Indexing Methodology for Title I Manufactured Home Loan Limits, 14582-14588 [2024-04138]
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Federal Register / Vol. 89, No. 40 / Wednesday, February 28, 2024 / Rules and Regulations
Accordingly, 20 CFR part 651 is
corrected by making the following
correcting amendments:
Section 2145 of the Housing
and Economic Recovery Act of 2008
(HERA) amended the maximum loan
limits for manufactured home loans
insured under Title I of the National
Housing Act and required regulations to
implement future indexing of the loan
limit amounts for manufactured homes
originated under the Manufactured
Home Loan program. This rule
establishes indexing methodologies
using data from the United States
Census Bureau (‘‘Census’’) to annually
calculate the loan limits for
Manufactured Home Loans,
Manufactured Home Lot Loans, and
Manufactured Home and Lot
Combination Loans (‘‘Combination
Loans’’) insured under Title I of the
National Housing Act for the
Manufactured Home Loan program.
This final rule adopts HUD’s October
18, 2022, proposed rule with changes.
DATES: Effective March 29, 2024.
FOR FURTHER INFORMATION CONTACT:
Mary Jo Houton, Acting Director,
Department of Housing and Urban
Development, 451 7th St. SW, Room
9266, Washington, DC 20410–4000;
telephone number 202–402–2378 (this
is not a toll-free number). HUD
welcomes and is prepared to receive
calls from individuals who are deaf or
hard of hearing, as well as individuals
with speech or communication
disabilities. To learn more about how to
make an accessible telephone call,
please visit https://www.fcc.gov/
consumers/guides/telecommunicationsrelay-service-trs.
SUPPLEMENTARY INFORMATION:
SUMMARY:
PART 651—GENERAL PROVISIONS
GOVERNING THE WAGNER–PEYSER
ACT EMPLOYMENT SERVICE
1. The authority citation for part 651
continues to read as follows:
■
Authority: 29 U.S.C. 49a and 49k; 38
U.S.C. 101, chapters 41 and 42; Secs. 3, 189
and 503, Pub. L. 113–128, 128 Stat. 1425 (Jul.
22, 2014).
2. Amend § 651.10 by adding in
alphabetical order the definition of State
Workforce Agency (SWA) official to read
as follows:
■
§ 651.10 Definitions of terms used in this
part and parts 652, 653, 654, and 658 of this
chapter.
*
*
*
*
*
State Workforce Agency (SWA)
official means an individual employed
by the State Workforce Agency or any of
its subdivisions.
*
*
*
*
*
Laura P. Watson,
Deputy Assistant Secretary for Employment
and Training, Labor.
[FR Doc. 2024–03871 Filed 2–27–24; 8:45 am]
BILLING CODE 4510–FN–P
DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT
24 CFR Part 201
[Docket No. FR–6207–F–02]
RIN 2502–AJ52
Indexing Methodology for Title I
Manufactured Home Loan Limits
Office of the Assistant
Secretary for Housing—Federal Housing
Commissioner, Department of Housing
and Urban Development (HUD).
ACTION: Final rule.
AGENCY:
I. Background
Title I of the National Housing Act
authorizes the Secretary of HUD to
insure, through the Federal Housing
Administration (FHA), loans made by
FHA-approved lenders to eligible
borrowers to finance property
improvement and purchase, or
refinance, of a manufactured home, with
or without the lot. HUD insures these
loans under HUD’s Property
Improvement Loan program and HUD’s
Manufactured Home Loan program.
FHA insures the lender against loss if
the borrower defaults. A Title I
Manufactured Home Loan may be used
for the purchase or refinancing of a
manufactured home, a lot on which to
place a manufactured home, or a
manufactured home and lot in
combination. The manufactured home
must be used as the principal residence
of the borrower. Applicable loan limits
and requirements are codified in 24 CFR
part 201.
Section 2117 of HERA1 added the
definition of real estate to include all
natural resources and structures
permanently affixed to the land,
amended the maximum loan limits for
manufactured home loans and certain
property improvement loans insured
under Title I of the National Housing
Act, and required future changes to the
amounts for manufactured home loans
to be made through regulation. HERA
also stipulated that the Secretary
develop a metric that uses U.S. Census
Bureau (‘‘Census’’) data 2 on
manufactured home prices to calculate
an index for adjusting loan limits in the
future.
In compliance with HERA, on March
3, 2009, HUD published Title I Letter
TI–480 3 notifying lenders of the new
statutory loan limits. HUD also noted in
that Title I Letter the need for the
Secretary to develop an indexing
method that would determine future
loan limits. HUD regulations still reflect
the outdated, pre-HERA Loan Limits.
Initially after HERA’s enactment,
Census data showed a decline in home
prices. However, for compliance with
HERA, HUD did not lower loan limits
and the limits were kept at the threshold
set under HERA. The outdated Loan
Limits, and the 2008 Loan Limits
currently in effect for manufactured
homes as described in the Title I letter
are outlined below:
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TABLE 1—LOAN LIMITS UNDER HERA COMPARED TO PRE-HERA LOAN LIMITS
2008 loan limit basis
per HERA currently
in effect
Title I loan program name
Eligible loan name for property type
Loan limits prior to
HERA
Property Improvement Loan Program ...............
Manufactured Home Improvement Loan for
units classified as real estate.
Manufactured Home Loan (unit only) ...............
Manufactured Home Lot Loan (lot only) ...........
$7,500 .......................
$25,090.
$48,600 .....................
$16,200 .....................
$69,678.
$23,226.
Manufactured Home Loan Program ..................
1 Public Law 110–289, section 2117, 122 Stat.
2654, 2844–45 (2008).
2 See generally, U.S. Commerce Department,
Census Bureau data on manufactured homes,
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available at: https://www.census.gov/programssurveys/mhs.html.
3 ‘‘Increased Maximum Loan Limits for Title I
Manufactured Home Loans,’’ https://
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TABLE 1—LOAN LIMITS UNDER HERA COMPARED TO PRE-HERA LOAN LIMITS—Continued
Title I loan program name
Eligible loan name for property type
Manufactured Home and Lot (Combination
Loan).
II. The Proposed Rule
On October 18, 2022, as required by
HERA, HUD published for public
comment a proposed rule (87 FR 63018)
(‘‘the proposed rule’’) to update the loan
limits in § 201.10 and to establish an
index for which future loan limits
would be revised through notice. HUD
also proposed to amend the definition of
‘‘manufactured home’’ in § 201.2 to
conform to the loan limit change. HUD
proposed to index loan limits based on
sale prices, unit sizes, and property data
collected by the Census Bureau.
HUD proposed to establish separate
indexing methodologies to annually
calculate future loan limits for
manufactured home loans,
manufactured home lot loans, and
manufactured home and lot
combination loans under the
Manufactured Home Loan program.
HUD proposed to create a dual index
based on purchase prices of
manufactured homes, which are
collected by the US Census Bureau
(Census): an index for single-section
manufactured homes using only singlesection home sale data and a separate
index for multi-section manufactured
homes using only double-section home
sale data.4
HUD also proposed to adjust loan
limits for single-section and double or
greater-section manufactured home
loans annually based on changes to
indexes for the average price of singlesection and double-section
manufactured homes, respectively. HUD
proposed to set each loan limit at the
average price data for the most recent 12
months available at the time HUD
calculates the adjustment, weighted
according to the number of
manufactured units shipped during that
same period.
HUD also proposed creating an index
for Manufactured Home Lot Loans based
on median home prices in Census’s New
Residential Sales data.5
Finally, HUD proposed that the loan
limit for manufactured home and lot
Combination Loans would be
determined by adding the manufactured
home lot loan limit to either the singleor double-section loan limit, depending
on the home.
III. This Final Rule
HUD adopts the proposed rule with
changes to the indices and changes to
the regulatory text.
Changes to the Indexing Methodology
As further discussed in the public
comment summary, HUD received
several comments suggesting that the
loan limits set by the proposed indexing
methodology would be too low to
accurately reflect current manufactured
housing prices and that, if adopted, the
proposed indexing methodology would
frustrate the purpose of section 2145 of
HERA which is to make FHA housing
programs more widely available for lowincome homebuyers.
In consideration of these comments,
HUD has decided to adjust the proposed
indexing methodology to more
accurately reflect real-world
manufactured housing costs, improving
Loan limits prior to
HERA
$64,800 ($48,600 +
$16,200).
2008 loan limit basis
per HERA currently
in effect
$92,904 ($69,678 +
$23,226).
the viability of the Title I Manufactured
Housing program and fulfilling HERA’s
purpose of making FHA housing
programs available to more homebuyers.
In addition to using the average
manufactured housing prices for singleand multi-section homes, HUD will use
two additional factors in calculating the
manufactured home loan limits. First,
HUD will set loan limits at 15% above
the average home price according to the
Census data for the given type of loan.
This is consistent with the initial loan
limits set by HERA, which were set to
about 15% over the average
manufactured home price at the time.
This is also consistent with how HUD
calculates loan limits under Title II,
where FHA limits loans to 115% of the
median home price.
