MANUFACTURED 

HOUSING

Efforts Needed to 

Enhance Program 

Effectiveness and 

Ensure Funding 

Stability

Report to Congressional Requesters

July 2014

GAO-14-410

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-14-410, a report to 

congressional requesters

July 2014

MANUFACTURED HOUSING

Efforts Needed to Enhance Program Effectiveness 

and Ensure Funding Stability 

Why GAO Did This Study

Manufactured housing traditionally has 

been a low-cost option in the U.S. 

housing market. For nearly 40 years, 

HUD has provided standards for the 

manufactured housing industry by 

developing and updating the HUD 

Code. The 2000 Act was intended,

among other things, to establish a 

balanced consensus process for 

updating the standards and regulations 

for enforcing them and to encourage 

manufactured housing as an affordable 

option. GAO was asked to study 

HUD’s implementation of the 2000 Act. 

This report addresses, among other 

things, the extent to which HUD has 

met key purposes of the 2000 Act and

assesses whether user fees cover 

program costs. GAO interviewed and 

collected data for 2000-2013 from

HUD, other agencies, and industry 

groups. GAO also visited large and 

small plants that built manufactured 

housing to solicit industry perspectives.

What GAO Recommends

GAO makes several

recommendations, including that HUD 

develop and implement a plan for 

updating construction and safety 

standards in a timely fashion; develop 

a plan to assess how FHA financing 

might further manufactured home 

affordability; complete label fee rulemaking; and assess the need for other 

user fees. Of these, HUD agreed with 

the first recommendation and partially 

agreed with the next two because it 

believes it has already taken actions. 

HUD stated it would consider the last

recommendation. GAO continues to 

believe these recommendations 

remain valid as discussed in the report.

What GAO Found

HUD has established a process for updating the preemptive building standards 

for manufactured homes known as the HUD Code but has not fully met key 

purposes of the 2000 Manufactured Housing Improvement Act (2000 Act). Key 

purposes of the Act include:

• Establish a balanced, consensus-based process to update manufactured 

housing construction and safety standards. HUD has not accepted, rejected, 

or modified any of the Manufactured Housing Consensus Committee’s 

recommendations for updating the HUD Code within 1 year of their 

submission. The 2000 Act requires HUD to act on the committee’s 

recommended standards within 1 year if they were submitted in the form of a 

proposed rule with an economic analysis. According to HUD, because the 

committee did not include economic analyses in the proposals, HUD staff 

performed this task. They also stated because the proposals lacked the 

analyses, the Act’s 1-year timeline was not triggered. In some cases, HUD 

has not decided on recommendations made more than a decade ago and

lacks a plan to address the backlog. Meanwhile, some states’ and localities’ 

residential building codes require standards not in the HUD Code, resulting in 

post-production upgrades that may increase costs to homeowners. Not 

updating the HUD Code delays its intended benefit—to improve the quality, 

durability, safety, and affordability of manufactured homes. 

• Facilitate the availability of affordable manufactured homes. Owners of 

manufactured homes have lower monthly housing costs than site-built 

owners and apartment renters, but high financing costs often keep these 

homes from being even more affordable. HUD’s Federal Housing 

Administration (FHA) has two insurance programs for manufactured home 

loans. Although most manufactured homes are titled or owned as personal 

property, HUD’s programs primarily insure loans on manufactured homes 

financed as real estate. Additionally, owners of manufactured homes are 

more likely to have higher-priced financing than owners of site-built homes. 

The 2000 Act required HUD to review the effectiveness of the FHA

programs, but HUD has not developed a plan to do so. Such research would 

help HUD determine whether and how it might further facilitate the availability 

of affordable manufactured homes.

The 2000 Act establishes HUD’s authority to collect fees for certification labels on 

manufactured homes built to the HUD Code. The fees are placed in the

Manufactured Housing Fees Trust Fund that provides annual appropriations to 

fund the expenses of the Manufactured Housing Program. The current fee rate 

does not produce sufficient collections to fully fund the program’s expenses and 

must be supplemented by annual appropriations from Treasury’s General Fund. 

HUD has indicated its intent to raise the label fee, which currently stands at $39. 

As we provided a draft of this report, HUD issued a proposed rule to increase the 

label fee, but has not yet completed the rulemaking process. It has also not fully 

assessed the feasibility and benefits of putting in place other fees authorized by 

recent appropriation acts, in part, because it has carryover balances from past 

years. Without more fee revenue, however, the program will continue to require 

Treasury’s General Fund appropriations.

View GAO-14-410. For more information, 

contact Mathew J.Scirè at (202) 512-8678 or 

sciremj@gao.gov.
Page i GAO-14-410 Regulation of Manufactured Housing

Letter 1

Scope and Methodology 2

Background 5

Despite Declining Production, Manufactured Homes Remain an 

Affordable Housing Alternative in Some Regions 12

HUD Has Not Fully Achieved the Manufactured Housing 

Program’s Key Purposes 19

Current Funds Collected from HUD Label Fees Are Insufficient to 

Fund the Manufactured Housing Program 36

Conclusions 45

Recommendations for Executive Action 48

Agency Comments and Our Evaluation 49

Appendix I Comments from the Department of Housing and Urban Development 55

Appendix II GAO Staff Contact and Acknowledgments 59

Figures

Figure 1: Examples of Single-Section and Two-Piece Multisectional Manufactured Homes 6

Figure 2: HUD Manufactured Home Placed on a Permanent 

Foundation with a Basement 7

Figure 3: HUD Certification Label 10

Figure 4: States with and without State Administrative Agencies, 

as of May 2014 11

Figure 5: Shipments of Manufactured Homes from 2000 to 2012 12

Figure 6: Manufactured Homes as a Percentage of All Occupied 

Housing Units, by Region 13

Figure 7: Ownership Characteristics of Occupied Manufactured 

Homes and Single Family Homes, 2011 14

Figure 8: Income Characteristics of Owners of Occupied 

Manufactured and Single Family Site-Built Homes and 

Apartment Renters, 2011 (All Areas) 15

Figure 9: Income Characteristics of Owners of Occupied 

Manufactured and Single Family Site-Built Homes and 

Apartment Renters, 2011 (Non-metro Areas) 16

Contents
Page ii GAO-14-410 Regulation of Manufactured Housing

Figure 10: Monthly Housing Costs for Owners of Occupied 

Manufactured Homes, Single Family Site-Built Homes 

and Apartment Renters 2011 18

Figure 11: HUD’s Process for Updating the Manufactured Housing 

Safety and Construction Standards (HUD Code) 21

Figure 12: Selected MHCC Recommendations and HUD Updates 

to the HUD Code, 2003-2014 24

Figure 13: Examples of Multi-section Manufactured Homes Joined 

On-site 34

Figure 14: HUD Label Revenues and HUD Units Sold from Fiscal 

Years 2002 to 2013 37

Figure 15: General Fund Appropriations and Carryover Balances 

for the HUD Office of Manufactured Housing Programs 

from Fiscal Years 2009 to 2013 39

Figure 16: Collected Label Fees and Anticipated Label Fees from 

Fiscal Years 2009 to 2013 41
Page iii GAO-14-410 Regulation of Manufactured Housing

Abbreviations

AHS American Housing Survey

CFO Chief Financial Officer

CFPB Consumer Financial Protection Bureau

DAPIA Design Approval Primary Inspection Agency

FAR Federal Acquisition Regulation

FEMA Federal Emergency Management Agency

FHA Federal Housing Administration

FHFA Federal Home Finance Administration

GSE government-sponsored enterprises

HERA Housing Economic Recovery Act 2008

HMDA Home Mortgage Disclosure Act

HUD Department of Housing and Urban Development

ICC International Code Council

IPIA Production Inspection Primary Inspection Agency

IRC International Residential Code

MHCC Manufactured Housing Consensus Committee

MHS Manufactured Homes Survey

NFPA National Fire Protection Association

OMB Office of Management and Budget

PATH Partnership for Advancing Technology in Housing

PD&R Office of Policy Development and Research

RHS Rural Housing Service

SAA state administrative agency

USDA Department of Agriculture

VA Department of Veterans Affairs

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Page 1 GAO-14-410 Regulation of Manufactured Housing

441 G St. N.W.

Washington, DC 20548

July 2, 2014

The Honorable Randy Neugebauer

Chairman

Subcommittee on Housing and Insurance

Committee on Financial Services

House of Representatives

The Honorable Spencer Bachus

House of Representatives

Manufactured housing, which is factory built and can be relatively 

inexpensive, has long been seen as an affordable option for some 

homeowners. For four decades, the Department of Housing and Urban 

Development (HUD) has regulated the manufactured housing industry 

through its Manufactured Housing Program. In 2000, Congress enacted 

the Manufactured Housing Improvement Act of 2000 (2000 Act) to help 

facilitate the availability of affordable manufactured homes as a significant 

resource for affordable homeownership and rental housing.1

In 1998, the number of manufactured homes that manufacturers shipped 

to sites across the country reached a high of over 373,000 since the 

Manufactured Housing Program was established in 1974. However, a 

focus on increasing sales volume without fully considering borrowers’ 

creditworthiness led to a large number of repossessions from 2000 to 

2002. Further, in 2000 many manufacturers and lenders for manufactured 

homes began exiting the market. Since 2000, the number of homes 

shipped has declined dramatically, falling to under 50,000 in 2009. The 

contraction in the manufactured housing industry was further 

compounded by the broader collapse in home purchases after 2007.

The Act had 

many purposes, including protecting the quality, durability, safety, and 

affordability of manufactured homes and establishing a balanced 

consensus process for setting standards and related regulations for 

enforcing those standards. The 2000 Act created a new entity, the 

Manufactured Housing Consensus Committee (MHCC), which would be 

responsible for developing proposed revisions to the construction and 

safety standards and forwarding them to the HUD Secretary.

 1

Pub. L. 106-569, Title VI.
Page 2 GAO-14-410 Regulation of Manufactured Housing

Further, in recent years Congress, industry representatives, and MHCC 

members have raised questions about the process for updating the 

federal code governing manufactured housing—HUD’s Manufactured 

Housing Construction and Safety Standards, or the HUD Code. In 

October 2012, we found that HUD had not adopted any changes to the 

HUD Code since 2005 and that 84 recommendations forwarded by the 

MHCC were still awaiting HUD rulemaking actions.2

You asked that we examine HUD’s implementation of the 2000 Act and 

its process for collecting and administering program fees. This report (1) 

describes the availability, use, and affordability of manufactured homes; 

(2) assesses whether certain purposes set forth in the 2000 Act have 

been met, including (a) establishing a balanced process to update 

manufactured housing construction and safety and construction 

standards, (b) facilitating the availability of affordable manufactured 

homes, and (c) ensuring uniform and effective enforcement of the 

manufactured housing standards; and (3) examines whether the funds 

and fees used to administer HUD’s Manufactured Housing Program are 

sufficient to cover program costs.

