HUD wants to simplify lending for manufactured homes

The U.S. Department of Housing and Urban Development is accepting comment on proposed standardization of loan application forms, which could open the market for manufactured home products.

In a draft letter submitted this week by the Federal Housing Administrationthe regulator declared its intention to adopt the Uniform Home Loan Application for products covered by the Title I loan program. The change would affect loans for both manufactured homes and property improvement products currently offered through Title I.

The FHA, a unit of HUD, has done so made the letter available on the office’s design table for single-family homes and will be accepting feedback through Dec. 18.

“FHA believes these changes will encourage greater lender participation in the Title I program,” the draft letter said.

Applicants for manufactured home and property improvement loans currently must use a form specific to each product type. FHA’s proposal would replace the two separate forms with the application commonly used for conventional loans insured by government-sponsored enterprises, in addition to a HUD-specific Title I addendum.

Adopting the industry-standard URLA would simplify the lending process for factory-built homes, “allowing lenders to use existing origination system technology to collect borrower data, eliminating the financial burden of purchasing multiple software licenses,” FHA said.

Now that the US is facing a… affordable supply shortage after years of underpinning, many leaders in the field of housing and housing finance have highlighted the potential of manufactured housing as a channel to help deliver much-needed inventory.

HUD itself spearheaded the attack advocates for more manufactured housing development. Earlier this fall, the federal department updated codes that would allow the construction of prefabricated homes of up to four units. The announcement followed the launch of several new initiatives and products from previous months aimed at helping developers buy or rehabilitate larger manufactured home communities.

Last year, HUD also introduced an Office of Manufactured Housing Programs as an independent entity under the jurisdiction of the FHA commissioner.

In another sign of recognition of the likely growth the segment will have, the Federal Housing Finance Agency unveiled a price index for new-build homes which will be released quarterly with data on properties insured by Fannie Mae and Freddie Mac.

Analyzing some of the first data released by the FHFA, the Urban Institute found this week that manufactured real estate prices grew at “nearly identical rates as those for site-built homes” between 2000 and 2024.

Nearly 1.1 million prefabricated homes were shipped across the country in 2023, according to U.S. Census Bureau data. States with the largest supply of manufactured units in the US – Texas, North Carolina and Florida – accounted for more than a quarter of all shipments over the past thirty years. The three states are among those that have overall benefited the most from the price increase.