Second, to account for the time
between when the Manufactured
Housing Survey data was collected and
when the limits will be effective, HUD
will utilize an inflation factor. To
calculate this inflation factor, HUD will
use an inflation forecast such as the
CPI–U forecast in the President’s
Economic Assumptions 6 to increase
loan limits to account for inflation that
has occurred since the relevant Census
data were collected. This will address
the maintenance or increase of the sales
price from year-to-year according to the
Census data and intends to more
accurately represent current prices for
manufactured homes.
HUD’s updated indexing methodology
is demonstrated in the below chart:
TABLE 2—PROPOSED INDEX METHODOLOGIES FOR TITLE I MANUFACTURED HOME LOAN LIMITS
Eligible loan types
Proposed methodology/index
1. Manufactured Home Loan (Home only) .........
• For single-section homes, the loan limit will be set each year at 115% of the average singlesection home price with an adjustment for inflation.
• For homes composed of two or more sections (multi-section homes), the loan limit will be
set each year at 115% of the average double-section home price with an adjustment for inflation.*
Manufactured Home Lot Loan limit established by HERA, indexed using changes in the median new home price.***
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2. Manufactured Home Lot Loan (Lot only) ........
4 For an example of the latest data according to
Census, see ‘‘MHS Latest Data,’’ https://
www.census.gov/data/tables/time-series/econ/mhs/
latest-data.html.
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5 The New Residential Sales data come from
Census’s Survey of Construction. More information
can be found here: https://www.census.gov/
construction/nrs/.
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6 Available at https://www.whitehouse.gov/omb/
budget/mid-session-review/.
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TABLE 2—PROPOSED INDEX METHODOLOGIES FOR TITLE I MANUFACTURED HOME LOAN LIMITS—Continued
Eligible loan types
Proposed methodology/index
3. Manufactured Home and Lot Loan (Combination Loan).
The indexed Manufactured Home Lot Loan limit, plus the applicable Manufactured Home Loan
limit.
* Utilizing single- and double-section price averages based on the most recent data from the Manufactured Housing Survey from the Census
Bureau, adjusted for the effective year of the limit using an inflation forecast (such as the CPI–U forecast in the President’s Economic Assumptions or similar replacement data set or report as may be specified by the Secretary). See MHS Latest Data Average Sales Price by Region and
by Size of Home https://www2.census.gov/programs-surveys/mhs/tables/time-series/mhstabavgsls.xlsx.
** Utilizing median new home price based on the most recent data from the Survey of Construction from the Census Bureau. See Median and
Average Sales Price of Homes Sold https://www.census.gov/construction/nrs/xls/usprice_cust.xls.
HUD will make changes to the
indexing methodology through notice
where HUD determines that revisions
are necessary to enhance or maintain
the accuracy of the index. HUD
anticipates any such change(s) would
likely be technical in nature, but if a
change were more than technical, HUD
would provide notice to the public with
the opportunity for comment prior to
changing the index.
Table 3 below shows examples of the
loan limits, based on recent data from
Census.
TABLE 3—EXAMPLE LOAN LIMITS
Single-section Manufactured Home (unit only)
Multi-section Manufactured Home (unit only) ....
Manufactured Home Lot (lot only) .....................
Single-section Manufactured Home and Lot
(Combination Loan).
Multi-section Manufactured Home and Lot
(Combination Loan).
Example 2024
loan limits
(based on
2022 Census data)
Loan limit
methodology
Current limits
(per HERA)
Set to average of 115% of single-section home
prices. Note 1.
Set to 115% of average double-section home
prices. Note 1.
Set to median sales price for new single-family
homes. Note 2.
Limit for Single-Section + Limit for Lot Loan ....
$69,678 .....................
$106,405.
$69,678 .....................
$195,322.
$23,226 .....................
$43,377.
$92,904 (69,678 +
23,226).
$92,904 (69,678 +
23,226).
$149,782 (106,405 +
43,377).
$238,699 (195,322 +
43,377).
Description of property
Limit for Multi-Section + Limit for Lot Loan .......
Table 3 Notes:
1. Indexing to occur at the beginning of each year, based on the weighted average price data for the most recent 12 months available from the
Manufactured Housing Survey.
2. Indexing to occur at the beginning of each year, based on the median sales price of the most recent 12 months available from the New
Residential Sales data.
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Changes to the Regulatory Text
HUD is making only technical
changes at the final rule stage. HUD is
removing references to ‘‘double-section’’
homes as they are already covered by
‘‘multi-section’’ homes. HUD is also
revising § 201.10(h)(1) and (2) to remove
the reference to changes to the
‘‘average’’ price of single-section
manufactured home sales as
superfluous. HUD is also revising
§ 201.10(h)(2) to change a reference to
data published by HUD because the data
HUD will be using is published by the
Census Bureau. HUD is also revising
§ 201.10(h)(1) through (3) to clarify that
HUD will not lower loan limits from
previous years.
IV. Summary of Public Comments
The public comment period for the
proposed rule closed on December 19,
2022. HUD received five distinct
comments relating to the proposed rule.
Comments were submitted by an
individual, associations representing
housing industry stakeholders (i.e.,
community banks, manufactured
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housing, realtors), a lender, and
anonymously. The full text of each
public comment can be found at:
https://www.regulations.gov/document/
HUD-2022-0078-0001.
A. Support for the Proposed Rule
Multiple commenters expressed their
support for the proposed rule. One
commenter said they support the
proposed rule because of the significant
cost increase in modular homes since
2008 and because the Housing and
Economic Recovery Act of 2008’s
(HERA) current limits are too low to
allow low-income Americans to afford
housing. Commenters expressed support
for the proposed rule because they said
updated loan limits would help address
the declining trend in loans that qualify
for the Title I loan program. Another
commenter expressed support for the
proposed rule because it would
establish separate loan limits for singlesection and multi-section manufactured
homes. The commenter stated that home
size has a significant impact on home
cost and separate loan limits help
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account for the different cost
components between single- and multisection homes.
A commenter expressed their support
for the proposed rule, stating it would
benefit low to moderate-income and
first-time home buyers to take advantage
of financing through the Federal
Housing Administration (FHA) and
begin to build wealth through
homeownership. Another commenter
said the proposed rule would create
opportunities for creditworthy
borrowers to access manufactured
homes, and this is a crucial bridge to
address the housing supply gap
allowing low to moderate-income
Americans to afford a home.
A commenter stated that the proposed
rule creates a unique indexing
methodology that increases loan limits
through annual adjustments that would
ensure the limits remain current with
the housing market. Another commenter
stated that they are encouraged by the
potential effect of the proposed rule’s
indexing methodology because it will
update statutory loan limits established
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in 2008 and allow for annual
adjustments.
HUD Response: HUD appreciates
these comments and the broad support
for this rule; these commenters
identified many of the reasons why
HUD undertook this effort. HUD agrees
that increased loan limits will provide
additional opportunities for low-tomoderate income borrowers to access
homeownership now and in the future.
B. Suggested Revision to the Proposed
Rule’s Loan Cap and the 130 Percent
Home Invoice Limitation
A commenter stated they are
supportive of the proposed rule’s
attempt at increasing loan limits for
FHA’s Title I program and believed that
the index would capture the movement
of manufactured home pricing.
However, the commenter believes that
loan limits should be increased further
than described in the proposed rule.
The commenter stated that community
banks typically choose to portfolio loans
that may otherwise be eligible for FHA’s
Title I program because the maximum
FHA loan amounts often fail to cover
the cost of the unit. The commenter, a
lender, calculated the percentage of its
own loans in 2022 that would have
qualified under the proposed rule’s
example loan limits for 2022 to be 22.7
percent of all single-section loans; 47
percent of all multi-section loans; 46
percent of all single-section, land loans;
and 54.6 percent of all multi-section,
land loans.
The commenter encouraged HUD to
further increase the proposed loan
limits because the commenter was
discouraged that a higher percentage of
its loans would not have qualified for
the Title I program.
The commenter also stated that its
figures do not account for the advance
structure limitations that accompany the
Title I loan limits, such as the 130
percent of home invoice limitation
(including itemized options and freight).
The commenter estimated that only 3.4
percent of its originated new home only
loans in the last 12 months had a home
sales price under the 130 percent
limitation.
The commenter stated that, in the
commenter’s experience, most
manufactured home retailers sell homes
significantly above 130 percent of the
manufactured home invoice. To address
this, the commenter suggested that HUD
either improve or remove the limitation
altogether. The commenter stated that
annually adjusted loan limits can be a
sufficient ‘‘check’’ to ensure that home
prices stay true to recent market trends
and, therefore, the 130 percent cap is an
unnecessary limitation that undercuts
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the effectiveness of the increased loan
limits. The commenter stated that, as an
alternative to eliminating the 130
percent cap, HUD could increase the
limitation to 160 percent. The
commenter stated that the 160 percent
adjustment would represent a more
practical and realistic percentage that
would not require retailers to
significantly cut sales prices for a home
to qualify for a Title I loan. The
commenter stated that over the last 12
months, 44 percent of its loans have
involved homes sold under the 160
percent cap, compared to only 3.4
percent under the 130 percent cap.