In December 2013, 

HUD published a final rule that considered and discussed some of the 

MHCC recommendations, and adopted some. As of May 2014, however, 

HUD was still considering many of these MHCC recommendations, 

according to HUD officials.

To describe the availability, use, and affordability of manufactured 

housing, we reviewed and analyzed data from the U.S. Census Bureau’s 

Manufactured Homes Survey (MHS) from 2000 to 2013 and 2011 

American Housing Survey (AHS) on the production and location of 

manufactured housing and the characteristics of owners. We also 

compared the costs to occupants of manufactured homes with the costs 

of other housing choices, using available 2012 data—the most recent 

data available—from the Home Mortgage Disclosure Act (HMDA) 

database. By assessing related documentation, we found these data to 

be sufficiently reliable for the purposes of describing manufactured 

housing production trends and the affordability and financing of 

manufactured homes. Additionally, we visited large and small 

 2

GAO, Manufactured Housing Standards: Testing and Performance Evaluation Could 

Better Ensure Safe Indoor Air Quality, GAO-13-52 (Washington, D.C.: Oct. 24, 2012).

Scope and 

Methodology
Page 3 GAO-14-410 Regulation of Manufactured Housing

manufactured housing plants in Indiana and Pennsylvania, selected for 

their size and proximity to our offices, where we obtained information on 

factors affecting the cost of manufactured home sales.

To assess whether the HUD Manufactured Housing Program was 

meeting the Act’s intent for establishing a consensus process for 

developing, revising, and interpreting standards, we reviewed:

• Federal Register Notices from HUD, from 2002 until 2013, to 

understand the creation of the MHCC;

• MHCC documents, such as available meeting minutes and voting 

ballots from 2002 until 2013 to assess the timing and topics of MHCC 

recommendations to HUD;

• proposed and final rules from 2002 until 2013 to assess the status of

MHCC recommendations;

• documentation of HUD’s efforts to ensure the operation of the MHCC 

and rulemaking process, such as the contract for the administering 

organization and related documents; and

• HUD’s staffing and other resources allocated to the program.

We also interviewed HUD officials, six manufacturers in Indiana and 

Pennsylvania, industry representatives, and MHCC officials to obtain their 

views on the process for updating the standards. We compared this 

process with similar processes for establishing widely accepted industry 

construction standards for residences and interviewed officials from the 

International Code Council (ICC), the private standard-setting 

organization that develops model building codes for homes other than 

HUD manufactured homes.

To assess HUD’s efforts to facilitate the availability of affordable 

manufactured homes, we collected and analyzed fiscal year 2012 data 

from Federal Housing Administration (FHA) loan programs. By assessing 

related documentation and interviewing agency officials, we found these 

data to be sufficiently reliable for the purposes of this report. By reviewing 

the number of purchase loans reported we were able to examine the 

extent to which these programs supported loans for manufactured homes 

and compared FHA’s support for manufactured and site-built homes, 

using 2012 HMDA data. Because 2012 HMDA data do not distinguish 

between the types of loans made for manufactured homes (such as 

chattel or personal property loans, which are often used for manufactured 
Page 4 GAO-14-410 Regulation of Manufactured Housing

homes, and mortgage loans), we were not able to assess the 

characteristics of different types of loans.3

To assess the HUD Manufactured Housing Program’s ability to oversee 

enforcement of the HUD Code, we collected audits from HUD’s 

monitoring contractor from August 2011 to August 2012 to determine 

whether audits for all plants had been completed as required and 

evaluated how HUD had used the information from the audits. We also 

reviewed HUD’s policies, procedures, and mechanisms for enforcing the 

HUD Code. Finally, we obtained information from program officials and 

state administrative agencies, interviewed officials of manufacturers that 

we visited representing large and small manufacturing facilities, and 

discussed enforcement issues with manufactured housing trade 

associations.

We also collected and 

reviewed research on manufactured housing from HUD and other 

organizations on the affordability of manufactured homes. We interviewed 

HUD officials from the Office of Manufactured Housing Programs and the 

Office of Policy Development and Research (PD&R) to assess HUD’s 

efforts and plans to promote the availability of these homes. Additionally, 

we obtained information from consumer organizations and interviewed

four of the largest lenders, based on HMDA data, which provided loans to 

owners of manufactured homes, to understand the availability of financing 

for manufactured homes and to obtain the lenders’ perspective on any 

challenges involved in financing these homes.

To examine funding for the Manufactured Housing Program, we reviewed 

programmatic data found in HUD’s operating plans for the program for 

fiscal years 2009 through 2013. We reviewed annual appropriations, 

yearly program obligations, program carryover balances, and revenues 

raised from the collection of label fees during that period and checked 

these figures against those stated in both HUD’s yearly budget 

justifications and congressional appropriations acts. We obtained agency 

data on the use of program obligations and interviewed officials from 

HUD’s Offices of Manufactured Housing Programs and Budget to 

understand the agency’s goals and strategies for maintaining the program 

 3

The Consumer Financial Protection Bureau (CFPB) recently published a Fact Sheet 

stating that it is considering changes to the reporting requirements for lenders under 

HMDA. One change under consideration is for lenders to report for manufactured housing 

loans the type of financing, such as chattel or mortgage loans, and whether the borrower 

will own or lease the land where the home is sited.
Page 5 GAO-14-410 Regulation of Manufactured Housing

and the Manufactured Housing Fees Trust Fund, and efforts to assess 

the appropriate level of label fees and the feasibility of instituting other 

authorized user fees. We compared these practices with those found in 

our user fee guide and previous GAO reports.4

We conducted this performance audit from January 2013 through May 

2014 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.

Finally, we interviewed 

manufactured home manufacturers to obtain industry views on the 

potential effects of any label fee increases and reviewed statutory and 

regulatory guidance related to the collection and use of user fees.

HUD is responsible for enforcing the federal manufactured home 

construction and safety standards that it established under the National 

Manufactured Housing Construction and Safety Standards Act of 1974 

(1974 Act).5

 4

GAO, Federal User Fees: Fee Design Options and Implications for Managing Revenue 

Instability, 

The 1974 Act authorized HUD to develop construction and 

safety standards for manufactured homes and to oversee the 

enforcement of the standards through inspections and reviews of building 

plans. HUD developed the Manufactured Housing Construction and 

Safety Standards, commonly known as the HUD Code, basing them in 

substantial part on the National Fire Protection Association (NFPA) 

standards for manufactured homes (NFPA 501). The HUD Code was 

implemented in 1976, and replaced the state-by-state patchwork of 

regulations that existed prior to 1976 with one set of rules that all 

manufactured home builders must meet. The HUD Code is applied 

nationwide and preempts state and local codes. As a result, state and 

GAO-13-820 (Washington, D.C.: Sept. 30, 2013) and Federal User Fees: A 

Design Guide, GAO-08-386SP (Washington, D.C.: May 29, 2008).

5

42 U.S.C. 5401et seq.

Background

The National 

Manufactured Housing 

Construction and Safety 

Standards Act of 1974 and 

Manufactured Home 

Construction and Titling
Page 6 GAO-14-410 Regulation of Manufactured Housing

local building authorities may not apply their own codes to manufactured 

homes for components covered by the HUD Code.

Unlike site-built homes, which are constructed at their permanent 

locations, manufactured homes are constructed in factories and must 

have a permanent chassis that allows them to be moved to retailers and 

consumers in different states and localities.

6

Figure 1: Examples of Single-Section and Two-Piece Multi-sectional Manufactured Homes

Manufactured homes can be 

single-section or multi-sectional units with two or more sections (as 

shown in fig. 1). Manufactured homes can be placed on temporary or 

permanent foundations (see fig. 2).

 6 For the purposes of this report, a site-built home refers to houses that are constructed on 

a permanent foundation, built to state and local building codes, but does not include 

multifamily structures.
Page 7 GAO-14-410 Regulation of Manufactured Housing

Figure 2: HUD Manufactured Home Placed on a Permanent Foundation with a 

Basement

Manufactured homes also differ from modular homes, which are another 

type of prefabricated home and are often designed and constructed by 

the same manufacturers on the same production lines as manufactured 

homes. Like other site-built homes, modular homes are categorized as 

real property and are built to state and local building codes, most 

commonly the International Residential Code (IRC).7

 7

According to ICC, 43 states and the District of Columbia have adopted or based their 

own state site-built and modular home construction and safety codes on the ICC’s IRC. In 

the remaining 7 states, local counties or municipalities determine their own residential 

building standards. The IRC is updated every 3 years by the ICC. States and localities, 

however, are not required to adopt the codes produced by the ICC and independently 

decide which versions or parts of the IRC to adopt. 

Unlike manufactured 

homes that are towed to the sites on their own permanent chassis, 

modular home sections, or modules, are transported on truck beds and 
Page 8 GAO-14-410 Regulation of Manufactured Housing

assembled on site. For the purposes of this report, we include modular 

homes under our definition of site-built homes.

Unlike site-built homes, which are titled as real property and usually 

financed through a mortgage, a manufactured home may be financed as 

either personal or real property. When a home buyer purchases a 

manufactured home without tying the purchase to land, the home is 

generally considered personal property, or chattel—that is, it is a 

movable, “personal” possession, much like an automobile. Manufactured 

homes are sometimes grouped together in communities where residents 

may either own or lease the home, but lease the land.8

When a manufactured home is attached to the underlying land by a 

permanent foundation and the home and the land are treated as a single 

real estate title under state law, the home is considered real property. In 

such instances, the borrowers can obtain a conventional real estate loan 

or a government-guaranteed mortgage through traditional mortgage 

lenders. According to the MHS, 13.7 percent of manufactured homes that 

were placed in service in 2013 were titled as real estate, 78 percent were 

titled as personal property, and the remainder (8.3 percent) were not 

titled.

However, 

according to Manufactured Homes Survey (MHS) data, in 2013 70.2 

percent of manufactured homes were placed on leased or owned land 

outside of manufactured home communities. One lender we interviewed 

told us that homeowners in rural areas often placed manufactured homes 

on real property owned by a relative but did not want to place a lien on 

the land to purchase the manufactured home.

