Key Provisions Benefit Manufactured and Modular Housing Home-buyers

Arlington, VA (July 30, 2008) – The Manufactured Housing Institute (MHI) commends President Bush for signing H.R. 3221, the Housing and Economic Recovery Act of 2008 (the Act) into law. The legislation is intended to address the current crisis in the housing marketplace, giving a boost to the U.S. economy.

“The Act contains important provisions that recognize the role manufactured and modular housing play in the housing market. Our members provide quality homes for quality living that meet a wide array of lifestyles,” said Gail Cardwell, MHI President. “We are pleased President Bush signed this bill and congratulate the U.S. Congress for its bipartisan efforts.”

The manufactured housing provisions include:

•     FHA Title I – The Act dramatically increases loan limits for this program, which have not been increased since 1992. For example, the loan limits for “home only” loans which comprise approximately 95 percent of all Title I loans will increase from $48,600 to $69, 678 and will be indexed annually for inflation.

The Act also converts the current, limited insurance system to a more mainstream “loan-by-loan” insurance system, allowing FHA to insure today’s modern manufactured home loans while vastly improving the insurance coverage for lenders in the event of a foreclosure.

The Act also gives the U.S. Department of Housing and Urban Development (HUD) the authority to increase the upfront insurance premium to up to 2.25 percent and may charge an annual premium of up to one percent, of the remaining principal balance. It also gives HUD the authority to establish underwriting criteria to ensure the program is financially secure.

•     FHA Title II – FHA, under the Act, can insure mortgages for manufactured homes permanently affixed to land that is owned or leased under a long-term leasehold agreement. Currently FHA financing for a manufactured home subject to a long-term lease is impossible in some states because these states tax the home as personal property when the land is leased. The Act clarifies this by stating that taxation is not relevant to the definition of real estate and repeals such a provision. This would enable homebuyers within land lease communities to obtain a conventional mortgage in approximately 17 states provided certain conditions are met.

In addition, it will now be permissible under the law for FHA to insure manufactured housing units in condominium developments.

•     Regulation of Fannie Mae and Freddie Mac – In addition to potential Federal investment in the Government Services Enterprises (GSEs) and creating a new regulator for the GSEs, the Act requires Fannie and Freddie to meet a “duty to serve underserved markets.” Manufactured housing is one of only three underserved markets identified in the Act (rural housing and affordable housing preservation are the other two).

The Act requires that the GSEs provide leadership to the market and facilitate a secondary market for manufactured housing loans for low- and moderate-income homebuyers. In serving this market they are required to develop new manufactured housing loan products with flexible underwriting standards.

The new regulator, the Federal Housing Finance Agency (FHFA), is required (beginning in 2010) to evaluate the extent to which the GSEs have complied with this duty by taking into account the volume of manufactured loans purchased and their outreach to lenders. In determining compliance, the FHFA may consider manufactured home loans secured by both real and personal property.

If either Fannie Mae or Freddie Mac fails to meet its manufactured housing duties in any given year, the FHFA may require the GSEs to submit a housing plan to meet the “duty to serve” requirement in the next calendar year.

•     Tax Provisions – A homebuyer tax credit to assist new homebuyers in making down-payments by providing them with an interest free loan of ten percent of the home’s purchase price up to $7,500 is available to first-time homebuyers purchasing a principle residence, including manufactured homes. This provision runs through June of 2009.

Manufactured home-buyers will also benefit from a standard deduction for real property taxes to assist homeowners who do not itemize their income tax returns. These homeowners may claim an additional standard deduction of up to $500 ($1,000 for joint filers) regarding state and local real property taxes. The provision applies to the 2008 tax year only.

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MHI is the national trade organization representing all segments of the factory-built housing industry. MHI serves its membership by providing industry research, promotion, education and government relations programs, and by building and facilitating consensus within the industry.