions. If the state in which the property is located requires inspection by a state agency to approve modifications to the property, then the lender is required to confirm that the property has met the requirement. However, if the state does not have this requirement, then the structural modification must be inspected and be deemed structurally sound by a third party who is regulated by the state and is qualified to make the determination. In all cases, the satisfactory inspection report must be retained in the mortgage loan file.

 

MH Advantage Property Eligibility Requirements

MH Advantage is manufactured housing that is built to meet construction, architectural design, and energy efficiency standards that are more consistent with site-built homes.

Examples of the physical characteristics for MH Advantage include

  • specific architectural and aesthetic features such as distinctive roof treatments (eaves and higher pitch roofline), lower profile foundation, garages or carports, porches, and dormers;

  • construction elements including durability features, such as durable siding materials; and

  • energy efficiency standards (minimum energy ratings apply).

Fannie Mae has agreements with manufacturers of homes intended to qualify for MH Advantage based on specific design criteria. The agreement allows the manufacturers to apply an MH Advantage Sticker to homes that meet the design criteria. With the exception of the lender requirements outlined below, lenders will not be required to independently determine the property’s eligibility for MH Advantage.

Lenders’ and appraisers’ responsibilities relating to MH Advantage loans are detailed below:

Requirements
Lender The lender must
  • ensure the property meets the MH Advantage requirements by reviewing appraisal photos evidencing the presence of the MH Advantage Sticker (placed in proximity to the HUD Data Plate), HUD Data Plate, and HUD certification labels.

  • verify through appraisal or final inspection photos

    • the presence of a driveway leading to the home (or to the garage or carport, if one is present). The driveway must consist of blacktop, pavers, bricks, concrete, cement, or gravel, and;

    • the presence of a sidewalk connecting either the driveway, or a detached garage or carport, to a door or attached porch of the home. The sidewalk must consist of blacktop, pavers, flagstone, bricks, concrete, or cement.

  • For new construction, the lender is responsible for compliance with Fannie Mae’s standard appraisal requirements, specifically B4-1.2-03, Requirements for Postponed Improvements and, B4-1.4-01, Factory-Built Housing: Manufactured Housing for appraisals based on plans and specifications. This will ensure site improvements that are not attached to the home, such as detached garages, are complete.

Appraisal Standard valuation requirements for manufactured homes apply, including:

The Manufactured Home Appraisal Report (1004C) or Appraisal Completion Report (1004D) must include photos of the MH Advantage Sticker, HUD Data Plate, HUD Certification Labels, and the site showing all driveways, sidewalks, and detached structures located on the site.

Unless stated otherwise, loans secured by manufactured homes that meet the MH Advantage criteria are subject to the same requirements that apply to all manufactured homes. (References to “manufactured homes” or “manufactured housing” apply to MH Advantage unless an exception is stated.)

Note that loans secured by MH Advantage properties are afforded a number of flexibilities over standard manufactured housing, including higher LTV ratios, standard mortgage insurance, and reduced loan-level price adjustments. See the Eligibility Matrix , B7-1-02, Mortgage Insurance Coverage Requirements, and Loan-Level Price Adjustment Matrix , respectively, for additional information.

 

Modular, Prefabricated, Panelized, or Sectional Housing Eligibility

Modular Homes. Fannie Mae purchases loans secured by modular homes built in accordance with the Uniform Building Code administered by state agencies responsible for adopting and administering building code requirements for the state in which the modular home is installed.

Prefabricated, Panelized, and Sectional Homes. Loans secured by prefabricated, panelized, or sectional housing are eligible for purchase. These properties do not have to satisfy HUD’s Federal Manufactured Home Construction and Safety Standards or the Uniform Building Codes that are adopted and administered by the state in which the home is installed. The home must conform to local building codes in the area in which it will be located.

 

Modular, Prefabricated, Panelized, or Sectional Housing Requirements

Factory-built housing such as modular, prefabricated, panelized, or sectional housing is not considered manufactured housing and is eligible under the guidelines for one-unit properties. These types of properties must

  • be built of the same quality of materials as and assume the characteristics of site-built housing,

  • be legally classified as real property, and

  • conform to all local building codes in the jurisdiction in which they are permanently located.

The purchase, conveyance, and financing (or refinancing) must be evidenced by a valid and enforceable first-lien mortgage or deed of trust that is recorded in the land records, and must represent a single real estate transaction under applicable state law. The lender is responsible for perfecting the real estate title and obtaining any needed title endorsements before selling the loan to Fannie Mae when a unit is titled as personal property similarly to manufactured homes.

All factory-built units must be permanently attached to a foundation that meets the standards for local building codes where the unit will be placed and in accordance with the recommendations prescribed by the unit’s manufacturer (when applicable). If the unit had axles, wheels, tow hitch, or other hardware to facilitate ease of transportation to the site, the lender is responsible for ensuring that all such hardware is removed prior to selling the loan to Fannie Mae.

Fannie Mae affords modular, prefabricated, panelized, or sectional housing homes the same treatment as site-built housing. Therefore, Fannie Mae does not have minimum requirements for width, size, roof pitch, or any other specific construction details.

 

Modular Construction Techniques on Multi-Unit Buildings

Multi-unit buildings such as condos, co-ops, and townhomes may be constructed, in whole or in part, through the use of modular construction techniques. All buildings must conform to local building codes in the jurisdiction in which they are permanently located. Units in these buildings are provided the same treatment as units in multi-unit buildings constructed with site-built techniques.

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