 8

In some communities, the owners of the homes may collectively own the community real 

estate in the form of a cooperative.
Page 9 GAO-14-410 Regulation of Manufactured Housing

The National Manufactured Housing Construction and Safety Standards 

Act of 1974 was amended by the Manufactured Housing Improvement 

Act of 2000 (2000 Act) to create a balanced consensus process for 

establishing and revising manufactured home building standards. The 

2000 Act created the Manufactured Housing Consensus Committee 

(MHCC), a Federal Advisory Committee charged with providing 

recommendations to the Secretary on the revision and interpretation of 

HUD Code and related procedural and enforcement regulations.9

HUD’s Office of Manufactured Housing Programs is responsible for 

carrying out certain provisions of the 2000 Act. Under the law, the HUD 

Secretary is directed to establish appropriate federal manufactured home 

construction and safety standards as well as model standards for the 

installation of manufactured homes. The Office of Manufactured Housing

Programs is tasked with regularly updating the standards based on 

careful analysis of MHCC’s recommendations, the manufactured housing 

industry, and consumers. The Office of Manufactured Housing Programs 

is also tasked with approving certain state agencies and private thirdparty entities that inspect manufactured housing plants to determine 

whether manufacturers are complying with the HUD Code. Each 

manufacturer contracts with two types of third-party entities, a Design 

Approval Primary Inspection Agency (DAPIA) and a Production 

Inspection Primary Inspection Agency (IPIA). Generally, DAPIAs review 

and approve all manufactured home designs, design changes, and quality 

assurance manuals. IPIAs are responsible for assuring that the 

manufacturing plant follows the quality assurance manual and inspecting 

each home at some stage of production in the plant. IPIAs also issue the 

HUD Certification Label that is attached to each section of the home upon 

completion (see fig. 3 below).

 9 The MHCC also recommends proposals for installation standards.

The Manufactured 

Housing Improvement Act 

of 2000 and General 

Duties of the HUD Office 

of Manufactured Housing 

Programs
Page 10 GAO-14-410 Regulation of Manufactured Housing

Figure 3: HUD Certification Label

The 1974 Act also established the preemptive status of the HUD Code, 

as it stipulated that if a home is built to the HUD Code, state and local 

building authorities may not apply their own codes that are applicable to 

the same element of performance.10

To help ensure that all manufactured homes comply with the HUD Code, 

HUD has entered into cooperative agreements with 37 state governments 

that participate as state administrative agencies (SAA) to conduct periodic 

The 2000 Act stated that the federal 

preemptive authority was to be “broadly and liberally construed.” For 

instance, a state or local municipality cannot require that the distances 

between a HUD home’s air intake and exhaust vents be greater than the 

3-foot minimum currently stipulated in the HUD Code. One particular 

entity that relies heavily on the preemptive status of the HUD Code is the 

Federal Emergency Management Agency (FEMA). FEMA is a large 

purchaser of manufactured homes, which are utilized as temporary 

housing units under its emergency management operations across 

different states.

 10 42 U.S.C. 5403(d).

Federal Preemption
Page 11 GAO-14-410 Regulation of Manufactured Housing

checks of plant records and to oversee the handling of consumer 

complaints. HUD’s staff is responsible for carrying out these same 

functions in the 13 states without SAAs and the District of Columbia (see 

fig. 4).

Figure 4: States with and without State Administrative Agencies, as of May 2014
Page 12 GAO-14-410 Regulation of Manufactured Housing

Annual shipment of new manufactured homes has declined substantially 

in recent years. According to the MHS, about 250,500 manufactured 

homes were shipped to retailers in the United States in 2000.11 In 2012 

the number of manufactured homes shipped fell to 54,900 (see fig. 5).

According to the MHS, manufactured homes shipments increased to 

about 60,000 in 2013.

Figure 5: Shipments of Manufactured Homes from 2000 to 2012

Despite the decline in new shipments in past years, in 2013

approximately 5.9 million HUD Code compliant manufactured homes 

were in use in the United States, accounting for 5.1 percent of total 

occupied housing units. However, the concentration of manufactured 

homes varies across regions. The southern United States, for instance, 

 11 The Manufactured Homes Survey reports annual data for each calendar year instead of 

fiscal year.

Despite Declining 

Production, 

Manufactured Homes 

Remain an Affordable 

Housing Alternative in 

Some Regions
Page 13 GAO-14-410 Regulation of Manufactured Housing

has the highest concentration, with manufactured homes making up 

approximately 8 percent of the region’s total occupied homes (see fig. 6). 

In addition, the majority of manufactured homes are located in nonmetropolitan areas, in part because of land constraints or barriers such as 

zoning laws in metropolitan areas.

12 According to data from the 2011 

American Housing Survey (AHS), over half of manufactured homes (52.4

percent) were located in non-metro areas in that year, compared to about 

25 percent of single family homes and 11 percent of rented 

apartments.13, 14

Figure 6: Manufactured Homes as a Percentage of All Occupied Housing Units, by Region

Note: These figures refer to occupied manufactured homes built after 1974.

 12We determined that a home was “non-metropolitan” if the home was located in an area 

(urban or rural) outside of metropolitan statistical areas.

13We limited our analysis of 2011 AHS data, the most recent data available, to 

manufactured homes built after 1974, when HUD began regulating these units.

14 These figures refer to occupied housing units.
Page 14 GAO-14-410 Regulation of Manufactured Housing

As with other single family homes, manufactured homes tend to be 

occupied by their owners rather than rented to others. In 2011, about 81 

percent of the manufactured homes built after 1975 in the U.S. were 

owner occupied, and 16 percent were rented for cash. In comparison, 

about 85 percent of all single family homes were owner occupied in 2011

(see fig. 7).

Figure 7: Ownership Characteristics of Occupied Manufactured Homes and Single Family Homes, 2011

Note: The term “single family home” refers to single family detached homes, which are not attached 

to other homes like townhouses.

Our analysis also showed that owners of manufactured homes tended to 

have lower incomes than other homeowners. In 2011, about 75 percent of 

owners of manufactured homes had household incomes of less than 

$50,000, compared with about 77 percent of apartment renters, about 41

percent of owners of single family homes, and about 52 percent of 

owners of one story single family homes (see fig.8).
Page 15 GAO-14-410 Regulation of Manufactured Housing

Figure 8: Income Characteristics of Owners of Occupied Manufactured and Single Family Site-Built Homes and Apartment 

Renters, 2011 (All Areas)

Our analysis also showed similar income characteristics for manufactured 

home owners located in non-metropolitan areas. In 2011, about 76

percent of owners of manufactured homes had household incomes of 

less than $50,000, as compared with about 90 percent of apartment 

renters, 51 percent of owners of single family homes, and about 62 

percent of owners of one story single family homes (see fig. 9).
Page 16 GAO-14-410 Regulation of Manufactured Housing

Figure 9: Income Characteristics of Owners of Occupied Manufactured and Single Family Site-Built Homes and Apartment 

Renters, 2011 (Non-metro Areas)

Our analysis of the 2012 MHS and 2011 AHS data also showed that 

manufactured homes were an affordable housing option in terms of their 

relatively low sales prices and monthly costs. In 2012, single-section 

manufactured homes were priced, on average, at $41,175 and multisection manufactured homes at $75,52515

 15 The average is based on the mean and is calculated as the total dollars of sales 

divided by the total number of houses sold.

. Manufacturers we interviewed 

said that these homes cost less to build than site-built homes, including 

modular homes, primarily because on-site construction and transportation 

costs for manufactured homes are less than those associated with 

modular homes and other site-built homes. Manufactured homes also 
Page 17 GAO-14-410 Regulation of Manufactured Housing

typically had lower monthly costs, including loan payments, taxes, rent, 

utilities, and other fees, than site-built homes.16

In 2011, around 16 percent of owners of manufactured homes paid 

$1,000 or more in monthly costs, compared with 55 percent of owners of 

single family site-built homes. Around 45 percent of manufactured home 

owners paid less than $500 in monthly costs, while 19 percent of owners 

of single family site-built homes paid less than $500 each month (see fig. 

10). Owners of manufactured homes also had lower monthly costs than 

renters. According to the AHS data, the median monthly cost of owning a 

manufactured home in 2011 was approximately $550, while the median 

monthly costs for apartment renters that same year were $800.17

 16The AHS defines monthly housing costs for owner-occupied units as “the sum of 

monthly payments for all mortgages or installment loans or contracts [...], real estate taxes 

(including taxes on manufactured/mobile homes, and manufactured/mobile home sites if 

the site is owned), property insurance, homeowner association fees, cooperative or 

condominium fees, mobile home park fees, land rent, and utilities.” Energy efficiency, and 

the impact on utility bills, is another factor impacting the affordability of manufactured 

homes. See GAO, Green Affordable Housing: HUD Has Made Progress in Promoting 

Green Building, but Expanding Efforts Could Help Reduce Energy Costs and Benefit 

Tenants, GAO-09-46, (Washington, D.C.: Oct. 7, 2008). As of May 2014, the HUD Code 

has not been updated to include nearly all proposed energy efficiency improvements from 

the MHCC.

17In non-metropolitan areas, where the majority of manufactured homes are located and 

monthly housing costs in general are lower, the majority of owners of manufactured 

homes still had lower monthly housing costs than other households. According to the 2011 

AHS, 50.8 percent of owner-occupied manufactured homes located in non-metropolitan

areas paid less than $500 in monthly costs, compared to 31.7 percent of single family 

detached homes and 36.7 percent of apartment renters.
Page 18 GAO-14-410 Regulation of Manufactured Housing

Figure 10: Monthly Housing Costs for Owners of Occupied Manufactured Homes, 

Single Family Site-Built Homes and Apartment Renters 2011

Although manufactured homes generally cost less to purchase than other 

homes and have lower monthly costs, owners of manufactured homes 

are more likely to have higher-priced financing than owners of site-built 

homes.18 According to 2012 HMDA data, manufactured home loans 

accounted for about 2.5 percent of all one-to-four family purchase loans.19

However, according to the HMDA data, they comprise 34 percent of all 

high-priced purchase loans. Moreover, 74 percent of conventional 

purchase loans for manufactured homes were identified as high-priced 

loans, compared with 24 percent of purchase loans supported by FHA, 

the U.S. Department of Agriculture (USDA), and the Department of 

Veterans Affairs (VA).20

 18We defined higher priced loans as 150 basis points or more above the current Freddie 

Mac 30-year fixed-rate mortgage at the time of loan origination.

Private lenders, such as national consumer 

finance companies, also provide financing for purchasing manufactured 

homes. Loans generally take the form of home-only or chattel loans 

19There are three property types in HMDA, one-to-four family homes (excluding 

manufactured housing), manufactured housing, and multifamily. We calculated the share 

of manufactured housing loans to be the number of manufactured housing loans divided 

by the sum of one-to-four family home loans and manufactured housing loans since this 

most closely approximates the share of manufactured housing loans of single family 

homes as possible using HMDA data.

20For the purposes of this report, a conventional loan refers to loans neither made by nor 

insured or guaranteed by the federal government.
Page 19 GAO-14-410 Regulation of Manufactured Housing

rather than real estate mortgages. According to some lenders we 

interviewed and one consumer organization, these loans typically have 

higher interest rates and shorter terms (15-20 years versus 30) than 

home mortgages.