HUD Response: HUD appreciates the
comment that the proposed limits
should be further increased. Section
2145 of the Housing and Economic
Recovery Act (HERA) of 2008 amended
Title I, Section 2 of the National
Housing Act (12 U.S.C. 1703) to increase
the maximum loan limits for
manufactured home loans insured
under Title I and requires the Secretary
to develop an index to annually adjust
the loan limits based on U.S. Census
Bureau (Census) data on manufactured
home prices. The indices adopted by the
Secretary for manufactured homes in
this rulemaking to annually adjust the
loan limits are based on the average of
the year-over-year changes in the allunits price series published by Census,
at the national level, and for a defined
look-back period. These indices are
based on data from Census-collected
surveys of firms that sell new
manufactured housing to individuals for
residential use. HUD will also adjust the
average sales price, as determined by
the Census Bureau data, by 115% and
apply an inflation factor, which more
accurately reflects the prices of
manufactured homes since the
publication of the most recent Census
Bureau report.
HUD includes the 130 percent cap on
new manufactured homes to protect
FHA borrowers and in keeping with
FHA’s fiduciary responsibility to
taxpayers. The 130 percent cap is not
the focus of this rulemaking.
Nevertheless, HUD will continue to
consider this issue in regard to the Title
I manufactured housing program.
C. Alternate Method of Calculating the
Lot Loan Index
A commenter stated that the proposed
indexing methodology is not sufficient
to capture the reality of land and
improvements costs for manufactured
homes. The commenter stated that the
National Housing Act requires HUD to
base the index on manufactured housing
price data collected by the Census
Bureau; however, the proposed rule
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seeks to create an index based on
median home prices in the Census
Bureau’s New Residential Sales data.
The commenter stated that the average
total costs of options (e.g., well, septic,
driveway) is $30,000 across all of its
funded loans. When considering the
example loan limit of $37,205 for 2022,
the commenter stated that there is
essentially no additional room to
purchase a parcel of property under the
FHA Title I program after the cost of
options alone. Similarly, the commenter
stated that the average appraisal value
for a parcel of real estate is roughly
$34,028, which leaves virtually no room
for improvements to the land.
The commenter stated that
improvements on purchased land are
usually vital with the purchase of a
manufactured home with land because
each land site is typically developed
individually, unlike single-family
homes built by a developer with the
appropriate infrastructure scaled across
hundreds of lots.
To more accurately reflect the actual
costs of purchasing a manufactured
housing lot, the commenter suggested
the use of Census Bureau MHS Annual
Data, Cost & Size Comparison: New
Manufactured Homes and New SingleFamily Site Build Homes that derives
the average land price for site-built
homes, which, while not connected to
manufactured housing pricing data, at
least accounts for the actual cost of land,
according to the commenter. The
commenter stated that the derived
average land price in the Census Bureau
data vastly exceeds the example 2022
loan limit and is directly related to the
cost of land alone.
HUD Response: HUD appreciates the
comment and the commenter’s opinion
that the proposed limits should be
further increased. HUD’s loan limits and
indexing are dictated by the Housing
and Economic Recovery Act of 2008
(HERA). Section 2145 of the Housing
and Economic Recovery Act (HERA) of
2008 amended the maximum loan limits
for manufactured home loans insured
under Title I and stipulated that the
Secretary develop a metric that uses
U.S. Census Bureau (Census) data on
average manufactured home prices to
calculate an index for adjusting loan
limits in the future. The index is based
on data from the Census’ site, which is
derived from surveys that were
collected from firms that sell new
manufactured homes to individuals for
residential use. HUD has determined
that the New Residential Sales index
provides an accurate assessment of the
manufactured housing market. This
index is defined as the average of the
year-over-year changes in the all-units
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(total) price series published by Census,
at the national level, and for a defined
look-back period. Furthermore, HUD
has determined that it is appropriate to
include additional factors to the
indexing methodology, accounting for
inflation and resulting in adjustments
that more closely reflect current
manufactured home loan values.
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D. Establish New Loan Base Limits
Using Current Data
A commenter suggested that loan
limits be initially brought up to the
following values, which the commenter
stated were based on the commenter’s
current origination volume for
manufactured home lending: home only
loans, single-section homes to $200,000,
multi-section homes to $300,000; loans
secured by land, single-section homes to
$325,000, multi-section homes to
$350,000. The commenter suggested
that the new manufactured homes sales
price data then be used as the index for
year-over-year loan limit adjustments to
this new baseline. The commenter
stated that if the loan limits were
adjusted in the described manner,
nearly all manufactured home loans
could qualify for the Title I program,
making the program truly viable.
HUD Response: HUD appreciates the
comment that the proposed baseline
loan limits be further increased and the
commenter’s interest in improving the
viability of the Title I Manufactured
Home loan program. Section 2145 of the
Housing and Economic Recovery Act
(HERA) of 2008, established the baseline
loan limits and amended the maximum
loan limits for manufactured home
loans insured under Title I. HERA
stipulated that the Secretary develop a
metric that uses U.S. Census Bureau
(Census) data on average manufactured
home prices to calculate an index for
adjusting loan limits in the future.
E. Additional Suggested Revisions to
FHA’s Title I Program
A commenter provided the following
suggestions for changes to FHA’s Title I
program: (1) The origination cap fee
should be updated from 2 percent to the
greater of $2,000 or 2 percent because
the cost to originate a lower balance
Title I loan is effectively the same as
that to originate a larger mortgage; (2)
Permit Title I closing-related fees and
other customary home loan fees (e.g.,
closing fee, title insurance, title search)
to be financed in the loan because
customers currently have to contribute
an additional $3,000–$6,000 to cover
these fees and costs; (3) Allow the seller
to pay closing costs up to 6 percent, like
the Title II program; (4) Revise the
collections policy to match the Title II
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policies applicable to medical
collections, bankruptcies and
judgments—currently the Title I
program has a blanket limit on
collections of $1000; (5) Adjust the debt
ratio guidelines in Title I to match that
available for Title II; and (6) Do not
require a park/community agreement for
3 years because it has a negative impact
on adoptions as community owners
already have their own rental
agreements, the current length of
commitment is too long for some
owners, and a timeline of six months
should be acceptable if the community
is being shut down.
Another commenter recommended
that FHA update its fee structure to
incentivize lenders to offer loans
through the Title I program.
Another commenter stated that a
significant reason that community banks
are not FHA-approved lenders is
because the FHA lender approval
process is overly complicated and
burdensome. The commenter
recommended that HUD work with
community bank stakeholders to
determine the best way to simplify the
FHA lender approval process, thus
expanding community bank
participation in FHA’s Title I program.
This commenter also recommended that
HUD create a secondary market facility
that allowed community banks to sell
manufactured home loans, which the
commenter stated would incentivize
lenders to make these loans because it
would allow lenders to quickly free up
capital to further invest in the lenders’
communities.
HUD Response: HUD appreciates
these suggestions, which the commenter
believes would improve lender
participation in the Title I program.
These suggestions are outside the scope
of this rulemaking which is focused on
establishing an indexing methodology
for calculating Title I manufactured
home loans. HUD will consider these
suggestions for future rulemaking or
policy changes.
F. Other Comments
A commenter stated that they found
the proposed rule to be an interesting
proposal to address rising home prices
and that using indexing methodology
and census data on manufactured
homes may create a fair or unfair
opportunity to take out loans on
manufactured homes due to the
potential limitation on loan amounts
based on this methodology.
HUD Response: HUD appreciates this
comment. HUD believes the changes in
this rule will provide additional
opportunities for low-to moderate
PO 00000
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Fmt 4700
Sfmt 4700
income borrowers to participate in the
Title I Manufactured Housing program.
V. Findings and Certifications
Regulatory Review—Executive Orders
12866, 13563 and 14094
Pursuant to Executive Order 12866
(Regulatory Planning and Review), a
determination must be made whether a
regulatory action is significant and
therefore, subject to review by the Office
of Management and Budget (OMB) in
accordance with the requirements of the
order. Executive Order 13563
(Improving Regulations and Regulatory
Review) directs executive agencies to
analyze regulations that are ‘‘outmoded,
ineffective, insufficient, or excessively
burdensome, and to modify, streamline,
expand, or repeal them in accordance
with what has been learned.’’ Executive
Order 13563 also directs that, where
relevant, feasible, and consistent with
regulatory objectives, and to the extent
permitted by law, agencies are to
identify and consider regulatory
approaches that reduce burdens and
maintain flexibility and freedom of
choice for the public. Executive Order
14094 (Modernizing Regulatory Review)
amends section 3(f) of Executive Order
12866 (Regulatory Planning and
Review), among other things.
