The Federal Housing Administration (FHA) is addressing the affordability challenge by increasing supply, but it hasn’t yet started to reduce the costs it charges borrowers. At a news conference on July 14, senior officials from the Department of Housing and Urban Development, which houses the FHA, stated that the agency would improve funding for manufactured homes and restructure its repair financing. According to a senior HUD official, improving the usability of the 203K program is a “top priority.” The renovation program charges a 1 percent origination fee on the borrower and mandates that between 10% and 20% of the entire loan amount be set aside as a contingency.
The administration is also concentrating on strengthening its financing for manufactured housing. According to HMDA data, the FHA financed around 34% of the $15.2 billion in prefabricated house purchase mortgages in 2021. HUD provides mortgage insurance for prefabricated homes as part of its 50-year-old Title I program. Loan terms might last up to 20 years under the program. A senior HUD official remarked, “It has been long since anyone has given [Title I] a lot of love.” The Title I loan limitations is now too low, according to HUD officials, who stated that they are working to increase them.
More than 30 independent mortgage lenders petitioned the FHA to lower mortgage insurance costs in May. Two months have passed since Julia Gordon was confirmed as an FHA Commissioner, despite the expectations of many observers that she would act quickly to lower mortgage insurance prices. To read more on the affordability plan of the Department of Housing and Urban Development and its impacts on mortgage lending, click here.
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