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h. Programs and Products (05/09/2022)
i. Manufactured Home Lot Loans and Combination Loans
The FHA Title I Manufactured Home Loan program also insures Manufactured Home Lot Loans and Combination Loans. Manufactured Home Lot Loans and Combination Loans are subject to the same policies and guidelines as Manufactured Home Loans. Policies and guidelines that apply specifically to Manufactured Home Lot Loans or Combination Loans are detailed throughout this section.
ii. Manufactured Home Lot
A manufactured home lot may consist of a deeded parcel of real estate, a lot in a subdivision or a lot in a PUD. A manufactured home lot may also consist of an interest in a manufactured home Condominium Project, including any interest in the common areas, or a share in a cooperative association which owns and operates a manufactured home community.
The lot must comply with HUD’s requirements for a suitable manufactured home site.
Manufactured Home Lot Loans
A Manufactured Home Lot Loan is used to purchase a parcel of real estate to be used as a site for placement of a Manufactured Home. A Manufactured Home Lot Loan may
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include the cost to develop the lot to make it a suitable site for a Manufactured Home, including onsite water and utility connections, sanitary facilities, site improvements and landscaping.
(A) Definition
Manufactured Home Lot Loan refers to a Loan for the purchase or refinancing of a portion of land acceptable to HUD as a manufactured home lot. The manufactured home lot may consist of platted or unplatted land, a lot in a recorded or unrecorded subdivision or in an improved area of such subdivision, or a lot in a PUD. A manufactured home lot may also consist of an interest in a manufactured home Condominium Project (including any interest in the common areas) or a share in a cooperative association which owns and operates a manufactured home park.
(B) Eligibility Requirements
The following eligibility requirements apply to Manufactured Home Lot Loans:
• ownership of the lot must be held in Fee Simple, except when the lot consists of a share in a cooperative association which owns and operates the manufactured home community; and
• the Manufactured Home must be placed on the lot and occupied as the Borrower’s Principal Residence within six months after the date of the Loan.
(C) Maximum Loan Amounts
The loan amount must not exceed the Maximum Loan Amount restrictions for:
• Nationwide Loan Limits;
• minimum downpayment requirements;
• Minimum Decision Credit Score limitations;
• maximum LTV; and
• LTV calculations applicable to the loan transaction type for the manufactured home lot.
The UFIP may be added to the Base Loan Amount, not to exceed the Nationwide Loan Limit.
The maximum Base Loan Amount is determined by applying the appropriate LTV factor (95 percent or 90 percent) to the lesser of:
• the appraised value of an already developed lot plus financeable fees and charges; or
• the purchase price of the lot plus development costs plus financeable fees and charges.
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(D) Loan Term
The maximum term for a Manufactured Home Lot Loan must not exceed 15 years and 32 Days from the date of the Loan.
iii. Combination Loan
A Combination Loan is used to purchase a Manufactured Home and a parcel of real estate on which the unit will be placed in a single loan transaction.
The lot must comply with HUD’s requirements for a suitable manufactured home site.
A Combination Loan may also be used to combine the refinancing of an existing Manufactured Home Loan with the acquisition of a lot, or the refinancing of a Manufactured Home Lot Loan with the acquisition of a Manufactured Home.
(A) Eligibility Requirements
In addition to the guidelines specified in Manufactured Home Lot, the following requirements apply to Combination Loans.
(1) Lot Ownership
Title for the lot must be owned by the Borrower and held in Fee Simple, except when the lot consists of a share in a cooperative association which owns and operates the manufactured home community.
(2) Home Ownership
The Manufactured Home must be treated as Personal Property or Chattel when it retains its vehicle title (or certificate of title).
Title to the Manufactured Home must be held in Fee Simple if the Manufactured Home is classified as realty by the state or locality in which the Property is located, and the vehicle title is surrendered and canceled.
(3) Principal Residence Only
The Manufactured Home must be placed on the lot and occupied as the Borrower’s Principal Residence within six months of the date of the Loan.
(4) Maximum Loan Limit
The loan amount must not exceed the Maximum Loan Amount restrictions for:
• Nationwide Loan Limits;
• minimum downpayment requirements;
• Minimum Decision Credit Score limitations;
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• maximum LTV; and
• LTV calculations applicable to combination Manufactured Home and lot property types, which is described below.
