May 21, 2009 MORTGAGEE LETTER 2009-16 TO: ALL …

1 May 21, 2009 MORTGAGEE LETTER 2009-16TO:ALL APPROVED MORTGAGEESALL APPROVED APPRAISERSSUBJECT: manufactured housing Policy Guidance Property and Underwriting EligibilityThis MORTGAGEE LETTER provides guidance on manufactured housing eligibility requirements forFederal housing Administration (FHA) mortgage insurance under Title II of the National HousingAct. Changes to manufactured housing requirements for new and existing construction were madeby the housing and Economic Recovery Act of 2008 (Public Law 110-289, approved July 30,2008) (HERA). This MORTGAGEE LETTER addresses those changes that can be Connection between superstructure and foundation, by means ofwelds, bolts, and various light gage metal plates. Anchorage does not refer to anytype of soil anchor. [Note: soil anchors are not acceptable.] Permanent- A construction-permanent (herein, CP ) mortgagecombines the features of: a) a construction loan (a short-term interim loan forfinancing the cost of construction) and b) the traditional long-term permanentresidential Construction The manufactured home has been permanently installed ona site for one year or more prior to the date of the application for Foundation Wall Foundation walls placed directly below the exteriorperimeter walls of the unit.

2 These walls may or may not be structurally used as:bearing walls under gravity loads and/or shear walls under horizontal loads. If thesewalls are not used structurally, they are called non-bearing walls or skirt Value the appraised value of the unit and land separately Construction The manufactured home has been permanently erected on a sitefor less than one year prior to the date of the application for mortgage Permanent Foundations Guide for manufactured [of Eligible manufactured Homes] -To be eligible for FHA Title IIinsurance, the manufactured unit must not have been previously installed oroccupied at any other site or location. manufactured units may be moved only fromthe manufacturer s or dealer s lot to the site on which the unit will be insured. If apermanent foundation is to be constructed under an existing eligible unit, the unitmay bejacked-up or under pinnedin order to install a new A term often used to describe a non-structural enclosure of a foundationcrawl space.

3 Typically, but not always, it is a lightweight material such as vinyl ormetal, attached to the side of the structure, extending to the ground (generally, notinstalled below frost depth). See also II. (E) ELIGIBILITYM anufactured Homes: Eligibility and General Requirements - Title IIA manufactured home is a structure that is transportable in one or more sections, and isdesigned and constructed to the Federal manufactured Construction and Safety Standardsand is so labeled. To be eligible for FHA mortgage insurance, all manufactured homes mustcomply with the a floor area of not less than 400 square feet; constructed after June 15, 1976, in conformance with the Federal ManufacturedHome Construction and Safety Standards, as evidenced by an affixed certification labelin accordance with 24 CFR ( manufactured homes produced prior to that date areineligible for insured financing); classified as real estate (but need not be treated as real estate for purposes of statetaxation); mortgage must cover both the manufactured unit and its site and shall have a term ofnot more than 30 years from the date amortization begins; and remains on a permanent chassis; to be used as a dwelling with a permanent foundation built to FHA criteria.

4 Finished grade elevation beneath the manufactured home or, if a basement is used,the grade beneath the basement floor shall be at or above the 100-year return frequencyflood construction is also a factory-built home, but is treated the same as information on FHA Insurance under the Title II program, see HUD Handbooks 8; HUD Handbook , Rev-2, Section 3-4 and Appendix 11; and PermanentFoundations Guide for manufactured housing , (HUD-7584), dated September 1996( MORTGAGEE LETTER 1997-36). The latter is a revision of HUD Handbook , datedAugust the manufactured home is to be located in a coastal high hazard area (1) for new construction, it must meet thecurrent standards for V zones in Federal Emergency Management Agency (FEMA) regulations (44 CFR ); and (2)for existing construction, it must have met FEMA elevation and construction standards as required by HUD regulationsin 24 CFR (c)(ii).

5 manufactured home permanent foundation systems must follow the FHAguidelines in effect at the time of the certification. Currently, these guidelines arepublished in the Permanent Foundations Guide for manufactured housing (PFGMH), which is found at guidelines include submission of a certification from a licensed professionalengineer, or registered architect, who is licensed/registered in the state where themanufactured home is located, attesting to compliance with the current copy of the foundation certification, showing that the foundation meets theguidelines published in the PFGMH that were in effect at the time of certification, isacceptable for future FHA loans, provided there are no alterations and/or observabledamage to the s Certification on Foundations Compliance1. An Engineer s Certification on Foundation Compliance with the PFGMH must be:a)completed by a licensed professional engineer or registered architect, who islicensed/registered in the state where the manufactured home is located;b)site specific and contain the engineer s or registered architect s signature, seal,and/or state license/certification number.