This rule has been determined to be
a ‘‘significant regulatory action,’’ as
defined in section 3(f) of Executive
Order 12866, as amended by Executive
Order 14094, and therefore was
reviewed by OMB. However, this final
rule was not deemed to be significant
under section 3(f)(1) of the Order. The
docket file is available for public
inspection in the Regulations Division,
Office of General Counsel, Department
of Housing and Urban Development,
451 7th Street SW, Room 10276,
Washington, DC 20410–0500. Due to
security measures at the HUD
Headquarters building, please schedule
an appointment to review the docket file
by calling the Regulations Division at
202–402–3055 (this is not a toll-free
number). HUD welcomes and is
prepared to receive calls from
individuals who are deaf or hard of
hearing, as well as individuals with
speech or communication disabilities.
To learn more about how to make an
accessible telephone call, please visit:
https://www.fcc.gov/consumers/guides/
telecommunications-relay-service-trs.
Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA)
(5 U.S.C. 601 et seq.) generally requires
an agency to conduct a regulatory
flexibility analysis of any rule subject to
notice and comment rulemaking
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requirements, unless the agency certifies
that the rule will not have a significant
economic impact on a substantial
number of small entities. Accordingly,
the undersigned certifies that this rule
does not have a significant economic
impact on a substantial number of small
entities.
Environmental Impact
This rule establishes and reviews loan
limits. Accordingly, under 24 CFR
50.19(c)(6) this rule is categorically
excluded from environmental review
under the National Environmental
Policy Act of 1969 (42 U.S.C. 4321).
Executive Order 13132, Federalism
Executive Order 13132 (entitled
‘‘Federalism’’) prohibits an agency from
publishing any rule that has federalism
implications if the rule either: (i)
imposes substantial direct compliance
costs on state and local governments
and is not required by statute, or (ii)
preempts state law, unless the agency
meets the consultation and funding
requirements of section 6 of the
Executive order. This rule does not have
federalism implications and does not
impose substantial direct compliance
costs on state and local governments or
preempt state law within the meaning of
the Executive order.
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates
Reform Act of 1995 (2 U.S.C. 1531–
1538) (UMRA) establishes requirements
for federal agencies to assess the effects
of their regulatory actions on state,
local, and tribal governments, and on
the private sector. This rule does not
impose any federal mandates on any
state, local, or tribal governments, or on
the private sector, within the meaning of
the UMRA.
List of Subjects in 24 CFR Part 201
Claims, Health facilities, Historic
preservation, Home improvement, Loan
programs—housing and community
development, Manufactured homes,
Mortgage insurance, Reporting and
recordkeeping requirements.
ddrumheller on DSK120RN23PROD with RULES1
For the reasons discussed in the
preamble, HUD amends 24 CFR part 201
as follows:
PART 201—TITLE I PROPERTY
IMPROVEMENT AND MANUFACTURED
HOME LOANS
1. The authority for 24 CFR part 201
continues to read as follows:
■
Authority: 12 U.S.C. 1703; 15 U.S.C. 1639c;
42 U.S.C. 3535(d).
VerDate Sep<11>2014
16:07 Feb 27, 2024
Jkt 262001
2. Amend § 201.2 by revising the
definition of ‘‘Manufactured Home’’ to
read as follows:
■
§ 201.2
Definitions.
*
*
*
*
*
Manufactured home means a
transportable structure, comprised of
one or more modules, each built on a
permanent chassis, with or without a
permanent foundation, designed for
occupancy as a principal residence by a
single family. For purposes of the
annual adjustments to loan limits under
this part, a manufactured home may be
a single-section home comprised of one
module or a multi-section home
comprised of two or more modules. A
new manufactured home shall comply
with the minimum property standards
prescribed by the Secretary to assure its
livability and durability that are
published as the Manufactured Home
Construction and Safety Standards
implementing the National
Manufactured Housing Construction
and Safety Standards Act of 1974, 42
U.S.C. 5401–5426, at 24 CFR part 3280.
To qualify for a manufactured home
loan insured under this part, an existing
manufactured home must have been
constructed in accordance with
standards published at 24 CFR part 3280
and must meet standards similar to the
minimum property standards applicable
to existing homes insured under title II
of the Act, as prescribed by the
Secretary.
*
*
*
*
*
3. Amend § 201.10 by revising the
introductory texts of paragraphs (b)(1)
and (2), paragraph (c), and paragraphs
(d)(1) and (2), and adding paragraph (h)
to read as follows:
■
§ 201.10
Loan amounts.
(b) * * *
(1) The total principal obligation for a
loan to purchase a new manufactured
home shall not exceed the sum of the
following itemized amounts, up to a
maximum set according to an index
established by HUD in paragraph (h)(1)
of this section and updated through
notice which shall establish separate
loan limits for single-section homes and
multi-section homes:
*
*
*
*
*
(2) The total principal obligation for a
loan to purchase an existing
manufactured home shall not exceed the
lesser of the following amounts, up to a
maximum set according to an index
established by HUD in paragraph (h)(1)
of this section and updated through
notice which shall establish separate
PO 00000
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Fmt 4700
Sfmt 4700
14587
loan limits for single-section homes and
multi-section homes:
*
*
*
*
*
(c) Manufactured home lot loans. The
total principal obligation for a loan to
purchase and, if necessary, develop a lot
suitable for a manufactured home,
including on-site water and utility
connections, sanitary facilities, site
improvements and landscaping, shall
not exceed 95 percent of either the
appraised value of the developed lot (as
determined by a HUD-approved
appraisal) or the total of the purchase
price and development costs, whichever
is less, up to a maximum set according
to an index established by HUD in
paragraph (h)(2) of this section and
updated through notice.
(d) * * *
(1) The total principal obligation for a
loan to purchase a new manufactured
home and a lot on which to place the
home shall not exceed the sum of the
following itemized amounts, up to a
maximum set according to an index
established by HUD in paragraph (h)(3)
of this section and updated through
notice which shall establish separate
loan limits for single-section homes and
multi-section homes:
(2) The total principal obligation for a
Combination Loan, to purchase an
existing manufactured home and lot,
shall not exceed the lesser of the
following amounts, up to a maximum
set according to an index established by
HUD in paragraph (h)(3) of this section
and updated through notice which shall
establish separate loan limits for singlesection homes and multi-section homes:
*
*
*
*
*
(h) Annual Adjustments. HUD shall
adjust the following loan limits
annually through notice:
(1) In paragraphs (b)(1) and (2) of this
section, the single-section manufactured
home loan limit shall be adjusted to
reflect changes in single-section
manufactured home sales prices and the
multi-section manufactured home loan
limit shall be increased to reflect
changes in double-section manufactured
home sales prices, according to data
published by the Census Bureau, except
that the loan limits shall not be lowered.
(2) In paragraph (c) of this section, the
manufactured home lot loan limit shall
be increased to reflect changes in singlefamily home sales prices according to
data published by the Census Bureau,
except that the loan limit shall not be
lowered.
(3) In paragraphs (d)(1) and (2) of this
section, the combination manufactured
home and lot loan limits shall be
increased to be the sum of the
applicable loan limit for the
E:\FR\FM\28FER1.SGM
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Federal Register / Vol. 89, No. 40 / Wednesday, February 28, 2024 / Rules and Regulations
manufactured home loan in paragraph
(b)(1) and the lot loan limit in paragraph
(c) of this section, except that the loan
limit shall not be lowered.
Julia R. Gordon,
Assistant Secretary for Housing—FHA
Commissioner.
[FR Doc. 2024–04138 Filed 2–27–24; 8:45 am]
BILLING CODE 4210–67–P
DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT
24 CFR Part 401
[Docket No. FR–6122–F–02]
RIN 2502–AJ48
Rent Adjustments in the Mark-toMarket Program
Office of the Assistant
Secretary for Housing—Federal Housing
Commissioner, HUD.
ACTION: Final rule.
AGENCY:
The Mark-to-Market program
preserves affordability and availability
of affordable rental multifamily
properties with federally insured
mortgages, reducing rents to market
levels by restructuring existing debt to
levels supportable by these rents. This
final rule revises the Mark-to-Market
program regulations to clarify that
annual adjustment of restructured rents
under the program will be based on an
operating cost adjustment factor
determined by HUD and to further
clarify when HUD may approve rent
adjustments on a budget basis. This
final rule will bring greater clarity to the
Mark-to-Market program and will align
HUD’s regulations with recent
legislative changes that specifically
allow budget-based rent adjustments for
the program.
DATES: Effective: March 29, 2024.
FOR FURTHER INFORMATION CONTACT:
Thomas R. Davis, Director, Office of
Recapitalization, Office of Multifamily
Housing Programs, Department of
Housing and Urban Development, 451
Seventh Street SW, Room 6106,
Washington, DC 20410; telephone
number 202–402–7549. HUD welcomes
and is prepared to receive calls from
individuals who are deaf or hard of
hearing, as well as individuals with
speech or communication disabilities.
To learn more about how to make an
accessible telephone call please visit
https://www.fcc.gov/consumers/guides/
telecommunications-relay-service-trs.