The maximum loan amount for a Combination Loan is further limited by the cost or value of the lot and home as follows:
(1) The minimum downpayment and maximum LTV requirements must be
calculated using the total purchase price of the Manufactured Home and lot.
(2) The total purchase price of a Manufactured Home and lot may include
Eligible Options and Accessories.
(3) If the Borrower already owns a Manufactured Home or a lot on which a
Manufactured Home is to be placed, the Borrower’s equity in such a home or lot may be accepted in lieu of full or partial cash downpayment.
(4) When equity in a home or lot is used to meet any portion of the
downpayment requirement, the Loan may not allow any cash back to the Borrower.
(5) The UFIP may then be added to be Base Loan Amount, provided that the
Total Loan Amount does not exceed the Nationwide Loan Limit.
(B) Loan Term
The maximum loan term for a single unit Combination Loan may not exceed 20 years and 32 Days from the date of the Loan.
The maximum loan term for a multi-unit Combination Loan may not exceed 25 years and 32 Days from the date of the Loan.
(C) Interim Interest on Lot
The Lender may not charge the Borrower interim interest on the money advanced to pay for the lot.
(D) Security Instrument
In addition to compliance with the security instrument standards, the security instrument must attach to the Real Property as well as to the Manufactured Home. The security instrument must be in proper form and properly recorded to create a valid and enforceable lien against the Property.
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iv. Title I Refinance Transactions
(A) Definition
A Refinance Transaction establishes a new Loan to pay off the existing debt for a Borrower with legal title to the subject Property. The refinance Loan may also advance additional funds for the purchase of a home or lot, which is also referred to as a Combination Loan.
(B) Types of Title I Refinances
(1) Cash-Out or Cash Back (Not Permitted)
A Cash-Out Refinance is a refinance of any Loan that advances additional credit to the Borrower, or for which the loan proceeds are used for ineligible purposes.
A Cash Back Refinance or a transaction that provides cash back to the Borrower is not permitted for the Manufactured Home Loan program.
(2) No Cash-Out
(a) Title I to Title I Refinance
An existing Title I insured Manufactured Home Loan may be refinanced with or without an advance of additional funds that is used to add an eligible property type.
Title I Refinances are categorized into three possible refinance types.
(i) Simple Title I Refinance
A Simple Title I Refinance refers to a no cash-out refinance of an existing Title I insured Manufactured Home Loan, Manufactured Home Lot Loan, or Combination Loan. The proceeds of a Simple Refinance are exclusively used to pay off the existing debt plus eligible fees and charges.
(ii) Streamline Refinance (Non-credit Qualifying)
A Streamline Title I Refinance refers to the refinance of an existing Title I insured Loan for which the Lender is not required to perform credit or capacity analysis or obtain an appraisal.
(iii)Title I Refinance with Advance of Funds
An existing Title I insured Manufactured Home Lot Loan or Manufactured Home Loan may be refinanced with an advance of additional funds to purchase a manufactured home unit or lot.
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This type of refinance will result in a new Combination Loan.
(b) Conventional to Title I Refinance
Proceeds from a new Title I insured Loan may be used to pay off an existing Manufactured Home Loan, Manufactured Home Lot Loan, or Combination Loan that is not insured by HUD.
Conventional to Title I Refinances are categorized into two possible refinance types.
(i) Regular Conventional to Title I Refinance
An existing conventional Manufactured Home Loan, Manufactured Home Lot Loan, or Combination Loan that was not insured by HUD may be refinanced with a new Title I insured Loan. The proceeds of a regular refinance are exclusively used to pay off the existing debt plus eligible fees and charges.
(ii) Conventional Refinance with Advance of Funds
An existing conventional Manufactured Home Loan may be refinanced with an advance of additional funds to purchase a lot on which to place the home. Similarly, an existing conventional Manufactured Home Lot Loan may be refinanced with an advance of additional funds to purchase a manufactured home unit.
This type of refinance will result in a new Combination Loan.
(C) FHA-Insured to FHA-Insured Refinances
FHA-Insured to FHA-Insured refinances may be used with any refinance type.
(D) Borrower Occupancy Requirements
(1) Standard
Refinances may be used only for Principal Residences.