HUD has encountered challenges in meeting key purposes of the 2000 

Act, as seen by, among other things, delays and backlogs in its 

rulemaking process, limited assessment of financing alternatives, and 

incomplete documentation of enforcement-related activities. The 

purposes of the 2000 Act include (1) establishing a consensus-based 

process to update and interpret manufactured housing safety and 

construction standards and regulations for enforcing them; (2) facilitating 

the availability of affordable manufactured housing; and (3) ensuring 

uniform and effective enforcement of manufactured housing standards 

and protecting consumers.21 More specifically, the 2000 Act requires HUD 

to establish the MHCC to submit proposed standards within each 2-year 

period from the time its members are appointed. The MHCC must submit 

the standards in the form of a proposed rule, and include an economic 

analysis, for each proposal.22 The Act also requires HUD to publish each 

set of proposals within 30 days of submittal and respond to each set 

within a 1-year period. Further, it directs HUD to review the programs for 

FHA manufactured home loans, develop any changes that would promote 

the affordability of manufactured homes, and encourage the governmentsponsored enterprises (GSE) to develop and implement secondary 

market securitization programs for these loans. Finally, the Act requires 

that HUD ensure uniform and effective enforcement of the HUD Code.

 21The Senate report that accompanied the Act stated that the purpose of the legislation 

was setting up a process to update manufactured housing construction and safety 

standards on a timely basis.

22Office of Management and Budget (OMB) Circular A-4 states that agencies must 

demonstrate the need for federal regulatory action, consider alternative approaches, and 

conduct benefit-cost and cost-effectiveness analyses.

HUD Has Not Fully 

Achieved the 

Manufactured 

Housing Program’s 

Key Purposes
Page 20 GAO-14-410 Regulation of Manufactured Housing

HUD has met the requirements for the initial establishment of both the 

MHCC and a process for updating the HUD Code. In 2001, HUD entered 

into a contract with an administering organization for the MHCC and 

continued to work with the contractor through June 2013, when the 

contract expired. HUD rebid the contract in July 2013 but as of the 

release of this draft to HUD in May 2014 had not awarded the contract to 

a new administering organization.23

HUD has also put in place a process for updating the standards. First, 

MHCC reviews proposals submitted by its members, HUD, or the public. 

As required by the Act, if two-thirds of the MHCC members approve a 

proposal, the committee finalizes it and recommends it to HUD in the form 

of a proposed rule with an economic analysis. HUD is required to publish 

the proposed rule within 30 days of receiving the MHCC’s proposals. 

According to HUD officials, if the MHCC does not prepare a proposed rule 

with an economic analysis, HUD develops the proposed rule and the 

economic analysis. After this step, the proposal follows the typical 

rulemaking process, including an Office of Management and Budget 

(OMB) review, publication in the Federal Register, and a public comment 

period. After reviewing the public comments and possibly revising the 

recommendations, HUD adopts, modifies, or rejects the recommendation 

and publishes the decisions in a Final Rule (see fig. 11).

This organization is a private-sector 

standard-setting body with specific experience in developing building 

codes. It is responsible for managing the MHCC—for example, 

recommending new members—and for administering the processes for 

developing new standards. As required by the Act, the MHCC consists of 

21 members, who are all appointed volunteers. They represent three 

groups: producers and retailers, consumers, and general interest and 

public officers, including regulatory organizations. The administering 

organization first appointed members to the MHCC in August 2002. HUD 

last updated the roster of MHCC members in February 2013.

24

 23According to HUD, at least part of the delay was attributable to a bid protest filed in 

connection with HUD’s process for awarding a new contract for an administering 

organization. The bid protest was resolved in HUD’s favor earlier this year. See 

International Code Council, B-409146, Jan. 8, 2014, 2014 CPD ¶ 26. On June 18, 2014, 

HUD awarded a new contract for a new administering organization.

HUD also 

24If HUD determines that a standard is necessary in response to a public health or safety 

emergency, the agency may issue an order without the MHCC’s approval after a period of 

public comment.

HUD Has a Process for 

Updating the HUD Code, 

but Has Not Resolved 

Delays Related to the 

Lack of Economic 

Analyses
Page 21 GAO-14-410 Regulation of Manufactured Housing

submits the rule to its congressional authorizing committees for 15 days 

before publication of the proposed rules.

Figure 11: HUD’s Process for Updating the Manufactured Housing Safety and Construction Standards (HUD Code)

Note: The MHCC is an advisory committee established by Congress to provide recommendations to 

HUD on standards and monitoring of standards for manufactured housing.
Page 22 GAO-14-410 Regulation of Manufactured Housing

For the most part, the MHCC has met the requirements for submitting 

proposed standards within each 2-year period.25 The MHCC last 

submitted recommendations for changes in the standards in January 

2012 and January 2013, when it recommended approval of 9 proposals.

However, HUD officials stated that because the former administering 

organization did not formally submit these last 9 proposed MHCC 

recommendations from January 2012 and January 2013, the agency will 

not begin to consider them until it receives them from a new administering 

organization. We found that from its inception in 2003 to January 2013, 

the committee submitted 174 recommendations.26

As we have seen, the 2000 Act requires that not later than 12 months 

after receiving a MHCC recommendation to the HUD Code, HUD must 

either adopt and publish the recommendation as a final rule, reject the 

recommendation and publish the reasons for the rejection, or publish a 

modified version and provide for a comment period. However, we 

observed that HUD had not accepted, rejected, or modified any of the 

MHCC recommendations for updating the HUD Code within 1 year of 

their submission. According to HUD officials, the relevant procedural 

requirements and timelines for acting on MHCC’s recommendations were 

not triggered because the MHCC did not submit the recommendations in 

the form of proposed rules that included relevant economic analyses, as 

required by the 2000 Act. HUD officials said that the administering 

organization was responsible for providing technical support to the MHCC 

in developing proposed rules and economic analyses. For example, the 

contract for fiscal year 2013 required the administering organization to 

ensure the availability of subject-matter expertise necessary to support 

the satisfactory performance of the MHCC, including activities related to 

the federal rulemaking process. However, one official from the former 

administering organization told us that both it and the MHCC lacked the 

expertise and resources to draft proposed rules and conduct economic 

analyses. HUD and the administering organization have acknowledged 

that the MHCC does not have the expertise or resources to conduct 

economic analyses.27

 2542 U.S.C. 5403(a)(4)

According to HUD officials, because the MHCC and 

26 MHCC members did not meet or propose standards since from October 2012 until June 

2014.

27OMB Circular A-4 provides guidance on conducting regulatory analysis, including the 

development of economic analysis. 
Page 23 GAO-14-410 Regulation of Manufactured Housing

the administering organization had not been able to develop proposed 

rules with adequate economic analyses, none of the submissions from 

the MHCC had been complete, and the 1-year statutory requirement for 

adopting, modifying, or rejecting MHCC proposals has never been 

triggered.

HUD officials also said that because of the lack of adequate proposed 

rules with economic analyses from the MHCC or its administrative agent, 

HUD staff have developed rules and done the analyses, delaying the 

rulemaking process. In fact, HUD’s revisions to the Code have taken 

substantially longer than the timeframes specified in the 2000 Act. HUD 

has updated the Code twice (in 2005 and 2013). According to HUD 

officials, in November 2005 (in its first update of the Code), HUD 

published a final rule in the Federal Register that contained 36 MHCC 

recommendations submitted in February 2003 and July 2004, most of 

which were adopted without any further modifications by it. The second 

update of the Code consisted of 49 recommendations also proposed by 

MHCC in 2003. While at least some of these recommendations were the 

subject of further discussions between HUD and MHCC, HUD did not 

publish a proposed rule in the Federal Register containing these 

recommendations until July 2010 and did not publish a final rule until 

December 2013. As of May 2014, HUD was still considering 35 

recommendations that the MHCC submitted in 2009 and 2010. As stated 

earlier, according to HUD officials, because the administering 

organization did not formally submit an additional 9 recommendations in 

2012 and 2013, HUD will not consider these recommendations until it 

receives them from a new administering organization (see fig. 12 for a 

depiction of the timelines for five examples of manufactured housing 

construction and safety standards for which HUD had completed final 

rules).
Page 24 GAO-14-410 Regulation of Manufactured Housing

Figure 12: Selected MHCC Recommendations and HUD Updates to the HUD Code, 2003-2014

Note: For the purposes of this analysis, we considered a standard to be initiated on the date the 

MHCC approved it in a ballot from 2003 to 2013. We considered a standard to be finalized on the 

date it was published in the Federal Register as a final rule.

According to HUD officials, this additional workload posed by the tasks of 

developing proposed rules and economic analyses has further strained 

existing staff resources. Further, HUD officials voiced concerns over other 

administrative and legislative impediments to producing more timely 

updates to the HUD Code. These include the Act’s requirement that HUD 

publish a proposed rule within 30 days of receiving the MHCC’s 

recommendations, the requirement for a 15 day pre-publication review by 

Congress, a 30-60 day public comment period, as well as allowing 

sufficient time for other administrative reviews, including review by OMB. 

HUD requested increased staffing for fiscal year 2005 to better meet the 

1-year requirement for updating the standards, but staff levels have not 

increased. Also, the position of Administrator of the Office of 

Manufactured Housing Programs remained vacant from 2010 until March 

2014.28

 28The Consolidated Appropriations Act of 2014 stipulated that HUD must employ an 

administrator for the Office of Manufactured Housing within 120 days. Pub. L. 113-76, 128 

Stat. 605. HUD selected an administrator on March 6, 2014. 

Other than the earlier attempt at increasing staff levels, and facing 

ongoing challenges, HUD has no plan for ensuring more timely updates

to the construction and safety standards. Standards for internal control 
Page 25 GAO-14-410 Regulation of Manufactured Housing

emphasize the need for federal agencies to establish plans to help ensure 

goals and objectives can be met, including compliance with applicable 

laws and regulations.29

As we previously found, the lack of updates to the HUD Code has 

delayed implementation of important safety devices, reducing the 

effectiveness of the standards and, over time, creating discrepancies 

between the HUD Code and other commonly accepted residential 

building standards, which are updated every 3 years.30

Safety concerns have led some states and localities to begin requiring 

certain safety features for homes in their jurisdictions. For instance, 

Pennsylvania state officials told us that at least one locality required that 

manufactured homes have anti-scalding devices in showers before the 

HUD Code included them in December 2013. The HUD Code did not 

address this area of performance and therefore, according to HUD, a 

jurisdiction could have imposed such a requirement without conflicting 

with the preemptive HUD Code. However, the costs to purchasers of a 

manufactured home could be significant if the manufacturer had not 

already installed such a device. That is, a homeowner might be required 

by the locality to install such devices at a cost of hundreds of dollars. 