SUPPLEMENTARY INFORMATION:
ddrumheller on DSK120RN23PROD with RULES1
SUMMARY:
VerDate Sep<11>2014
16:07 Feb 27, 2024
Jkt 262001
I. Background
The Multifamily Assisted Housing
Reform and Affordability Act of 1997
(Title V of Pub. L. 105–65, approved
October 27, 1997, and codified at 42
U.S.C. 1437f note) (MAHRA) authorizes
the Mark-to-Market program, which is
designed to preserve low-income rental
housing affordability while reducing the
long-term costs of federal rental
assistance. Under the program,
multifamily housing projects with
above-market rents that are subject to an
expiring contract under section 8 of the
United States Housing Act of 1937 (42
U.S.C. 1437f) (Section 8) undergo both
a restructuring of the project’s HUDinsured or HUD-held debt and an initial
renewal of its Section 8 Housing
Assistance Payments (HAP) contract so
that a new first loan is serviceable based
on modified rents.
On July 16, 2020, HUD issued a
proposed rule in the Federal Register, at
85 FR 43165, which proposed to revise
the Mark-to-Market program regulations
to clarify that all annual rent
adjustments for projects subject to a
restructuring plan are solely by
application of an operating cost
adjustment factor (OCAF) established by
HUD. The current regulations, at 24 CFR
401.412(b), authorize HUD to approve a
request for a budget-based rent
adjustment in lieu of an OCAF. HUD
proposed to remove the budget-based
rent adjustment provision as discussed
in detail in the proposed rule at 85 FR
43166–43167.
In addition, HUD in the proposed rule
sought to revise § 401.554 to remove the
statement that HUD will ‘‘extend’’
Section 8 contracts in order to comport
with HUD’s standard programmatic
practice of renewing contracts rather
than extending them and also to remove
a parenthetical reference in § 401.554 to
multiple renewal authorities for
contracts subject to a Restructuring
Plan.
Subsequent to the publication of the
proposed rule, Public Law 117–328,
Consolidated Appropriations Act, 2023,
approved on December 29, 2022,
amended MAHRA section 515 to add a
new subsection specifically authorizing
budget-based rent adjustments for Markto-Market projects. As amended, the
statute provides that HUD may, not
more than once every 10 years, adjust
rents in an amount equal to the lesser
of budget-based rents or comparable
market rents for the market area upon
request of an owner or purchaser who
meet certain criteria.
This final rule implements the
statutory change enacted by the
Consolidated Appropriations Act, 2023,
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Frm 00026
Fmt 4700
Sfmt 4700
as well as the revisions to § 401.554
contemplated in the proposed rule.
II. The Public Comments
The public comment period for the
proposed rule closed on September 14,
2020. HUD received five comments. The
commenters included members of the
public, public officials, and the assisted
housing industry. Commenters were
generally opposed to the contemplated
regulatory changes removing the budgetbased rent adjustment provision;
however, this issue has been superseded
and obviated by the statutory change
enacted by the Consolidated
Appropriations Act, 2023. The statutory
change is generally aligned with the
views expressed by commenters on the
rent adjustment provisions. Commenters
expressed no opinions with respect to
the proposed revisions to § 401.554.
Discretion To Allow Budget-Based Rent
Adjustments
Commenters stated that HUD does
retain the discretion to use a budgetbased rent adjustment at the request of
the property owner regardless of
whether § 401.412(b) is revised. One
commenter noted that in enacting
MAHRA, Congress did not prohibit the
Secretary’s exercise of reasonable
discretion to address extraordinary
circumstances affecting the viability and
condition of restructured projects over a
30-year period. Additionally, the
commenter stated that under section
514(e) of MAHRA, the use of the
mandatory ‘‘shall’’ with the permissive
‘‘allow’’ refutes any presumption that
Congress intended rent adjustments by
application of an OCAF to be exclusive.
Congress did not provide that it must be
the only option regardless of all
potential circumstances at the property.
In this same vein, another commenter
stated that although Section 514 and
Section 515 when read together make
clear that the Restructuring Plan must
‘‘allow for’’ an OCAF as a required
element of the Restructuring Plan, and
an owner must agree to an OCAF
renewal if offered by HUD, there is
nothing that either prevents HUD from
offering or an owner from accepting an
alternate renewal option. The
commenter noted that MAHRA at 514(e)
uses the term ‘‘allow’’ when describing
inclusion of an OCAF rent adjustment
in the Restructuring Plan without the
qualifying term ‘‘only,’’ and uses the
term ‘‘require’’ for other aspects of the
Restructuring Plan. One commenter
stated that since the publication of the
Final Rule in 2000, HUD has made a
‘‘determination’’ that Section 515(b) is
the appropriate legal authority for
subsequent renewal of HAP Contracts
E:\FR\FM\28FER1.SGM
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]]>Agencies
[Federal Register Volume 89, Number 40 (Wednesday, February 28, 2024)]
[Rules and Regulations]
[Pages 14582-14588]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-04138]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Part 201
[Docket No. FR-6207-F-02]
RIN 2502-AJ52
Indexing Methodology for Title I Manufactured Home Loan Limits
AGENCY: Office of the Assistant Secretary for Housing--Federal Housing
Commissioner, Department of Housing and Urban Development (HUD).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: Section 2145 of the Housing and Economic Recovery Act of 2008
(HERA) amended the maximum loan limits for manufactured home loans
insured under Title I of the National Housing Act and required
regulations to implement future indexing of the loan limit amounts for
manufactured homes originated under the Manufactured Home Loan program.
This rule establishes indexing methodologies using data from the United
States Census Bureau (``Census'') to annually calculate the loan limits
for Manufactured Home Loans, Manufactured Home Lot Loans, and
Manufactured Home and Lot Combination Loans (``Combination Loans'')
insured under Title I of the National Housing Act for the Manufactured
Home Loan program. This final rule adopts HUD's October 18, 2022,
proposed rule with changes.
DATES: Effective March 29, 2024.
FOR FURTHER INFORMATION CONTACT: Mary Jo Houton, Acting Director,
Department of Housing and Urban Development, 451 7th St. SW, Room 9266,
Washington, DC 20410-4000; telephone number 202-402-2378 (this is not a
toll-free number). HUD welcomes and is prepared to receive calls from
individuals who are deaf or hard of hearing, as well as individuals
with speech or communication disabilities. To learn more about how to
make an accessible telephone call, please visit https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs.
SUPPLEMENTARY INFORMATION:
I. Background
Title I of the National Housing Act authorizes the Secretary of HUD
to insure, through the Federal Housing Administration (FHA), loans made
by FHA-approved lenders to eligible borrowers to finance property
improvement and purchase, or refinance, of a manufactured home, with or
without the lot. HUD insures these loans under HUD's Property
Improvement Loan program and HUD's Manufactured Home Loan program. FHA
insures the lender against loss if the borrower defaults. A Title I
Manufactured Home Loan may be used for the purchase or refinancing of a
manufactured home, a lot on which to place a manufactured home, or a
manufactured home and lot in combination. The manufactured home must be
used as the principal residence of the borrower. Applicable loan limits
and requirements are codified in 24 CFR part 201.
Section 2117 of HERA \1\ added the definition of real estate to
include all natural resources and structures permanently affixed to the
land, amended the maximum loan limits for manufactured home loans and
certain property improvement loans insured under Title I of the
National Housing Act, and required future changes to the amounts for
manufactured home loans to be made through regulation. HERA also
stipulated that the Secretary develop a metric that uses U.S. Census
Bureau (``Census'') data \2\ on manufactured home prices to calculate
an index for adjusting loan limits in the future.
---------------------------------------------------------------------------
\1\ Public Law 110-289, section 2117, 122 Stat. 2654, 2844-45
(2008).
\2\ See generally, U.S. Commerce Department, Census Bureau data
on manufactured homes, available at: https://www.census.gov/programs-surveys/mhs.html.
---------------------------------------------------------------------------
In compliance with HERA, on March 3, 2009, HUD published Title I
Letter TI-480 \3\ notifying lenders of the new statutory loan limits.
HUD also noted in that Title I Letter the need for the Secretary to
develop an indexing method that would determine future loan limits. HUD
regulations still reflect the outdated, pre-HERA Loan Limits. Initially
after HERA's enactment, Census data showed a decline in home prices.
However, for compliance with HERA, HUD did not lower loan limits and
the limits were kept at the threshold set under HERA. The outdated Loan
Limits, and the 2008 Loan Limits currently in effect for manufactured
homes as described in the Title I letter are outlined below:
---------------------------------------------------------------------------
\3\ ``Increased Maximum Loan Limits for Title I Manufactured
Home Loans,'' https://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/letters/title1.
Table 1--Loan Limits Under HERA Compared to Pre-HERA Loan Limits
----------------------------------------------------------------------------------------------------------------
Eligible loan name 2008 loan limit basis per
Title I loan program name for property type Loan limits prior to HERA HERA currently in effect
----------------------------------------------------------------------------------------------------------------
Property Improvement Loan Manufactured Home $7,500....................... $25,090.
Program. Improvement Loan
for units
classified as
real estate.
Manufactured Home Loan Program. Manufactured Home $48,600...................... $69,678.
Loan (unit only).
Manufactured Home $16,200...................... $23,226.