(2) Required Documentation
The Lender must review the Borrower’s employment documentation or obtain utility bills to evidence that the Borrower currently occupies the Property with a manufactured unit as their Principal Residence.
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(E) Disclosure to Borrower: “Notice to Borrower of HUD’s Role”
For each new Title I insured Loan, a Notice to Borrower of HUD’s Role in Title I Loans must be issued and acknowledged by all Borrowers.
(F) Premium Charges
Every new Title I Loan requires payment of a UFIP charge, and annual premium.
(G) Loan Maturities
The maximum term for the new refinance must not exceed:
Loan Type Maximum Loan Term Manufactured Home Loan 20 years and 32 Days Manufactured Home Lot Loan 15 years and 32 Days Combination Lot and Single Unit Manufactured Home
20 years and 32 Days
Combination Lot and Multi-unit Manufactured Home
25 years and 32 Days
(H) Limit on Total Time Period
In the case of a refinance of a previous Title I Loan, the total time period from the date of the original Loan to the final maturity of the refinanced Loan must not exceed the maximum term permitted for a new Loan of the same type.
(I) Existing Loan Payoff Amount
(1) Standard
A loan payoff statement is required on all Title I Loans secured by the Property that will be paid off with the new Title I Loan.
(2) Required Documentation
The Lender must obtain the payoff statement for all existing Loans.
(J) Note and Security Requirements
(1) Standard
Refinancing requires the Borrower(s) to execute a new Note. The new Note must comply with the same requirements as an original Title I Loan and must be properly secured.
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(2) Required Documentation
The Borrower(s) must execute a new Note.
The Lender must obtain and record a new security instrument and ensure a release of the original lien unless state law permits a renewal and extension of the original lien.
(K) Original Title I Case Binder
For a Title I to Title I Refinance, copies of all documents pertaining to the original Title I Loan must be retained in the refinance case binder.
(L) Conditions for Refinance by Loan Type
(1) Streamline Refinance (Non-credit Qualifying)
Streamline Refinance may be used when the proceeds of the Loan are used to extinguish an existing Title I insured Loan with first place lien.
An existing Manufactured Home Loan and/or Manufactured Home Lot Loan that is not Title I insured is not eligible for a non-credit qualifying Streamline Refinance transaction.
(a) Lender of Record Only
Only the Lender that owns the Title I Loan according to HUD’s records may Streamline Refinance an existing Title I Loan. Another Lender would need to obtain the Loan from the current Lender of record through sale, assignment or transfer in order for the Loan to be eligible for a Streamline Refinance transaction. The sale, assignment or transfer of the Loan must be reported to HUD as required in the Servicing Title I Manufactured Home Loan Program section.
(b) Co-maker or Co-signer on Existing Loan
The Lender must require any co-makers or Co-signers on the original Note to be obligated on the refinance Note.
To release a co-maker or Co-signer from liability on an existing Note, the Lender must obtain pre-approval from HUD.
(c) Previous Assumption
A Loan that was assumed may be refinanced only if the original Borrower and any intervening assumptors were released from liability, either at the time the Loan was assumed or through permission from HUD.
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(d) Maximum Loan Amount
The maximum loan amount of a Streamline Refinance is limited to the cost of prepaying the existing Loan, plus Financeable Fees and Charges, and the new UFIP.
An existing Title I Loan that is in Default may be refinanced, but not for an amount greater than the original principal balance of the Loan. The UFIP may be added, not to exceed the Nationwide Loan Limits.
(e) Credit Analysis
Lenders are not required to conduct credit or capacity analysis or obtain an appraisal.
(2) Simple Title I Refinance
An existing Title I insured Manufactured Home, Lot or Combination Loan may be refinanced to pay off an existing Title I Loan, without an advance of additional funds or cash back to the Borrower.
(a) Lender of Record Only
Only the Lender that owns the Title I Loan according to HUD’s records may refinance an existing Title I Loan. Another Lender would need to obtain the Loan from the current Lender of record through sale, assignment or transfer in order for the Loan to be eligible for a Simple Refinance transaction. The sale, assignment or transfer of the Loan must be reported to HUD in compliance with form HUD-27030, Title I Transfer of Note Report, requirements.
