Washington, D.C. - Federal Housing Authority (FHA)-guaranteed financing for the purchase of manufactured homes would be available to more individuals as a result of legislation recently passed by the Senate and House of Representatives. The Senate bill was sponsored by Senator Evan Bayh (D-IN); the House version was sponsored by Congressman Joe Donnelly (D-IN).
Last week, the Senate passed the FHA Modernization Act of 2007, which includes the provisions Bayh introduced earlier this year to raise the limits on loan amounts that FHA will insure for the purchase of a factory-built home. In June, the House of Representatives passed Donnelly’s FHA Manufactured Housing Loan Modernization Act of 2007, which includes similar provisions. With the legislation having passed both chambers, differences will be resolved in a House-Senate conference committee.
FHA insurance on home loans makes it possible for individuals, often those making a down payment of less than 20 percent, to get financing from traditional lenders. However, in spite of increases in the purchase price, FHA limits on loans for manufactured homes have not been raised since 1992. As a result, traditional lenders have been less able to finance the purchase of manufactured homes, despite the fact that they are an affordable option for many homebuyers. In 1992, FHA guaranteed 30,000 loans through its insurance program, compared to only 1,500 in 2006.
“This legislation puts the dream of homeownership within reach of more Americans,” Senator Bayh said. “It’s unfortunate that one of the most affordable options for homeownership has not been available because of out-of-date FHA limits. This is a common-sense fix that will help put more hard-working families into a home of their own. And it’s welcomed news for Indiana’s manufactured housing industry, which provides good-paying jobs for so many Hoosiers.”
“I am proud to have worked with Senator Bayh to pass this critical piece of legislation, which will help revitalize the manufactured housing industry by providing affordable homeownership options, as well as job opportunities to Hoosiers,” Congressman Donnelly said. “It is my goal to help Hoosiers achieve the American dream of homeownership, and this legislation ensures that one of the most affordable and quality housing options is now within reach.”
If the Bayh-Donnelly legislation is signed into law, the cap on loans that FHA would insure would be raised by more than $20,000 (from $49,600 to $69,678) for the purchase of a manufactured home, and by nearly $30,000 (from $64,800 to $92,904) for those buying both a home and land. Additionally, the legislation raises loan limits in conjunction with future home prices to guarantee that low-interest financing continues to be available.
Indiana’s manufactured home industry, which is concentrated primarily in the South Bend-Elkhart area, is the fifth largest in the nation, having built more than 8,500 homes in 2006.