Further, according to officials from the State of Pennsylvania, this 

modification of the homes’ plumbing might void the manufacturers’

plumbing warranty. As mentioned earlier, the MHCC recommended antiscalding devices in February 2003 and the HUD Code will require these 

devices beginning in June 2014.

For example, the 

pending recommendations include requirements for carbon monoxide 

detectors, which are now incorporated in industry standards.

Several states, including California, Minnesota, and Maryland, require 

carbon monoxide detectors, which are not addressed by the HUD Code.31

 29

The IRC and the American Society of Heating, Refrigerating, and AirGAO/AIMD-00-21.3.1.

30GAO, Manufactured Housing Standards: Testing and Performance Evaluation Could 

Better Ensure Safe Indoor Air Quality, GAO-13-52 (Washington, D.C.: Oct. 24, 2012). 

Carbon monoxide detectors are not intended to be used as a measure of, or to test for, 

adequate indoor air quality but are a safety device to warn occupants in the event of a 

dangerous build-up of carbon monoxide gasses in the air.

31GAO-13-52.
Page 26 GAO-14-410 Regulation of Manufactured Housing

Conditioning Engineers have required carbon monoxide detectors for all 

residential site-built and modular homes since 2009 and 2010, 

respectively. While the MHCC recommended in 2009 that this standard 

be required for all new manufactured homes, HUD has not yet adopted 

this proposal. According to HUD officials, as of May 2014 HUD is 

considering the proposal to require carbon monoxide detectors. Until 

HUD works its way through its backlog of proposals, purchasers of 

manufactured homes could face increased costs and, in some cases, 

potential safety hazards.

HUD offers two loan insurance programs that provide financing for 

manufactured homes, FHA Title I and Title II. Both programs are intended 

to insure lenders against losses in the event of a default. Homebuyers 

and homeowners may finance the purchase of or refinance their 

manufactured home, lot, or both through the FHA Title I program, which 

insures both chattel and mortgage loans. Manufactured homes titled as 

personal property are financed through chattel loans and would be 

eligible for Title I. Home buyers and homeowners may also finance the 

purchase or refinancing of their home through the Title II program, which 

insures mortgages for all types of single family homes, including 

manufactured homes that are classified as real estate. Manufactured 

homes titled as real estate and installed on a permanent foundation would 

be eligible for Title II.

Considering both its Title I and Title II loan programs, FHA plays a smaller 

role in the financing of manufactured homes than in the financing of other 

single family homes, according to HMDA data. Specifically, 2012 HMDA 

data, which include both chattel and real property manufactured housing 

loans, showed that FHA programs made up 17.5 percent of all loans for 

the purchase of manufactured homes, but 27 percent of loans for the 

purchase of one-to-four family homes. Although the Title I program is 

intended in part to serve the needs of the manufactured housing market, 

owners of manufactured homes use it less often than Title II.32 In 2012, 

FHA insured a total of 654 Title I manufactured home loans and 12,301 

Title II manufactured home loans.33

 32Title I also insures private lenders against loss on property improvement loans for single 

family homes, multifamily structures, and nonresidential buildings.

According to data from the MHS, in 

33According to FHA officials, the Title II data on manufactured homes include modular 

homes.

HUD Has Done Little to 

Assess How Federal Loan 

Programs Could Improve 

the Affordability of 

Manufactured Homes
Page 27 GAO-14-410 Regulation of Manufactured Housing

that same year nearly 41,000 newly placed manufactured homes were 

titled as personal property, while 8,000 newly placed manufactured 

homes were titled as real estate.34 FHA officials stated that they were not 

aware of specific barriers that consumers faced in obtaining Title I loans, 

but noted that two nationwide lenders participated in the program. Ginnie 

Mae securitizes FHA Title I manufactured home loans and works with 

these lenders.35 One Ginnie Mae official explained that although the 

agency had experienced losses from manufactured housing products in 

the past, the agency had conducted ongoing outreach with lenders to 

increase participation in the Ginnie Mae program.36 FHA arranged a 

meeting between Ginnie Mae officials and several manufactured housing 

stakeholders to discuss requirements for participating in the Ginnie Mae 

program. Industry representatives requested less stringent eligibility 

criteria for those wanting to issue Ginnie Mae-guaranteed securities 

backed by Title I loans. At present, Ginnie Mae requires that such issuers 

have a minimum net worth of $10,000,000. In contrast, issuers of 

securities backed by Title II mortgages must have a minimum net worth of 

$2,500,000. According to one HUD official, issuers of securities backed 

by Title I loans bore greater risk that necessitated the higher net worth 

requirement. A number of factors contribute to the increased risk, 

including higher losses because of greater frequency of default and lower 

insurance coverage.37

 34In 2012, over 4,000 newly placed manufactured homes were not titled.

According to one Ginnie Mae official, Ginnie Mae

had invited the industry to provide additional data to demonstrate the 

performance of their manufactured home loans, but had yet to receive a 

response. According to a Ginnie Mae official, it has continued to engage 

35Ginnie Mae guarantees the performance of mortgage-backed securities, which are 

obligations of the issuers and are backed by mortgages insured or guaranteed by federal 

agencies, such as FHA, VA, or USDA’s Rural Housing Service. Ginnie Mae is a wholly 

owned government corporation within HUD.

36Ginnie Mae began securitizing manufactured housing loans in the early 1970s. 

However, 12 Ginnie Mae issuers with $1.8 billion of securities backed by Title I loans 

defaulted between 1986 and 1988, and Ginnie Mae had to assume their portfolios, 

resulting in significant losses. From 1989 until 2010, Ginnie Mae imposed a moratorium on 

the acceptance of new issuers in the manufactured housing program to prevent further 

losses. According to Ginnie Mae officials, Ginnie Mae continued to experience issuer 

defaults during the moratorium, with the last one in 1997.

37FHA insurance covers 90 percent of losses from defaulted Title I loans and up to 100 

percent of losses from defaulted Title II loans.
Page 28 GAO-14-410 Regulation of Manufactured Housing

with lenders and industry representatives, but have so far received no 

data demonstrating the performance of these loans.

Further, Fannie Mae and Freddie Mac, which guarantee and purchase 

loans from mortgage lenders, play less of a role in providing liquidity to 

lenders of manufactured home loans than they do in providing liquidity to 

lenders of loans on other single family properties. HMDA data indicated 

that of conventional loans for manufactured homes, 7 percent were sold 

to Fannie Mae and Freddie Mac, compared to 41 percent of conventional 

loans for site-built homes. One lender of manufactured home loans cited 

certain underwriting constraints that limited their participation in Fannie 

Mae and Freddie Mac programs. For example, Fannie Mae requires an 

appraisal of the manufactured home with comparable local manufactured 

homes titled as real estate, a requirement that can be challenging, 

particularly in rural areas with relatively few homes and where many 

manufactured homes are titled as personal property. Fannie Mae and 

Freddie Mac do not purchase loans for manufactured homes titled as 

personal property.

Because of these constraints, most financing for manufactured homes, 

whether chattel or real property, is provided through private lenders. 

According to industry representatives and one lender, lenders often hold 

these loans in their portfolios and do not sell them on the secondary 

market. Some lenders we spoke with indicated that they declined to work 

with the FHA loan products because of the administrative burden. These 

lenders also stated that they believed Fannie Mae and Freddie Mac 

should buy chattel loans in addition to real estate loans. According to 

testimony given by the Manufactured Housing Institute during a House of 

Representatives field hearing on November 29, 2011, the lack of a viable 

secondary market for manufactured home loans has led to higher 

financing costs.38

 38Field Hearing before the Subcommittee on Housing, Insurance and Community 

Opportunity, Committee on Financial Services, U.S. House of Representatives, State of 

U.S. Manufactured Housing Industry, (Danville, VA: Nov. 29, 2011).

The institute noted that the lack of liquidity in the 

manufactured housing market restricted buyers’ access to low-cost loans 

and that the available loans sometimes carried higher interest rates than 

loans for site-built homes. As stated previously, loans for manufactured 

homes are more likely to be higher priced than loans for site-built homes.

Although some of these differences may be due to differences in credit 

strength, the generally higher interest rate associated with financing a 
Page 29 GAO-14-410 Regulation of Manufactured Housing

manufactured home diminishes, in part, because of some of the 

affordability benefits that we discussed earlier.39

Recognizing the impact that a lack of low-cost financing could have on 

the affordability of manufactured homes, Congress directed HUD in the 

2000 Act to review the FHA programs for manufactured home loans.40

The Act required that HUD develop any changes in, among other things, 

loan terms, amortization periods, regulations, and procedures that might 

promote the affordability of manufactured homes. However, HUD has not 

yet examined or researched the effectiveness of these loan programs 

because its research has focused on other priorities. HUD’s most recent 

study on manufactured housing focused on state and local regulatory 

barriers to placing manufactured homes in urban communities.41 Other 

research that PD&R has coordinated includes aspects of manufactured 

housing as they relate to energy efficiency and the environment.42

Such research could help HUD to understand the effectiveness of its 

programs in facilitating the affordability of manufactured homes. For 

example, data from the Rural Housing Services (RHS) program show that 

PD&R’s Research Roadmap for fiscal years 2014 through 2018 proposed 

researching the manufactured housing market and the effect of financing 

on manufactured housing demand. However, HUD did not select this 

proposal for its fiscal year 2015 Budget Request and, according to one 

HUD official, it was not among the highest priorities.

 392012 HMDA data do not include credit score information.

40 Additionally, the FHA Manufactured Housing Loan Modernization Act of 2008 required 

HUD to revise FHA’s Title I program. See Pub. L. 110-289, Division B §§ 2141-2150. HUD 

revised Title I to increase loan amount limits and amend credit underwriting requirements, 

among other changes. See Title I letters TI 481 and TI 484. Also, in response to the FHA 

Modernization Act, Pub. L. 110-289, Division B, §§ 2101 – 2133, HUD made 

manufactured homes eligible for Title II insurance if treated as real estate by the local 

authority, even if not treated as real estate for purposes of state taxation, as well as 

individual manufactured housing units in condominium projects. See Mortgagee Letter 

2009-16.

41HUD, PD&R, Regulatory Barriers to Manufactured Housing Placement in Urban 

Communities, (Washington, D.C.: January 2011).

