“I’m pleased that in the final week of National Homeownership Month, my colleagues in the House have joined me in trying to give more Americans the opportunity to become homeowners and, in the process, strengthen the manufactured housing industry,” Donnelly said. “As the congressman that represents the Manufactured Housing Capital of the World, I have been working very closely with the industry to learn what Congress can do to reverse the downturn of production levels of affordable manufactured homes. I believe that this legislation is beneficial not only to Americans seeking the economic advantages homeownership provides but also to the manufactured housing industry by increasing the demand for affordable, quality manufactured homes.”

The Federal Housing Administration (FHA) Title I mortgage insurance program insures loans made by private lenders to finance the purchase of manufactured homes that will be placed in land-lease communities or otherwise not classified as real property. 

Title I loan limits have not been adjusted for inflation since 1992 and the manufactured housing industry has experienced a major decline since.  In 1992, in the midst of the last downturn, FHA insured 30,000 Title I loans.  In 2006, that number went to fewer than 1,500.  In Indiana, that number went from 377 loans in 1992 to just four loans in 2006.

Ginnie Mae, which securitizes FHA loans, maintains that its decline in Title I activity is due to “structural problems” with the program.  They argue that it is very difficult for them to recoup losses when lenders go out of business.  This does not occur with Title II (real property) because insurance under that program is set on a loan-by-loan basis as opposed to a bundle of loans. 

Ginnie Mae officials have indicated that if the insurance issue can be addressed, they would certify new lenders and securitize more Title I loans.  The FHA Manufactured Housing Loan Modernization Act of 2007 would give HUD the authority to increase insurance premiums and improve underwriting standards to make sure the program is actuarially sound. This aspect of Donnelly’s bill would address the current structural programs, resulting in a stronger Title I program.

Donnelly’s bill also includes provisions that would raise the manufactured housing Title I loan limits and annually index them for inflation. 

“The legislation that passed the House today would fix the problems with the current FHA Title I loan program and increase the number of loans available to buy manufactured housing,” Donnelly said. “If we increase the number of people who can afford to buy manufactured housing, more Americans would be able to achieve the dream of homeownership. I hope the Senate will act quickly on a similar bill and get it to the president for his signature so Americans can get the resources they need to become homeowners.”

Last Congress, a similar version of this bill was introduced by Chairman of the Financial Services Committee, Barney Frank, and passed the House on July 25, 2006 by a vote of 412 to 4. The legislation was also introduced in the Senate by Senator Evan Bayh but was not brought before the Banking Committee for a vote.

###