(b) Previous Assumption
A Loan that was assumed may be refinanced only if the original Borrower and any intervening assumptors were released from liability, either at the time the Loan was assumed or through permission from HUD.
(c) Maximum Loan Amount
The maximum loan amount of a Simple Title I Refinance is limited to the cost of prepaying the existing Loan, plus Financeable Fees and Charges, and the new UFIP.
Cash back to the Borrower is not permitted.
(d) Loan in Default
The existing Title I Loan must not be in Default.
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(e) Credit Qualification
Lenders must underwrite the Simple Title I Refinance Loan to ensure compliance with Title I credit and capacity requirements. An appraisal is not required.
(f) Original Case Binder
Copies of all documents pertaining to the original Title I Loan must be retained in the case binder of the refinanced Loan.
(3) Title I Refinance with Advance of Funds
An existing Title I insured Manufactured Home Loan or Manufactured Home Lot Loan may be refinanced with an advance of additional funds to purchase a manufactured home unit or lot.
This type of refinance will result in a new Combination Loan.
(a) Lender of Record Only
Only the Lender that owns the Title I Loan according to HUD’s records may refinance an existing Title I Loan. Another Lender would need to obtain the Loan from the current Lender of record through sale, assignment or transfer in order for the Loan to be eligible for a Title I refinance with advance of funds transaction. The sale, assignment or transfer of the Loan must be reported to HUD in compliance with form HUD-27030 requirements.
(b) Loan in Default
The existing Title I Loan must not be in Default.
(c) Previous Assumption
A Loan that was assumed may be refinanced only if the original Borrower and any intervening assumptors were released from liability, either at the time the Loan was assumed or through permission from HUD.
(d) Maximum Loan Amount
(i) Base Loan Amount
The cost of the UFIP charge may be added to the Base Loan Amount, not to exceed the Nationwide Loan Limits for the transaction.
An advance of loan proceeds or cash back to the Borrower is not permitted.
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(ii) Refinance of a Home Loan with Advance to Purchase a Lot
The maximum base Combination Loan amount is limited to:
• the existing debt on the Manufactured Home Loan; plus
• Eligible Fees and Charges associated with the new Loan; plus
• the lesser of:
o the purchase price of the lot and any development costs; or
o the appraised value of the lot.
(iii)Refinance of a Manufactured Home Lot Loan with Advance of
Funds to Purchase New Home
The maximum base Combination Loan amount is limited to the existing debt on the Title I Manufactured Home Lot Loan, plus the sum of the following items eligible to be financed for the purchase of a New Manufactured Home multiplied by the appropriate LTV factor (95 percent or 90 percent):
• 130 percent of the sum of the wholesale (base) price of the home plus eligible itemized options, including the charge for freight, as detailed on the Manufacturer’s Invoice or found on the Wholesale
(Base) Price List;
• sales tax to be paid by the Borrower, as detailed in the retail sales contract;
• Dealer’s actual cost of transportation to the home site, set-up and anchoring, including the rental of wheels and axles (if not included in the freight charges);
• Dealer’s actual cost for skirting, garage, carport, patio, or other appurtenance, and for the purchase and installation of a central air conditioning system or heat pump (if not installed by the manufacturer); and
• fees and charges that may be financed.
(iv) Refinance of a Title I Manufactured Home Lot Loan with Advance
of Funds to Purchase Existing Home
The maximum Base Loan Amount is limited to:
• the existing Title I debt on the Manufactured Home Lot Loan; plus
• Eligible Fees and Charges associated with the new Loan; plus
• the appropriate LTV Factor (95 or 90 percent) applied to the lesser of:
o the purchase price of the home, including costs to the Borrower
for all items described in the sales contract and any eligible options as documented in the file; or
o the appraised value of the home as described in the sales
contract, including any eligible options itemized in the sales contract or documented in the file.
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(e) Underwriting and Documentation Requirements
The refinance of a Manufactured Home Loan or Manufactured Home Lot Loan to a new Combination Loan will increase the loan amount and be subject to all other underwriting and processing requirements for the Manufactured Home Loan program.
(f) Appraisal Requirements
For refinances with advance of funds to purchase a lot, the Lender must obtain a HUD-approved appraisal of the lot.
(g) Original Case Binder
Copies of all documents pertaining to the original Title I Loan must be retained in the case binder of the refinanced Loan.
