© 2004 HFI On the Web Introduction to Manufactured Housing August 10, 2005

© 2004 HFI On the Web

Introduction to Manufactured

Housing

August 10, 2005


Before We Begin, Please…

• Put your phone on mute except when you want to ask a question

• Don’t put your phone on hold during the seminar

• Wait until the end of the seminar to print out the presentation

THANK YOU!


Your Instructor Today

Kelly VespucciKelly VespucciSenior Underwriting

Consultant


Your Subject Matter Expert

Virginia MahoneySenior Risk Manager

Single Family Business


• Introduction & Definition of Manufactured Housing

• Review of Eligibility Parameters & Underwriting Requirements

• Examine new Appraisal Requirements • Explore Title Issues and Lien Requirements • Offer Servicing Guidance

Objectives for this Session


• Manufactured homes make up approximately .5 % of our total book of business

• Volumes have been low, however, we have seen a significant increase in the past 2 years

Introduction & Definition


• Mortgages secured by manufactured homes default at higher rates and have higher losses than mortgages secured by comparable site-built homes

• Our previous guidelines for manufactured housing allowed for mortgage characteristics that did not match the asset

Introduction & Definition(continued)


Introduction & Definition(continued)

• Modifying our requirements and providing additional guidance for lenders will • Reduce the likelihood of default• Help ensure that borrowers have every

opportunity to become and remain successful homeowners

• Fannie Mae remains committed to providing liquidity to this important segment of the housing market


Built on a permanent chassis and attached to a permanent foundation system

Definition of Manufactured Housing


• Built in compliance with Federal Manufactured Home Construction and Safety Standards - June 15, 1976

• A one-family dwelling, legally classified as real property.

• The land must be owned as fee simple. Leasehold estates are not eligible.

• “On-Frame” modular homes built on a permanent chassis must meet the HUD Code to be eligible for delivery.

Eligibility Parameters


Eligibility Parameters(continued)

• Multi-width may be located on an individual lot

in a co-op, condo or PUD

• Single-width manufactured homes are eligible

only if located in a co-op, condo, or PUD

• Project acceptance is required for

cooperative or condominium

PUD if a single-width manufactured home


Mortgage Eligibility• General Eligibility Criteria is defined by Transaction Types

& Loan-to-Value Ratios

• Purchase

• Refinance transactions

• Underwriting

• Fannie Mae’s automated underwriting system Desktop Underwriter® is required

• Borrowers with less-than-perfect credit are eligible under our Expanded Approval™ option in Desktop Underwriter (EA I/Eligible & EA II/Eligible only)


Mortgage Eligibility (continued)• Pricing Adjustments:

• A one time price adjustment of 0.50% is required for each mortgage loan

• Deeper Mortgage Insurance Requirements

• Seasoning Requirement on land as equity • Based on length of ownership

• Greater than 12 months• Equal or Less than 12 months


Summary of Manuf Home Guidelines

Up to 95% now permitted on Primary residences, Purchase & Limited Cash Out ONLY

35% MI coverage required with term > 20 up to 30 years

Up to 95% now permitted on Primary residences, Purchase & Limited Cash Out ONLY

Announcement 04-07 changes in RED below


Revised Appraisal Requirements• Additional guidance on the selection of appraisers

• Adequate training & knowledge of manufactured housing • Experience with property type and location• Access to appropriate data sources

• Modifications to appraisal standards

• Continue to require market-based property valuations• Sales comparison approach supported by a detailed cost

approach


Revised Appraisal Requirements (continued)

• Enhanced appraisal reporting requirements with new Manufactured Home Appraisal Report Addendum (Form 1004C)

• Addendum reinforces existing valuation and reporting requirements

• Addendum also implements revised requirements• New certifications by the appraiser


Revised Appraisal Requirements (continued)

• Sources of manufactured housing data

• N.A.D.A. Manufactured Housing Appraisal Guide

• Marshall & Swift Residential Cost Handbook• Manufactured home dealer costs


Title Issues and Lien Requirements• Overview

• Did not previously provide much guidance related to titling

• Previously, we required properties to be secured by a single lien on both the home and land

• Fannie Mae requires that manufactured housing loans be secured by a lien on real property


Title Issues & Lien Requirements (cont’d)• Guidance on Fannie Mae’s website to assist lenders

• state-specific• does not relieve lenders of responsibility for reps and

warranties (Consult with your own legal counsel)• available on www.efanniemae.com

• Legal requirements covered in Announcement 03-06 • titling properties as real estate • use of standard instruments that support characteristics of

properties as real estate and specifies information that must be included on the security instrument (VIN #, Serial #, make model and size of unit)

• recorded affidavit from lender & borrower that home will be a permanent part of real property that secures the loan


Title Issues and Lien Requirements (continued)

Link to Titling information Resources on www.efanniemae.com

http://www.efanniemae.com/singlefamily/mortgage_products/manufactured_housing.jhtml


• Clarifies existing servicing requirements & addresses issues unique to manufactured home mortgages

• Stresses the need for servicers to identify mortgages as manufactured homes on their internal systems & to notify Fannie Mae if the servicer discovers a mortgage not delivered with the Special Feature Code

• Specifies collateral documents to be retained by servicer

Servicing Requirements


Servicing Requirements (continued)• Addresses collection of personal property taxes if they

are assessed

• Addresses loan modifications completed as part of loss mitigation efforts

• Requires the servicer to notify the attorney in advance of foreclosure and bankruptcy proceedings that a property is a manufactured home


Additional ResourcesLink to Titling Information Resources on www.efanniemae.com

http://www.efanniemae.com/singlefamily/mortgage_products/manufactured_housing.jhtml

Announcement 03-06

Link to Manufactured Housing Appraisal Addendum

http://www.efanniemae.com/singlefamily/pdf/1004c.pdf


Questions?

Documents

© 2004 HFI On the Web Introduction to Manufactured Housing August 10, 2005