Lot Loan (lot
only).
[[Page 14583]]
Manufactured Home $64,800 ($48,600 + $16,200).. $92,904 ($69,678 + $23,226).
and Lot
(Combination
Loan).
----------------------------------------------------------------------------------------------------------------
II. The Proposed Rule
On October 18, 2022, as required by HERA, HUD published for public
comment a proposed rule (87 FR 63018) (``the proposed rule'') to update
the loan limits in Sec. 201.10 and to establish an index for which
future loan limits would be revised through notice. HUD also proposed
to amend the definition of ``manufactured home'' in Sec. 201.2 to
conform to the loan limit change. HUD proposed to index loan limits
based on sale prices, unit sizes, and property data collected by the
Census Bureau.
HUD proposed to establish separate indexing methodologies to
annually calculate future loan limits for manufactured home loans,
manufactured home lot loans, and manufactured home and lot combination
loans under the Manufactured Home Loan program.
HUD proposed to create a dual index based on purchase prices of
manufactured homes, which are collected by the US Census Bureau
(Census): an index for single-section manufactured homes using only
single-section home sale data and a separate index for multi-section
manufactured homes using only double-section home sale data.\4\
---------------------------------------------------------------------------
\4\ For an example of the latest data according to Census, see
``MHS Latest Data,'' https://www.census.gov/data/tables/time-series/econ/mhs/latest-data.html.
---------------------------------------------------------------------------
HUD also proposed to adjust loan limits for single-section and
double or greater-section manufactured home loans annually based on
changes to indexes for the average price of single-section and double-
section manufactured homes, respectively. HUD proposed to set each loan
limit at the average price data for the most recent 12 months available
at the time HUD calculates the adjustment, weighted according to the
number of manufactured units shipped during that same period.
HUD also proposed creating an index for Manufactured Home Lot Loans
based on median home prices in Census's New Residential Sales data.\5\
---------------------------------------------------------------------------
\5\ The New Residential Sales data come from Census's Survey of
Construction. More information can be found here: https://www.census.gov/construction/nrs/.
---------------------------------------------------------------------------
Finally, HUD proposed that the loan limit for manufactured home and
lot Combination Loans would be determined by adding the manufactured
home lot loan limit to either the single- or double-section loan limit,
depending on the home.
III. This Final Rule
HUD adopts the proposed rule with changes to the indices and
changes to the regulatory text.
Changes to the Indexing Methodology
As further discussed in the public comment summary, HUD received
several comments suggesting that the loan limits set by the proposed
indexing methodology would be too low to accurately reflect current
manufactured housing prices and that, if adopted, the proposed indexing
methodology would frustrate the purpose of section 2145 of HERA which
is to make FHA housing programs more widely available for low-income
homebuyers.
In consideration of these comments, HUD has decided to adjust the
proposed indexing methodology to more accurately reflect real-world
manufactured housing costs, improving the viability of the Title I
Manufactured Housing program and fulfilling HERA's purpose of making
FHA housing programs available to more homebuyers.
In addition to using the average manufactured housing prices for
single- and multi-section homes, HUD will use two additional factors in
calculating the manufactured home loan limits. First, HUD will set loan
limits at 15% above the average home price according to the Census data
for the given type of loan. This is consistent with the initial loan
limits set by HERA, which were set to about 15% over the average
manufactured home price at the time. This is also consistent with how
HUD calculates loan limits under Title II, where FHA limits loans to
115% of the median home price.
Second, to account for the time between when the Manufactured
Housing Survey data was collected and when the limits will be
effective, HUD will utilize an inflation factor. To calculate this
inflation factor, HUD will use an inflation forecast such as the CPI-U
forecast in the President's Economic Assumptions \6\ to increase loan
limits to account for inflation that has occurred since the relevant
Census data were collected. This will address the maintenance or
increase of the sales price from year-to-year according to the Census
data and intends to more accurately represent current prices for
manufactured homes.
---------------------------------------------------------------------------
\6\ Available at https://www.whitehouse.gov/omb/budget/mid-session-review/.
---------------------------------------------------------------------------
HUD's updated indexing methodology is demonstrated in the below
chart:
Table 2--Proposed Index Methodologies for Title I Manufactured Home Loan
Limits
------------------------------------------------------------------------
Eligible loan types Proposed methodology/index
------------------------------------------------------------------------
1. Manufactured Home Loan (Home For single-section homes,
only). the loan limit will be set each
year at 115% of the average single-
section home price with an
adjustment for inflation.
For homes composed of two
or more sections (multi-section
homes), the loan limit will be set
each year at 115% of the average
double-section home price with an
adjustment for inflation.*
2. Manufactured Home Lot Loan (Lot Manufactured Home Lot Loan limit
only). established by HERA, indexed using
changes in the median new home
price.***
[[Page 14584]]
3. Manufactured Home and Lot Loan The indexed Manufactured Home Lot
(Combination Loan). Loan limit, plus the applicable
Manufactured Home Loan limit.
------------------------------------------------------------------------
* Utilizing single- and double-section price averages based on the most
recent data from the Manufactured Housing Survey from the Census
Bureau, adjusted for the effective year of the limit using an
inflation forecast (such as the CPI-U forecast in the President's
Economic Assumptions or similar replacement data set or report as may
be specified by the Secretary). See MHS Latest Data Average Sales
Price by Region and by Size of Home https://www2.census.gov/programs-surveys/mhs/tables/time-series/mhstabavgsls.xlsx.
** Utilizing median new home price based on the most recent data from
the Survey of Construction from the Census Bureau. See Median and
Average Sales Price of Homes Sold https://www.census.gov/construction/nrs/xls/usprice_cust.xls.
HUD will make changes to the indexing methodology through notice
where HUD determines that revisions are necessary to enhance or
maintain the accuracy of the index. HUD anticipates any such change(s)
would likely be technical in nature, but if a change were more than
technical, HUD would provide notice to the public with the opportunity
for comment prior to changing the index.
Table 3 below shows examples of the loan limits, based on recent
data from Census.
Table 3--Example Loan Limits
----------------------------------------------------------------------------------------------------------------
Loan limit Example 2024 loan limits
Description of property methodology Current limits (per HERA) (based on 2022 Census data)
----------------------------------------------------------------------------------------------------------------
Single-section Manufactured Set to average of $69,678...................... $106,405.
Home (unit only). 115% of single-
section home
prices. Note 1.
Multi-section Manufactured Home Set to 115% of $69,678...................... $195,322.
(unit only). average double-
section home
prices. Note 1.
Manufactured Home Lot (lot Set to median $23,226...................... $43,377.
only). sales price for
new single-family
homes. Note 2.
Single-section Manufactured Limit for Single- $92,904 (69,678 + 23,226).... $149,782 (106,405 + 43,377).
Home and Lot (Combination Section + Limit
Loan). for Lot Loan.
Multi-section Manufactured Home Limit for Multi- $92,904 (69,678 + 23,226).... $238,699 (195,322 + 43,377).
and Lot (Combination Loan). Section + Limit
for Lot Loan.
----------------------------------------------------------------------------------------------------------------
Table 3 Notes:
1. Indexing to occur at the beginning of each year, based on the weighted average price data for the most recent
12 months available from the Manufactured Housing Survey.
2. Indexing to occur at the beginning of each year, based on the median sales price of the most recent 12 months
available from the New Residential Sales data.
Changes to the Regulatory Text
HUD is making only technical changes at the final rule stage. HUD
is removing references to ``double-section'' homes as they are already
covered by ``multi-section'' homes. HUD is also revising Sec.
201.10(h)(1) and (2) to remove the reference to changes to the
``average'' price of single-section manufactured home sales as
superfluous. HUD is also revising Sec. 201.10(h)(2) to change a
reference to data published by HUD because the data HUD will be using
is published by the Census Bureau. HUD is also revising Sec.
201.10(h)(1) through (3) to clarify that HUD will not lower loan limits
from previous years.
IV. Summary of Public Comments
The public comment period for the proposed rule closed on December
19, 2022. HUD received five distinct comments relating to the proposed
rule. Comments were submitted by an individual, associations
representing housing industry stakeholders (i.e., community banks,
manufactured housing, realtors), a lender, and anonymously. The full
text of each public comment can be found at: https://www.regulations.gov/document/HUD-2022-0078-0001.
A. Support for the Proposed Rule
Multiple commenters expressed their support for the proposed rule.
One commenter said they support the proposed rule because of the
significant cost increase in modular homes since 2008 and because the
Housing and Economic Recovery Act of 2008's (HERA) current limits are
too low to allow low-income Americans to afford housing. Commenters
expressed support for the proposed rule because they said updated loan
limits would help address the declining trend in loans that qualify for
the Title I loan program. Another commenter expressed support for the
proposed rule because it would establish separate loan limits for
single-section and multi-section manufactured homes. The commenter
stated that home size has a significant impact on home cost and
separate loan limits help account for the different cost components
between single- and multi-section homes.