42From 1998 to 2008, PD&R coordinated the publication of studies on manufactured 

homes technology under the Partnership for Advancing Technology in Housing (PATH) 

program. The goal of the program was to accelerate the creation and use of technologies 

in order to improve the affordability, quality, durability, and environmental and energyefficiency of homes and some PATH studies focused on manufactured homes. 
Page 30 GAO-14-410 Regulation of Manufactured Housing

guaranteed loans on manufactured homes with permanent foundations 

perform worse than all RHS single family guaranteed loans.43 However, 

this analysis did not control for other factors that might explain these 

differences, such as borrower and property characteristics. FHA collects 

such data, which should permit a more rigorous analysis of loan 

performance. Further, FHA officials stated that they evaluate Title I 

manufactured housing loan performance and the Title I insurance fund to 

ensure that premiums are sufficient to cover program expenses, as 

required by the Housing Economic Recovery Act 2008 (HERA).44

However, FHA has not analyzed the performance of Title I and Title II 

manufactured housing loans to understand the different participation 

levels in the programs and lacks a plan for doing so. As noted earlier, 

standards for internal control emphasize the need for federal agencies to 

establish plans to help ensure goals and objectives can be met, including 

compliance with applicable laws and regulations.45

The Act also requires HUD to conduct research and make other efforts to 

encourage the enterprises and Ginnie Mae to actively develop and 

implement secondary market securitization programs for federally insured 

loans for manufactured homes, as well as those of other loan programs, 

in order to promote the availability of affordable manufactured homes. As 

we have seen, industry officials have cited the lack of a viable secondary 

market for manufactured housing loans as a factor in higher financing 

costs, especially for chattel loans. However, HUD was unable to identify 

any efforts, other than the discussions with Ginnie Mae, which it had 

undertaken to encourage the enterprise to do more to help securitize

additional manufactured home loans. A Ginnie Mae official pointed to 

their prior experience in working with issuers of securities backed by 

manufactured home loans insured under the FHA Title I program. 

Specifically, he cited experience with lenders that were unable to fulfill 

their commitments, requiring Ginnie Mae to pick up servicing of their 

Such research could 

further HUD’s understanding of the relationship between loan 

performance and property type, providing information that it could 

potentially use to encourage lenders to participate in the federal program.

 43RHS loan guarantee programs are available to borrowers with new manufactured 

homes on permanent foundations but do not finance manufactured housing titled as 

personal property.

44Pub. L. 110-289.

45 GAO/AIMD-00-21.3.1.
Page 31 GAO-14-410 Regulation of Manufactured Housing

portfolios. The official also noted that lenders might not want to securitize 

their loans through Ginnie Mae because they had other sources of 

funding and wished to keep these loans in their portfolio. The official 

noted that one of the largest such lenders met the net worth requirement 

for Ginnie Mae and was an approved issuer of Ginnie Mae securities 

backed by Title I loans. Nonetheless, it is not clear that HUD has 

conducted research and other efforts to encourage the enterprises and 

Ginnie Mae to actively develop and implement secondary market 

securitization programs for FHA manufactured home loans or loans 

guaranteed by other federal programs.

Further, it remains uncertain that the enterprises would enter the market 

for securitizing loans on manufactured homes that are titled as personal 

property. Under HERA, which resulted in the enterprises being placed 

under conservatorship by the Federal Home Finance Administration 

(FHFA), Congress also directed the enterprises to serve specified 

underserved markets, including manufactured housing. HERA provided 

that in determining whether the enterprises had adequately served the 

manufactured housing market, FHFA could consider loans secured by 

both real and personal property. However, in 2010 FHFA published a 

proposed rule that would establish a method for evaluating and rating the 

Fannie Mae and Freddie Mac’s performance in underserved markets. The 

proposed rule also excluded loans for manufactured homes titled as 

personal property from consideration for securitization because, as FHFA 

stated, these loans would require substantial efforts by the Fannie Mae 

and Freddie Mac “to ensure safe and sound operations and sustainable 

homeownership for families.”

Another purpose of the 2000 Act is to help ensure uniform and effective 

enforcement of federal construction and safety standards for 

manufactured homes. To do this, HUD uses a monitoring contractor that 

reviews the activities of organizations that inspect manufactured home 

design and production activities. However, HUD could not demonstrate 

that it has consistently taken actions in response to the monitoring 

contractor’s “Recommendations for HUD Follow-Up.” These 

recommendations highlighted items that HUD should follow-up on based 

on the contractor’s review of IPIA and DAPIA inspections in 

manufacturing plants. For example, in some cases the HUD monitoring 

contractor noted that an IPIA was not performing inspections as required 

in certain plants and recommended that HUD take action to ensure that

the appropriate corrective measures had been taken. HUD officials 

maintained that they did conduct follow up actions such as phone calls 

HUD Cannot Consistently 

Demonstrate That Issues 

from Inspection Monitoring 

Activities and Complaints 

Are Being Resolved
Page 32 GAO-14-410 Regulation of Manufactured Housing

and provided us with emails showing follow-up on some of the findings 

we inquired about, but did not provide documentation showing that the 

agency consistently acted on all the monitoring contractor’s findings or 

the outcome of follow-up actions taken. HUD officials also said that they 

had not been able to devote further attention to monitoring and following 

up on findings from the monitoring contractor because of resource issues 

and time limitations. Standards for federal internal controls suggest that, 

among other things, monitoring activities should assess the quality of 

performance over time and ensure that the findings of audits and other 

reviews are promptly resolved.46

HUD acknowledged that the monitoring contractor did not provide a 

deliverable from a recently completed monitoring contract period (July 

2011 through July 2012). The missing item was a transition plan that 

would have documented activities tied to the monitoring contract in the 

event that HUD decided to assume the activities in the contract or hire a 

new contractor. The transition plan was intended to provide a plan for 

transferring all data and property associated with the contract to the 

government and/or a new contractor should HUD decide to assume the 

activities of the contract or transfer them to another contractor. Such 

information could aid HUD in exploring other options for conducting the 

work called for in the monitoring contract. Overall, such a condition raises 

questions and uncertainties about HUD’s oversight of its monitoring 

contract as well as whether the data that were not delivered in a transition 

plan represents significant noncompliance under the contract. Among 

other things, the Federal Acquisition Regulations (FAR) state that 

contracting offices are responsible for ensuring that nonconformances are 

identified, and establishing the significance of a nonconformance when 

considering the acceptability of supplies or services which do not meet 

contract requirements.

Without consistent documentation of the 

outcome of these follow-up efforts, HUD has limited assurance that 

issues identified during the enforcement process are being resolved and 

that federal construction and safety standards for manufactured homes 

are uniformly and effectively applied.

47, 48

 46GAO/AIMD-00-21.3.1. 

47FAR 46.103(e).
Page 33 GAO-14-410 Regulation of Manufactured Housing

HUD also oversees a complaint process that is intended to help with the 

goal of ensuring uniform application of manufactured housing standards. 

In part, HUD relies upon the 37 state administrative agencies (SAA) that 

respond to consumer complaints and periodically review manufacturer 

facilities. However, HUD did little to assess the content of complaints. For 

example, HUD does not maintain a consolidated complaint log to 

evaluate in a systematic fashion the nature and resolution of complaints 

involving manufactured housing, or the entities involved. HUD’s website 

directs consumers to individual SAAs where they may file complaints.

There are 13 states where no SAA exists, thus making HUD the primary 

focal point for complaints in those states. However, even for the 

complaints it does receive, HUD does not maintain a consolidated 

complaint log or record to identify their extent and nature. The complaint 

process has the potential to play an important role in quantifying the 

extent of complaints tied to homes built under the HUD Code, 

understanding the nature of complaints, and ensuring that the safety 

standards are followed. Standards for federal internal controls suggest 

that organizations, among other things, establish monitoring activities to 

assess the quality of performance over time, including identifying and 

correcting deficiencies within established time frames, which a 

comprehensive complaint system would help accomplish.

49

Looking ahead, we also noted that on-site construction activities pose 

new challenges for HUD’s inspection efforts on manufactured homes.

HUD’s testing and inspection activities of manufactured homes are 

focused within the plant itself. However, some construction activities 

occur on-site. One of the most common building layouts to surface over 

time has been the construction of manufactured homes in two or more 

factory-built units, or sections (see fig. 13). For example, a manufactured 

home may consist of two complete sections that are joined together onsite to create a multi-section manufactured home. Consequently, other 

construction activities, such as the completion of siding and joining roofs, 

are occurring on-site, outside of the factory.

 48Since we sent a draft of this report to the agency for comment, HUD has accepted a 

transition plan from its monitoring contractor, which was the same entity that served as the 

monitoring contractor for the contract that ended July 2012.

49GAO/AIMD-00-21.3.1. 
Page 34 GAO-14-410 Regulation of Manufactured Housing

Figure 13: Examples of Multi-section Manufactured Homes Joined On-site

Other common construction methods—for example, adding a hinged roof 

to enhance the look of the home,50 or upgrading the energy efficiency of 

the home, also require construction and inspection activities on-site.51

However, HUD, through its monitoring contractor and IPIA entities, 

continues to focus almost exclusively on in-plant testing and inspections.

For instance, HUD has developed in-plant inspection checklists for IPIA 

inspection entities to follow to help ensure compliance with the HUD Code 

while a unit is being constructed in the factory, but is still working on 

implementing more robust inspection processes for on-site construction 

activities.52

 50A hinged roof allows for the construction of a steeper, higher pitched roof. For such a 

roof, setup and final construction occurs on-site instead of at the factory.

As homes are further customized, some variations, such as 

many hinged-roof designs, are categorized as alternative construction, 

51Homes that are certified as Energy Star must undergo quality assurance testing on-site 

to validate, among other things, whether the home was constructed tightly enough, to 

minimize air leaks, and with sufficient ventilation air flow to maintain sound indoor air 

quality. 

52HUD has issued a proposed rule to more fully address on-site construction activities and 

simplify current alternative construction procedures. 75 Fed. Reg. 35902 (June 23, 2010). 

As of May 2014, the proposed rule had not yet been issued as a final rule.
Page 35 GAO-14-410 Regulation of Manufactured Housing

requiring an on-site inspection, while other activities completed on-site 

are not currently subject to additional testing and inspection. HUD’s 

inspection checklists do not require testing of some key systems 

completed on-site or IPIA inspections of all units on-site. For instance, 

testing to validate the air-tightness of the home and performance of the 

ventilation system is required to receive an Energy Star certification 

during construction. However, the HUD Code cannot be used for such a 

certification because such testing is not currently required on-site once 

two sections of a multi-section HUD manufactured home are joined onsite.53

Furthermore, as we have noted in previous work, HUD’s testing and 

inspection efforts to validate the quality of construction are also specified 

in the HUD Code.

As on-site construction activities increase, HUD will continue to 

face challenges ensuring the inspection regime for manufactured homes 

keeps pace with and addresses such trends in construction methods.

