Fannie Introduces Manufactured Housing Changes, Updates Condo Policies

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A
Selling Guide Announcement from Fannie Mae on Tuesday introduced a new
initiative for loans secured by manufactured housing. 
The MH Advantage program is designed for
those units that meet specific construction, architectural design, and energy
efficiency standards that more closely approximate those used for site-built
housing.  The company says its goal is to
help bridge the gap in affordable housing by making manufactured homes a more
acceptable alternative traditional built-on-site housing.  

MH
Advantage loans will follow the same DU eligibility requirements as
manufactured homes, with the exception that the maximum LTV ratio is increased
to 97%
for certain purchases and limited cash-out refinances. All requirements
that pertain to other loans with LTV ratios between 95.01 and 97% apply.  The CLTV ratio may be up to 105% with
Community Seconds.  The MH Advantage loans
will also have reduced loan-level price adjustments and other flexibilities not
accorded to standard manufactured units, including standard mortgage insurance;
the deeper coverage required for manufactured homes will not apply. 

Examples
of the physical characteristics for MH Advantage include


  • specific architectural and aesthetic
    features, such as distinctive roof treatments (eaves and higher pitch
    roofline), lower profile foundation, garages or carports, porches, and dormers;

  • construction elements including durability
    features, such as durable siding
    materials; and energy efficiency standards (minimum energy ratings apply).

MH
Advantage is open to all manufacturers. 
Those participating will attach an “MH Advantage Sticker” to the home in
proximity to the home’s HUD Data Plate. The Sticker identifies the home as
having been designed to accommodate the physical characteristics for an MH
Advantage property. The lender will confirm the presence of the Sticker, and
additional information about site improvements to the property, but is not
responsible for confirming the physical characteristics of the home
.  Lenders must use Desktop Underwriter to
underwrite the MH Advantage loans, and the program goes into effect
immediately.

Fannie
Mae also updated its Selling Guide in reference to the treatment of structural
modifications or additions to a manufactured house, easing the current
requirements for acceptable inspectors of those changes.

The
Announcement also updates several of Fannie Mae’s condo, co-op, and PUD project
policies.  The first set of changes deal
with computation of the single entity ownership requirements.  One change exempts units held by non-profits,
affordable housing programs (including units subject to non-eviction rent
regulation codes), or institutions of higher education from the single-entity computation.  Another raises single-entity ownership in
projects with 21 or more units to 20 percent. The allowable commercial space allocation
in condo, co-op and PUD projects is increased to 35 percent and commercially
owned or operated parking spaces are exempted from the commercial space
calculations.

A new condo project will
now be considered an “established” one if it meets all of the requirements for
such other than the 90 percent unit conveyance standard.  Eighty percent conveyance will be acceptable
where the developer is holding back units as rental stock and where additional
requirements are met.

More information on the above and on other technical
changes are detailed in Selling Guide Announcement SEL-2018-05. Fannie Mae also
announced that, beginning with the June 2018 Selling Guide update, Fannie Mae is again providing a highlighted
version of the Selling Guide PDF.  The topic title and edited paragraphs are
highlighted in yellow to help users quickly identify the most recent
significant updates made to it.  The
highlighted Selling Guide PDF is
intended to be used as a companion tool in conjunction with a review of the
corresponding Selling Guide Update
Announcement.  



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