A commenter expressed their support for the proposed rule, stating
it would benefit low to moderate-income and first-time home buyers to
take advantage of financing through the Federal Housing Administration
(FHA) and begin to build wealth through homeownership. Another
commenter said the proposed rule would create opportunities for
creditworthy borrowers to access manufactured homes, and this is a
crucial bridge to address the housing supply gap allowing low to
moderate-income Americans to afford a home.
A commenter stated that the proposed rule creates a unique indexing
methodology that increases loan limits through annual adjustments that
would ensure the limits remain current with the housing market. Another
commenter stated that they are encouraged by the potential effect of
the proposed rule's indexing methodology because it will update
statutory loan limits established
[[Page 14585]]
in 2008 and allow for annual adjustments.
HUD Response: HUD appreciates these comments and the broad support
for this rule; these commenters identified many of the reasons why HUD
undertook this effort. HUD agrees that increased loan limits will
provide additional opportunities for low-to-moderate income borrowers
to access homeownership now and in the future.
B. Suggested Revision to the Proposed Rule's Loan Cap and the 130
Percent Home Invoice Limitation
A commenter stated they are supportive of the proposed rule's
attempt at increasing loan limits for FHA's Title I program and
believed that the index would capture the movement of manufactured home
pricing. However, the commenter believes that loan limits should be
increased further than described in the proposed rule. The commenter
stated that community banks typically choose to portfolio loans that
may otherwise be eligible for FHA's Title I program because the maximum
FHA loan amounts often fail to cover the cost of the unit. The
commenter, a lender, calculated the percentage of its own loans in 2022
that would have qualified under the proposed rule's example loan limits
for 2022 to be 22.7 percent of all single-section loans; 47 percent of
all multi-section loans; 46 percent of all single-section, land loans;
and 54.6 percent of all multi-section, land loans.
The commenter encouraged HUD to further increase the proposed loan
limits because the commenter was discouraged that a higher percentage
of its loans would not have qualified for the Title I program.
The commenter also stated that its figures do not account for the
advance structure limitations that accompany the Title I loan limits,
such as the 130 percent of home invoice limitation (including itemized
options and freight). The commenter estimated that only 3.4 percent of
its originated new home only loans in the last 12 months had a home
sales price under the 130 percent limitation.
The commenter stated that, in the commenter's experience, most
manufactured home retailers sell homes significantly above 130 percent
of the manufactured home invoice. To address this, the commenter
suggested that HUD either improve or remove the limitation altogether.
The commenter stated that annually adjusted loan limits can be a
sufficient ``check'' to ensure that home prices stay true to recent
market trends and, therefore, the 130 percent cap is an unnecessary
limitation that undercuts the effectiveness of the increased loan
limits. The commenter stated that, as an alternative to eliminating the
130 percent cap, HUD could increase the limitation to 160 percent. The
commenter stated that the 160 percent adjustment would represent a more
practical and realistic percentage that would not require retailers to
significantly cut sales prices for a home to qualify for a Title I
loan. The commenter stated that over the last 12 months, 44 percent of
its loans have involved homes sold under the 160 percent cap, compared
to only 3.4 percent under the 130 percent cap.
HUD Response: HUD appreciates the comment that the proposed limits
should be further increased. Section 2145 of the Housing and Economic
Recovery Act (HERA) of 2008 amended Title I, Section 2 of the National
Housing Act (12 U.S.C. 1703) to increase the maximum loan limits for
manufactured home loans insured under Title I and requires the
Secretary to develop an index to annually adjust the loan limits based
on U.S. Census Bureau (Census) data on manufactured home prices. The
indices adopted by the Secretary for manufactured homes in this
rulemaking to annually adjust the loan limits are based on the average
of the year-over-year changes in the all-units price series published
by Census, at the national level, and for a defined look-back period.
These indices are based on data from Census-collected surveys of firms
that sell new manufactured housing to individuals for residential use.
HUD will also adjust the average sales price, as determined by the
Census Bureau data, by 115% and apply an inflation factor, which more
accurately reflects the prices of manufactured homes since the
publication of the most recent Census Bureau report.
HUD includes the 130 percent cap on new manufactured homes to
protect FHA borrowers and in keeping with FHA's fiduciary
responsibility to taxpayers. The 130 percent cap is not the focus of
this rulemaking. Nevertheless, HUD will continue to consider this issue
in regard to the Title I manufactured housing program.
C. Alternate Method of Calculating the Lot Loan Index
A commenter stated that the proposed indexing methodology is not
sufficient to capture the reality of land and improvements costs for
manufactured homes. The commenter stated that the National Housing Act
requires HUD to base the index on manufactured housing price data
collected by the Census Bureau; however, the proposed rule seeks to
create an index based on median home prices in the Census Bureau's New
Residential Sales data. The commenter stated that the average total
costs of options (e.g., well, septic, driveway) is $30,000 across all
of its funded loans. When considering the example loan limit of $37,205
for 2022, the commenter stated that there is essentially no additional
room to purchase a parcel of property under the FHA Title I program
after the cost of options alone. Similarly, the commenter stated that
the average appraisal value for a parcel of real estate is roughly
$34,028, which leaves virtually no room for improvements to the land.
The commenter stated that improvements on purchased land are
usually vital with the purchase of a manufactured home with land
because each land site is typically developed individually, unlike
single-family homes built by a developer with the appropriate
infrastructure scaled across hundreds of lots.
To more accurately reflect the actual costs of purchasing a
manufactured housing lot, the commenter suggested the use of Census
Bureau MHS Annual Data, Cost & Size Comparison: New Manufactured Homes
and New Single-Family Site Build Homes that derives the average land
price for site-built homes, which, while not connected to manufactured
housing pricing data, at least accounts for the actual cost of land,
according to the commenter. The commenter stated that the derived
average land price in the Census Bureau data vastly exceeds the example
2022 loan limit and is directly related to the cost of land alone.
HUD Response: HUD appreciates the comment and the commenter's
opinion that the proposed limits should be further increased. HUD's
loan limits and indexing are dictated by the Housing and Economic
Recovery Act of 2008 (HERA). Section 2145 of the Housing and Economic
Recovery Act (HERA) of 2008 amended the maximum loan limits for
manufactured home loans insured under Title I and stipulated that the
Secretary develop a metric that uses U.S. Census Bureau (Census) data
on average manufactured home prices to calculate an index for adjusting
loan limits in the future. The index is based on data from the Census'
site, which is derived from surveys that were collected from firms that
sell new manufactured homes to individuals for residential use. HUD has
determined that the New Residential Sales index provides an accurate
assessment of the manufactured housing market. This index is defined as
the average of the year-over-year changes in the all-units
[[Page 14586]]
(total) price series published by Census, at the national level, and
for a defined look-back period. Furthermore, HUD has determined that it
is appropriate to include additional factors to the indexing
methodology, accounting for inflation and resulting in adjustments that
more closely reflect current manufactured home loan values.
D. Establish New Loan Base Limits Using Current Data
A commenter suggested that loan limits be initially brought up to
the following values, which the commenter stated were based on the
commenter's current origination volume for manufactured home lending:
home only loans, single-section homes to $200,000, multi-section homes
to $300,000; loans secured by land, single-section homes to $325,000,
multi-section homes to $350,000. The commenter suggested that the new
manufactured homes sales price data then be used as the index for year-
over-year loan limit adjustments to this new baseline. The commenter
stated that if the loan limits were adjusted in the described manner,
nearly all manufactured home loans could qualify for the Title I
program, making the program truly viable.
HUD Response: HUD appreciates the comment that the proposed
baseline loan limits be further increased and the commenter's interest
in improving the viability of the Title I Manufactured Home loan
program. Section 2145 of the Housing and Economic Recovery Act (HERA)
of 2008, established the baseline loan limits and amended the maximum
loan limits for manufactured home loans insured under Title I. HERA
stipulated that the Secretary develop a metric that uses U.S. Census
Bureau (Census) data on average manufactured home prices to calculate
an index for adjusting loan limits in the future.
E. Additional Suggested Revisions to FHA's Title I Program
A commenter provided the following suggestions for changes to FHA's
Title I program: (1) The origination cap fee should be updated from 2
percent to the greater of $2,000 or 2 percent because the cost to
originate a lower balance Title I loan is effectively the same as that
to originate a larger mortgage; (2) Permit Title I closing-related fees
and other customary home loan fees (e.g., closing fee, title insurance,
title search) to be financed in the loan because customers currently
have to contribute an additional $3,000-$6,000 to cover these fees and
costs; (3) Allow the seller to pay closing costs up to 6 percent, like
the Title II program; (4) Revise the collections policy to match the
Title II policies applicable to medical collections, bankruptcies and
judgments--currently the Title I program has a blanket limit on
collections of $1000; (5) Adjust the debt ratio guidelines in Title I
to match that available for Title II; and (6) Do not require a park/
community agreement for 3 years because it has a negative impact on
adoptions as community owners already have their own rental agreements,
the current length of commitment is too long for some owners, and a
timeline of six months should be acceptable if the community is being
shut down.
Another commenter recommended that FHA update its fee structure to
incentivize lenders to offer loans through the Title I program.