54 Consequently, any updates to specifications on 

testing methods for key components of the house require updates to the 

HUD Code itself. However, as discussed earlier, HUD has faced delays in 

updating the HUD Code. For instance, the Code specifies the test for the 

pressure that the roof is supposed to be able to withstand. However, as 

we found in our past report, some performance standards that are called 

for in the HUD Code, such as those pertaining to whole-house ventilation, 

are not currently being tested. Accordingly, we recommended that test 

methods be developed for the ventilation system, to help ensure proper 

indoor air quality, which requires an update to the HUD Code. HUD 

generally agreed with this recommendation and said that it has been 

referred to the MHCC for consideration.

 53The Energy Star certification requires testing to ensure that the home is constructed with 

minimal air leakage and adequate whole-house ventilation. Such testing is also 

incorporated into the current IRC used for site-built homes.

54GAO-13-52.
Page 36 GAO-14-410 Regulation of Manufactured Housing

HUD is authorized to collect fees from builders of manufactured homes to 

offset the expenses it incurs in carrying out its responsibilities under the 

Manufactured Housing Program.55 HUD currently assesses a $39 label 

certification fee per transportable manufactured housing unit produced by 

manufacturers. HUD set the level of the label certification fee in 2002 and 

has not increased it, although declining sales of manufactured homes 

mean that fee collections no longer cover the program’s annual costs. 

Under the 2000 Act, all HUD label certification fee collections from HUD 

transportable units are deposited into the Manufactured Housing Fees 

Trust Fund and are available for use to the extent provided in annual 

appropriations acts.56 The 2000 Act also stipulated that the amount HUD 

charges for label fees may only be modified as specifically authorized in 

advance in an annual appropriations act and pursuant to a rulemaking.57

In addition, the 2000 Act specifies the activities for which the Office of 

Manufactured Housing Programs may use the funds appropriated from 

the Manufactured Housing Fees Trust Fund.58

 55 42 U.S.C. § 5419(a)

HUD can use the label 

fees to cover contractual costs, carry out inspections, or monitor aspects 

of the program in the 13 states and the District of Columbia that do not 

have SAAs. HUD can also use them to pay the 37 SAAs that enforce the 

HUD Code and handle consumer complaint activities on HUD’s behalf to 

offset the costs they incur. Fees and appropriations from the general fund 

are held in the Manufactured Housing Fees Trust Fund. The Fund may 

56 42 U.S.C. § 5419(e)

57 42 U.S.C. § 5419(d) 

58 42 U.S.C. § 5419(a)

Current Funds 

Collected from HUD 

Label Fees Are 

Insufficient to Fund 

the Manufactured 

Housing Program

Label Fees Are the 

Primary Funding Source 

for the HUD Manufactured 

Housing Program
Page 37 GAO-14-410 Regulation of Manufactured Housing

have reserves that are carried over from one fiscal year to the next, 

helping the Office of Manufactured Housing Programs make payments at 

the beginning of each fiscal year.

As the production and sale of manufactured homes generally declined 

after 2002, revenue collections from HUD certification label fees also fell, 

dropping to historically low levels in 2011. As we have seen, sales of 

transportable units fell from approximately 325,000 in fiscal year 2002 to 

around 90,000 in fiscal year 2013. This decline in sales, reflecting a 

decline in production, in turn, significantly reduced HUD’s revenue from 

label fees, which fell from around $12,000,000 in 2002 to less than 

$3,000,000 by 2011 (see fig. 14).59

Figure 14: HUD Label Revenues and HUD Units Sold from Fiscal Years 2002 to 2013

 59Revenue figures shown in current dollars (unadjusted for inflation), as we compared 

them to the corresponding obligations for each fiscal year.

Since Fiscal Year 2009 

Manufactured Housing 

Program Obligations Have 

Been Greater Than 

Revenue from HUD Label 

Fees
Page 38 GAO-14-410 Regulation of Manufactured Housing

At the same time, obligations for the Manufactured Housing Program 

have increased. According to HUD, until 2009, the number of 

manufactured homes built and sold generated enough in label fee 

revenue to cover the costs of the HUD Manufactured Housing Program.

Beginning in fiscal year 2009, however, the revenue that label fees 

generated was insufficient to cover the program’s obligations. According 

to data that HUD officials provided to us, the Manufactured Housing 

Program’s obligations were $6.62 million in 2009, when HUD generated 

$3.3 million in label fees. In each of the following years, HUD generated 

less revenue in label fees than it incurred in obligations. For the most 

recently completed fiscal year, fiscal year 2013, HUD had $10.1 million in 

obligations, while generating only $3.5 million in label fees. For fiscal year 

2014, HUD estimates that program obligations will total roughly $10.0 

million but the program will only collect $6.53 million in label fees.60

According to officials, these obligations include expenses associated with 

office staff and program administration (including payments to SAAs), as 

well as costs related to MHCC activities—monitoring contractors, 

administration, and planning meetings. The officials said that payments to 

SAAs were a major programmatic cost and noted that the payments 

made to each SAA varied from year to year, depending on the activities 

the states undertook. For fiscal year 2014, HUD projected that the costs 

of annual SAA payments and the contract for monitoring inspection 

agencies of the Office of Manufactured Housing would total $7.3 million, 

or 73 percent of the program’s projected obligations. HUD officials noted 

that in recent years SAAs had been taking a more active role in HUD 

Code monitoring and enforcement and, as a result, HUD’s payments to 

them and the monitoring contractor had increased.

In order to meet its increasing budget obligations, the program has relied 

on congressional appropriations from the U.S. Department of Treasury’s 

general fund. From 2009 through 2013, the program took in 

approximately $16.1 million in label fees and had programmatic 

obligations of around $38.3 million. During this same period, the program 

received $22.2 million in congressional general fund appropriations to

make up the gap between its program costs and label fee revenue. 

Furthermore, the program’s year-end carryover balances in recent years 

 60Estimates for fiscal year 2014 are based on a proposed fee increase of $100 per label 

for 6 months. Without a fee increase, the program projects it would generate only $3.5 

million in label fee collections.
Page 39 GAO-14-410 Regulation of Manufactured Housing

have been higher as a direct result of general fund appropriations that are 

available until expended (see fig. 15).61

Figure 15: General Fund Appropriations and Carryover Balances for the HUD Office of Manufactured Housing Programs from 

Fiscal Years 2009 to 2013

In fiscal year 2014, HUD’s budget justification called for a total of $7.53 

million in budget authority, including up to $6.53 million in estimated label 

fees and $1 million in general fund appropriations. In its fiscal year 2014 

budget justification, the agency projected that the number of transportable 

units for which label fees are paid was not expected to significantly 

increase, and proposed an increase to the certification label fee of up to 

$100 in order to increase label fee revenue. 

 61 Appropriations and carryover balances shown in current dollars (unadjusted for 

inflation), as we compared them to the corresponding obligations for each fiscal year.

HUD User Fee Analysis
Page 40 GAO-14-410 Regulation of Manufactured Housing

HUD’s budget justification for fiscal year 2015 also calls for an increase in 

label fees from $39 to $100. HUD’s Office of Manufactured Housing 

Programs currently projects a gradual increase in transportable unit sales 

through the end of fiscal year 2015 and estimates that fee collections in 

2015 will be approximately $10 million dollars. The agency also stated in 

its 2015 congressional budget justification that its projected label fee 

revenue, combined with small amounts of unobligated balances from prior 

years, would be sufficient to fully fund the program’s operating 

requirements in 2015.

The HUD Office of Manufactured Housing Programs has stated its intent 

to raise label fees in previous HUD budget justifications dating back to 

fiscal 2009 and, as a result, had anticipated higher label fee collections in 

previous years.62 However, total user fee collections have fallen short of 

projections of the Office of Manufactured Housing Programs because it 

did not raise its label fees or seek other additional user fee income (see 

fig. 16).63

 62Fiscal year 2013 projections do not assume an increase in the label fee.

63Collected and anticipated fees shown in current dollars.
Page 41 GAO-14-410 Regulation of Manufactured Housing

Figure 16: Collected User Fees and Anticipated User Fees from Fiscal Years 2009 to 

2013

Note: HUD did not propose a label fee increase for 2013.

Despite its stated intent for several years to raise label fees, HUD did not 

take the necessary actions to implement these label fee increases. 

Standards for federal internal controls suggest that organizations, among 

other things, establish plans to achieve their objectives, including effective 

and efficient operations using the entity’s resources.

64

 64

Manufactured 

Housing Program officials stated that at the end of 2013 they had begun 

working with HUD’s Office of General Counsel on a proposed rule 

designed to raise label fees. At present, HUD officials stated their intent to 

have a final rule permitting this label fee increase ready to be 

implemented at the end of 2014. However, as of April 2014, the agency 

GAO/AIMD-00-21.3.1.
Page 42 GAO-14-410 Regulation of Manufactured Housing

had not issued any notices of proposed rules regarding label fee 

increases.65

Since fiscal year 2009, HUD has proposed increases to the label 

certification fee in all but one of its congressional budget justifications.

The Chief Financial Officers (CFO) Act and OMB Circular A-25 provide 

for biennial fee reviews that include recommendations about adjustments 

to fees, as appropriate. While HUD Manufactured Housing Program 

officials told us that they have not conducted any such biennial reviews of 

their HUD label fees, program officials told us they have completed 

analysis of label fees in previous years. The label fee analysis that HUD 

officials provided to GAO was based on manufactured home production 

estimates, the amount of direct appropriations the program receives, the 

amount of carryover the program has from the previous year, and the 

anticipated program office activity and expense levels for the upcoming 

year. 

We previously concluded that whether fee rates are set by the agency in 

regulation or by Congress in statute, agencies must substantively review 

and report on all cost-based fees regularly to better ensure decision 

makers have complete information about program costs and activities.66

 65The same day in which the agency received a draft of this report for review and 

comment, HUD published in the Federal Register a proposed rule calling for the increase 

of label fees from the current $39 per unit fee to an amount anticipated to be no less than 

$95 and no more than $105. This proposed rule outlines HUDs plans to increase the label 

fee and HUD officials hope to have a final rule permitting this increase ready to be 

implemented at the end of 2014.

Agencies should provide program information to agencies, stakeholders, 

and Congress. These reviews can improve transparency, help ensure 

that fees remain aligned with program costs and activities, increase 

awareness of the costs of the federal program, and therefore increase 

incentives to reduce costs where possible. We previously found that user 

fee design and review should address how the user fees will be linked to 

a program’s fixed and variable costs and whether or not user fees are set 

at a rate that enables the program to respond to spikes and surges in 

demand for the good or service upon which they are collected. Agencies 

should also seek to identify which factors drive fee revenue instability, 

66GAO-13-820, p. 18. 
Page 43 GAO-14-410 Regulation of Manufactured Housing

and whether or not a particular program has other sources of funding 

which may mitigate initial revenue shortfalls.67

In order to identify and manage revenue instability, decision makers need 

regular information and analysis to understand potential vulnerabilities in 

the context of the specific fee design.