(h) Placement Certificate
A new form HUD-56002-MH is required for the addition of the manufactured home unit to the lot.
(4) Conventional to Title I Refinance
An existing conventional Manufactured Home Loan, Manufactured Home Lot Loan, or Combination Loan that was not insured by HUD may be refinanced with a new Title I insured Loan under the following conditions.
(a) Loan Default
The original Loan must not be in Default.
(b) Existing Borrowers Must Be Retained
The Lender must require all Borrowers, including co-makers or Co-signers, on the original Note to be obligated on the refinance Note.
(c) Maximum Loan Amount
(i) Conventional to Title I Refinance with no Advance of Funds
The maximum Base Loan Amount for a Conventional to Title I Refinance with no advance of funds is the lesser of the cost of prepaying the existing Loan or the appraised value of the Property.
The cost of the UFIP charge may be added to the Base Loan Amount, not to exceed the Nationwide Loan Limits.
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An advance of loan proceeds or cash back to the Borrower is not permitted.
(ii) Refinance with Advance of Funds to Purchase a Lot
The maximum base Combination Loan amount is limited to:
• the existing debt on the Manufactured Home Loan; plus
• Financeable Fees and Charges associated with the new Loan; plus
• the lesser of:
o the purchase price of the lot and any development costs; or
o the appraised value of the home and lot as determined by a
HUD-approved appraisal.
(iii) Refinance with Advance of Funds to Purchase a Home
To determine the maximum Base Loan Amount for a refinance of a conventional Loan and purchase of a New Manufactured Home, the Lender must follow the same calculation requirements as described for a Refinance of a Title I Manufactured Home Lot Loan with Advance of Funds to Purchase New Home.
To determine the maximum Base Loan Amount for a refinance of a conventional Loan and purchase of an Existing Manufactured Home, the Lender must follow the same calculation requirements as described for a Refinance of a Title I Manufactured Home Lot Loan with Advance of Funds to Purchase Existing Home.
(d) Placement Certificate
A new form HUD-56002-MH is required for the addition of the manufactured home unit to the lot.
(e) Underwriting and Documentation Requirements
All Conventional to Title I Refinance Loans are subject to all other underwriting and processing requirements for the Manufactured Home Loan program. Borrowers on the refinanced Loan must demonstrate acceptable credit and meet qualifying ratios.
(f) Appraisal Requirements
For a Conventional to Title I Refinance, the Lender must obtain an appraisal on the secured Property that complies with appraisal requirements.
For a Conventional Refinance with Advance of Funds to purchase a lot, the Lender must obtain a HUD-approved appraisal of the home and lot.
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An appraisal is not required for refinance with advance of funds to purchase a new home. However, an appraisal must be obtained when the advance of funds purchases an existing home.
(g) Co-maker or Co-signer on Existing Conventional Loan
The Lender must require the co-makers or Co-signers on the original Note to be obligated on the refinance Note.
To release a co-maker or Co-signer from liability on the Note, the Lender must obtain pre-approval from HUD.
(h) Previous Assumption
A Loan that was assumed may be refinanced only if the original Borrower and any intervening assumptors were released from liability.
(M) Refinancing Title I Loans that Were Originated on or Prior to June 1, 2009
The 10 percent portfolio reserves limitation applies only to Loans originated prior to June 1, 2009 (implementation date of the FHA Manufactured Housing Loan Modernization Act of 2008) and does not apply to refinanced Loans.
Loans originated prior to June 1, 2009 and refinanced on or after June 2009 will be removed from the Lender’s portfolio insurance reserve account and will be individually insured based on the credit policies and insurance premiums (upfront and annual) in effect at the time of refinance.
(N) Insurance Processing
Refinanced Loans must be submitted to HUD for insurance endorsement within 30 Days after loan Disbursement as outlined in Procedures for Endorsement. When reporting a refinance of a prior Title I Loan, Lenders must supply information on the original Loan so that HUD may terminate the Title I insurance on the original Loan. HUD will also prorate any unpaid installments on the insurance charge between the old Loan and the new Loan. Lenders are cautioned not to erroneously submit a refinanced Loan as a new Loan.
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II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT F. Appraiser and Property Requirements for Title I Loans
1. Appraiser Qualifications (05/09/2022)