Another commenter stated that a significant reason that community
banks are not FHA-approved lenders is because the FHA lender approval
process is overly complicated and burdensome. The commenter recommended
that HUD work with community bank stakeholders to determine the best
way to simplify the FHA lender approval process, thus expanding
community bank participation in FHA's Title I program. This commenter
also recommended that HUD create a secondary market facility that
allowed community banks to sell manufactured home loans, which the
commenter stated would incentivize lenders to make these loans because
it would allow lenders to quickly free up capital to further invest in
the lenders' communities.
HUD Response: HUD appreciates these suggestions, which the
commenter believes would improve lender participation in the Title I
program. These suggestions are outside the scope of this rulemaking
which is focused on establishing an indexing methodology for
calculating Title I manufactured home loans. HUD will consider these
suggestions for future rulemaking or policy changes.
F. Other Comments
A commenter stated that they found the proposed rule to be an
interesting proposal to address rising home prices and that using
indexing methodology and census data on manufactured homes may create a
fair or unfair opportunity to take out loans on manufactured homes due
to the potential limitation on loan amounts based on this methodology.
HUD Response: HUD appreciates this comment. HUD believes the
changes in this rule will provide additional opportunities for low-to
moderate income borrowers to participate in the Title I Manufactured
Housing program.
V. Findings and Certifications
Regulatory Review--Executive Orders 12866, 13563 and 14094
Pursuant to Executive Order 12866 (Regulatory Planning and Review),
a determination must be made whether a regulatory action is significant
and therefore, subject to review by the Office of Management and Budget
(OMB) in accordance with the requirements of the order. Executive Order
13563 (Improving Regulations and Regulatory Review) directs executive
agencies to analyze regulations that are ``outmoded, ineffective,
insufficient, or excessively burdensome, and to modify, streamline,
expand, or repeal them in accordance with what has been learned.''
Executive Order 13563 also directs that, where relevant, feasible, and
consistent with regulatory objectives, and to the extent permitted by
law, agencies are to identify and consider regulatory approaches that
reduce burdens and maintain flexibility and freedom of choice for the
public. Executive Order 14094 (Modernizing Regulatory Review) amends
section 3(f) of Executive Order 12866 (Regulatory Planning and Review),
among other things.
This rule has been determined to be a ``significant regulatory
action,'' as defined in section 3(f) of Executive Order 12866, as
amended by Executive Order 14094, and therefore was reviewed by OMB.
However, this final rule was not deemed to be significant under section
3(f)(1) of the Order. The docket file is available for public
inspection in the Regulations Division, Office of General Counsel,
Department of Housing and Urban Development, 451 7th Street SW, Room
10276, Washington, DC 20410-0500. Due to security measures at the HUD
Headquarters building, please schedule an appointment to review the
docket file by calling the Regulations Division at 202-402-3055 (this
is not a toll-free number). HUD welcomes and is prepared to receive
calls from individuals who are deaf or hard of hearing, as well as
individuals with speech or communication disabilities. To learn more
about how to make an accessible telephone call, please visit: https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs.
Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.)
generally requires an agency to conduct a regulatory flexibility
analysis of any rule subject to notice and comment rulemaking
[[Page 14587]]
requirements, unless the agency certifies that the rule will not have a
significant economic impact on a substantial number of small entities.
Accordingly, the undersigned certifies that this rule does not have a
significant economic impact on a substantial number of small entities.
Environmental Impact
This rule establishes and reviews loan limits. Accordingly, under
24 CFR 50.19(c)(6) this rule is categorically excluded from
environmental review under the National Environmental Policy Act of
1969 (42 U.S.C. 4321).
Executive Order 13132, Federalism
Executive Order 13132 (entitled ``Federalism'') prohibits an agency
from publishing any rule that has federalism implications if the rule
either: (i) imposes substantial direct compliance costs on state and
local governments and is not required by statute, or (ii) preempts
state law, unless the agency meets the consultation and funding
requirements of section 6 of the Executive order. This rule does not
have federalism implications and does not impose substantial direct
compliance costs on state and local governments or preempt state law
within the meaning of the Executive order.
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C.
1531-1538) (UMRA) establishes requirements for federal agencies to
assess the effects of their regulatory actions on state, local, and
tribal governments, and on the private sector. This rule does not
impose any federal mandates on any state, local, or tribal governments,
or on the private sector, within the meaning of the UMRA.
List of Subjects in 24 CFR Part 201
Claims, Health facilities, Historic preservation, Home improvement,
Loan programs--housing and community development, Manufactured homes,
Mortgage insurance, Reporting and recordkeeping requirements.
For the reasons discussed in the preamble, HUD amends 24 CFR part
201 as follows:
PART 201--TITLE I PROPERTY IMPROVEMENT AND MANUFACTURED HOME LOANS
0
1. The authority for 24 CFR part 201 continues to read as follows:
Authority: 12 U.S.C. 1703; 15 U.S.C. 1639c; 42 U.S.C. 3535(d).
0
2. Amend Sec. 201.2 by revising the definition of ``Manufactured
Home'' to read as follows:
Sec. 201.2 Definitions.
* * * * *
Manufactured home means a transportable structure, comprised of one
or more modules, each built on a permanent chassis, with or without a
permanent foundation, designed for occupancy as a principal residence
by a single family. For purposes of the annual adjustments to loan
limits under this part, a manufactured home may be a single-section
home comprised of one module or a multi-section home comprised of two
or more modules. A new manufactured home shall comply with the minimum
property standards prescribed by the Secretary to assure its livability
and durability that are published as the Manufactured Home Construction
and Safety Standards implementing the National Manufactured Housing
Construction and Safety Standards Act of 1974, 42 U.S.C. 5401-5426, at
24 CFR part 3280. To qualify for a manufactured home loan insured under
this part, an existing manufactured home must have been constructed in
accordance with standards published at 24 CFR part 3280 and must meet
standards similar to the minimum property standards applicable to
existing homes insured under title II of the Act, as prescribed by the
Secretary.
* * * * *
0
3. Amend Sec. 201.10 by revising the introductory texts of paragraphs
(b)(1) and (2), paragraph (c), and paragraphs (d)(1) and (2), and
adding paragraph (h) to read as follows:
Sec. 201.10 Loan amounts.
(b) * * *
(1) The total principal obligation for a loan to purchase a new
manufactured home shall not exceed the sum of the following itemized
amounts, up to a maximum set according to an index established by HUD
in paragraph (h)(1) of this section and updated through notice which
shall establish separate loan limits for single-section homes and
multi-section homes:
* * * * *
(2) The total principal obligation for a loan to purchase an
existing manufactured home shall not exceed the lesser of the following
amounts, up to a maximum set according to an index established by HUD
in paragraph (h)(1) of this section and updated through notice which
shall establish separate loan limits for single-section homes and
multi-section homes:
* * * * *
(c) Manufactured home lot loans. The total principal obligation for
a loan to purchase and, if necessary, develop a lot suitable for a
manufactured home, including on-site water and utility connections,
sanitary facilities, site improvements and landscaping, shall not
exceed 95 percent of either the appraised value of the developed lot
(as determined by a HUD-approved appraisal) or the total of the
purchase price and development costs, whichever is less, up to a
maximum set according to an index established by HUD in paragraph
(h)(2) of this section and updated through notice.
(d) * * *
(1) The total principal obligation for a loan to purchase a new
manufactured home and a lot on which to place the home shall not exceed
the sum of the following itemized amounts, up to a maximum set
according to an index established by HUD in paragraph (h)(3) of this
section and updated through notice which shall establish separate loan
limits for single-section homes and multi-section homes:
(2) The total principal obligation for a Combination Loan, to
purchase an existing manufactured home and lot, shall not exceed the
lesser of the following amounts, up to a maximum set according to an
index established by HUD in paragraph (h)(3) of this section and
updated through notice which shall establish separate loan limits for
single-section homes and multi-section homes:
* * * * *
(h) Annual Adjustments. HUD shall adjust the following loan limits
annually through notice:
(1) In paragraphs (b)(1) and (2) of this section, the single-
section manufactured home loan limit shall be adjusted to reflect
changes in single-section manufactured home sales prices and the multi-
section manufactured home loan limit shall be increased to reflect
changes in double-section manufactured home sales prices, according to
data published by the Census Bureau, except that the loan limits shall
not be lowered.
(2) In paragraph (c) of this section, the manufactured home lot
loan limit shall be increased to reflect changes in single-family home
sales prices according to data published by the Census Bureau, except
that the loan limit shall not be lowered.
(3) In paragraphs (d)(1) and (2) of this section, the combination
manufactured home and lot loan limits shall be increased to be the sum
of the applicable loan limit for the
[[Page 14588]]
manufactured home loan in paragraph (b)(1) and the lot loan limit in
paragraph (c) of this section, except that the loan limit shall not be
lowered.
Julia R. Gordon,
Assistant Secretary for Housing--FHA Commissioner.
[FR Doc. 2024-04138 Filed 2-27-24; 8:45 am]
BILLING CODE 4210-67-P