6 In states where seals are issued, theseal must be on the certification; andc)contained in both the lender s loan file and the insuring binder when submittedto An Engineer s Certification on Foundation Compliance is not required in the loanfile or insuring binder for:a)Any FHA-to-FHA transaction provided that no modifications have been made tothe foundation or structure from the date of the effective )FHA/HUD Real Estate Owned (REO) Division ZoneAll manufactured homes located in Flood Zones A or V are not eligible for FHAmortgage insurance without:a)FEMA issued LETTER of Map Amendment (LOMA);b) FEMA issued LETTER of Map Revision (LOMR); orc) Acceptable Elevation Certificate This must be based on the finished constructionand prepared by a state licensed/registered engineer or land surveyor and indicate thatthe finished grade beneath the manufactured home shall be at or above the 100-yearreturn frequency flood elevation.

7 For all manufactured homes with a basement, thegrade beneath the basement must be at or above the 100-year flood newly constructed manufactured homes, initial and final inspections must becompleted by FHA Compliance Inspectors, licensed engineers, registered architects, orother qualified construction industry professionals, as determined by the lender. Theinspector must have a copy of the FHA required foundation certification and relatedplans and specifications at the time of the inspection. Also, the inspection must becompleted in accordance with requirements set forth in: 1) HUD Handbook ,REV-2, CHG-1,Architectural Processing and Inspections for Home MortgageInsurance;and 2) reported using form HUD-92051,Compliance Inspection EnclosuresThe space beneath manufactured homes must be properly enclosed. The perimeterenclosure shall be a continuous wall (whether bearing or non-load bearing) thatseparates the crawl space from backfill, and keeps out vermin and water.

8 Theenclosure must be adequately secured to the perimeter of the unit and allow for properventilation of the crawl space. Accordingly, for:a)New space beneath the home shall be enclosed by a continuousfoundation-type construction designed to resist all forces to which it issubject without transmitting forces to the building enclosure shall be adequately secured to the perimeter of the home andbe constructed of materials that conform, accordingly, to HUDM inimumProperty Standards(MPS) (such as: concrete, masonry, or treated wood)and the PFGMH for )Existing the perimeter enclosure is non-load bearing skirting comprised oflightweight material, there must be adequate backing (such as: concrete,masonry, or treated wood) to permanently attach and support or reinforce Protection for New ConstructionThe steel chassis under a newly constructed manufactured home unit is not aneffective termite barrier as it is neither designed nor approved for any such soil treatment, EPA registered bait treatments, pressure preservativetreated wood, naturally termite resistant wood or any combination of these methodsis required for maximum protection against termites.

9 [Note: Termite control on existing manufactured homes is the same as for standardexisting site-built homes.]Existing manufactured homes will be handled in the same manner as stick-builthomes with regard to termite protection policies. State or local requirements are tobe Project ApprovalUnder authority granted by enactment of HERA, individual manufactured housingunits in condominium projects are now eligible for FHA insurance. Until updatedguidance on the processing of condominium project approvals is published, manufactured housing condominium project approval is subject to the requirementsof HUD Handbook , Chapter 11. The Spot Loan Approval process as definedin MORTGAGEE LETTER 1996-41 is not applicable. All manufactured housing projectapproval requests must be processed by the Homeownership Center that hasgeographical authority over the property to be IssuesAll manufactured home units and land must be classified as real estate to be eligiblefor Title II FHA Insurance.

10 When the land is purchased, exclusive of themanufactured housing unit, there may be two deeds, a property deed for the land anda chattel deed or motor vehicle title for the unit. FHA requires one clear title at thetime of closing. Therefore, lenders must provide evidence that the title policyspecifically states the manufactured home and land are classified as real estate (butneed not be treated as real estate for the purposes of state taxation).The lender may resolve title issues through services such as the website offered byFannie Mae which includes state-by-state titling information for loans secured bymanufactured housing . See: QUALITYThe quality of data contained in FHA s databases is important for accurate processingand recordkeeping. Therefore, manufactured housing data must be correct. Thefollowing clarifications are provided for data entry on the loan applications and FHAC onnection Connection, Case Number Assignment Screen, must contain theappropriate two-digit Program ID Code:a).