68The appropriate analysis can help 

an agency obtain a thorough understanding of factors such as cost 

drivers and elements that influence collections. Without regular 

comprehensive reviews, agencies and Congress may miss opportunities 

to make improvements to a fee’s design which, if left unaddressed, could 

contribute to inefficient use of government resources. For example, fee 

reviews could help ensure that fees are properly set to cover the total 

costs of those activities that are intended to be fully fee-funded, thus 

eliminating the need for direct appropriations for those activities. 

Furthermore, not reviewing fees regularly can create costly challenges for 

user fee programs and agencies, such as larger fee increases, when fees 

are ultimately increased. Regular fee reviews can help ensure that 

Congress, stakeholders, and agencies have complete information about 

changing costs and whether a fee needs to be changed, help identify 

opportunities to revise fees in ways that enhance user funding of goods or 

services above and beyond what is normally available to the public, and 

can be a useful step towards examining whether the activities themselves 

are duplicative or overlapping.

Since fiscal year 2009, Congress has authorized the HUD Manufactured 

Housing Program to collect additional user fees in the form of installation 

fees and dispute resolution fees in states where HUD operates 

installation and dispute resolution programs. The 2000 Act required HUD 

to establish and implement a manufactured home installation program for 

states that chose not to operate their own installation programs.

According to HUD, the federal installation program ensures the inspection 

of over 7,000 manufactured home installations annually, as well as the 

training and licensing of over 2,000 installers in the 19 states that do not 

 67GAO-13-820, p. 41.

68GAO-13-820, p. 25. 

HUD Has Not Assessed 

Other Authorized User 

Fees or Program Goals 

Related to the 

Manufactured Housing 

Fees Trust Fund
Page 44 GAO-14-410 Regulation of Manufactured Housing

have such programs.69 Additionally, the 2000 Act requires HUD to 

establish and implement a manufactured home dispute resolution 

program for states that choose not to operate their own dispute resolution 

programs. The program provides for the timely resolution of disputes 

between manufacturers, retailers, and installers regarding responsibility 

for the repair of defects in manufactured homes. HUD maintains a dispute 

resolution program in the 23 states that have no such program.70

Any dispute resolution and installation fees that HUD collects are to be 

deposited into the Manufactured Housing Fees Trust Fund and used to 

offset the costs of the Manufactured Housing Program. For fiscal years 

2009 through 2012, the Office of Manufactured Housing Programs stated 

that it intended to collect a total of $11.2 million in fees from its dispute 

resolution and installation programs. However, HUD officials told us that 

the agency had not collected any of these fees, citing reasons such as 

the insufficient resources to implement such fees and the considerable 

administrative and logistical burden the agency would face. Under the 

authority granted in section 620 of the 2000 Act allows the Office of 

Manufactured Housing Programs to use HUD label fees to help pay for 

other aspects of the program, such as the dispute resolution and 

installation programs. However, as we have seen, because HUD has not 

increased label fees it has not generated sufficient fee revenue to meet 

the program’s costs. Despite this shortfall in fee revenue, HUD has not 

assessed how it might put in place a program for assessing and collecting 

installation and dispute resolution fees, nor has it assessed the costs and 

benefits that such a program might realize. 

HUD officials also stated that they have yet to develop any specific 

program goals that would help in establishing a minimum or maximum 

amount of reserve funding for the Manufactured Housing Fees Trust Fund 

or the appropriate levels of program carryover balances for the 

Manufactured Housing Program. Officials stated that the program’s 

carryover balances vary from year to year; are based on label fees 

collected, general fund appropriations, and program obligations; and are 

 69Any state that wishes to operate its own installation program must have state installation 

standards that provide at least the same protection provided by the federal installation 

standards. 42 U.S.C. § 5404(c)(2)(B)(3).

70A state dispute resolution program must meet the requirements of the Act for operating 

in lieu of the HUD dispute resolution program. 42 U.S.C. § 5422(c)(12).
Page 45 GAO-14-410 Regulation of Manufactured Housing

capped each year by the budgetary authority granted to the Office of 

Manufactured Housing Programs in each year’s congressional 

appropriations act. HUD officials stated that each fiscal year’s carryover 

balance is established by the remaining amount of funding available once 

all program obligations had been paid, and consequently they saw little 

need to examine the costs or benefits of establishing longer or shorter 

goals for the Manufactured Housing Fees Trust Fund. Regardless of the 

authority under which a user fee reserve is created, setting clear goals for 

the reserve and clarifying how those reserves will be used helps ensure 

accountability and transparency both to Congress and users of fee-based 

programs. Agencies may wish to use a reserve to help ensure long-term 

financial stability, to position the agency to respond to varying economic 

conditions, to smooth expected fluctuations in costs or collections, or to 

build capital for necessary infrastructure improvements or mitigate 

unforeseen and unavoidable revenue shortfall. To further ensure 

accountability and adherence to any reserve fund goals, establishing 

minimum and maximum reserve levels, justified by program data and risk 

management considerations, may be advisable.

Longstanding unresolved issues in implementing reforms to the HUD 

Manufactured Housing Program limit the potential for achieving key 

purposes specified in the 2000 Act. Although the 2000 Act mandates that 

HUD act on proposed changes to the HUD Code within a 1-year period of 

the proposal being approved by the MHCC, this requirement has not 

been effective in accelerating the rulemaking process. HUD has not 

considered any of the proposals made by the MHCC to be subject to the 

1-year deadline because the MHCC has not submitted recommendations 

in the form of proposed rules with adequate economic analyses, as 

required by the Act. Because the MHCC and the previous administering 

organization lacked the expertise to develop recommendations in the

proper form, HUD’s staff has developed the proposed rules and 

conducted the economic analyses with limited staff resources. Despite 

these longstanding shortcomings, known resource limitations, and other 

administrative and legal impediments it faces, HUD has not identified how 

it might ensure more timely updates of the standards in achieving the 

purposes of the Act. As a result, it took over 10 years after receipt of a 

proposal from the MHCC for HUD to make some of the recent updates to 

the HUD Code. In contrast, building codes for use in site-built (including 

modular) homes are updated on a recurring basis every 3 years raising 

questions about HUD’s effectiveness in establishing meaningful and 

timely standards for manufactured housing. Ultimately, delays in updating 

the standards can result in families seeking an affordable housing option 

Conclusions
Page 46 GAO-14-410 Regulation of Manufactured Housing

bearing additional costs when they must retrofit their homes to meet local 

and state standards that have outpaced the scope of the HUD Code, or 

being denied the benefit of safety and other standards that the consensus 

committee has recommended.

Although the higher cost of financing manufactured homes can limit their 

potential affordability, HUD has done little to implement the Act’s 

requirements for reviewing FHA programs for providing manufactured 

home loans and developing any changes that might further promote the 

affordability of manufactured homes, or for conducting research and other 

efforts to determine the potential for the enterprises and Ginnie Mae to 

actively develop and implement better secondary market securitization 

programs for manufactured home loans. Although HUD PD&R proposed 

a study on the financing of manufactured homes for its 2014 to 2018 

Research Roadmap, HUD selected other research projects over this 

proposal and does not yet plan to conduct this study. Without analysis 

and research into the contribution financing might make toward the 

affordability of manufactured housing, HUD has little assurance that its 

loan programs and securitization programs of Ginnie Mae and the 

enterprises are appropriately promoting the availability of affordable 

manufactured homes.

HUD’s efforts to ensure compliance with the HUD Code rely on actions of 

others, including the monitoring contractor that reviews the activities of

inspectors of manufacturers. However, we found that HUD lacked 

consistent documentation of actions it had taken in response to significant 

audit findings of the monitoring contractor. Further, HUD has no 

mechanism to catalogue complaints received by HUD and the SAAs.

Without such documentation and transparency, HUD cannot determine 

the nature and content of complaints and whether any patterns might 

suggest further analysis or action. Ultimately, these weaknesses limit the 

potential for the enforcement process to ensure that federal safety and 

construction standards for manufactured homes are having their intended 

effect. Given its limited resources, HUD will likely face continued 

challenges in ensuring its standards are followed and needs to make the 

most efficient use of the resources it does have to enforce those 

standards.

In recent years, the HUD Manufactured Housing Program has relied on 

general fund appropriations to bridge the gap between its declining label 

fee revenue and its higher programmatic obligations. The current fee 

structure, which is based on per unit fees charged for labels indicating 

that units have been built in accordance with the HUD Code, is at its 
Page 47 GAO-14-410 Regulation of Manufactured Housing

present amount not sufficient to fully fund the program. However, HUD 

had not put in place the increased label fees that it had proposed in 5 of 

the last 6 fiscal years.71

Finally, the HUD Office of Manufactured Housing Programs has not 

established any programmatic goals for the Manufactured Housing Fees 

Trust Fund, or established recommended minimum and maximum 

reserve levels. Due to a lack of analysis, HUD may be unaware of the 

optimum levels of trust fund reserves or yearly carryover balances 

needed to maximize the Manufactured Housing Program’s operational 

efficiency. GAO best practices state that unobligated balances in fee 

programs may represent a reserve intended to manage the effects of 

revenue instability. Setting clear goals for a program’s user fee reserves 

and clarifying how those reserves will be used can help ensure both 

accountability and transparency to Congress and users of fee-based 

programs. To further ensure accountability and adherence to any reserve 

Nor has HUD taken steps to rigorously assess 

the feasibility of establishing inspection and dispute resolution fees that 

Congress has authorized. The 1990 CFO Act and OMB guidance provide 

for biennial fee reviews that include recommendations about adjustments 

to the fees, as appropriate. A rigorous analysis of user fees can help an 

agency obtain a thorough understanding of factors such as cost drivers 

and elements that influence collections. HUD cited a number of reasons 

for not increasing label fees or considering other fees, including political 

pressure, the presence of large carryover balances that grew after 

receiving general fund appropriations, and challenges in implementing 

new user fees. Given manufactured home production levels in recent 

years and the constrained resource environment that the federal 

government faces, it is important for HUD’s Office of Manufactured 

Housing Programs to consider all revenue streams at its disposal 

including higher label fees and the potential for others fees already 

authorized by Congress. Further, delaying increases in user fees has the 

potential to require even higher fee increases when they are ultimately 

made—increasing any potential disruption to the manufactured housing 

market.

 71The same day in which the agency received a draft of this report for review and 

comment, HUD published in the Federal Register a proposed rule calling for the increase 

of label fees from the current $39 per unit fee to an amount anticipated to be no less than 

$95 and no more than $105. This proposed rule outlines HUDs plans to increase the label 

fee and HUD officials hope to have a final rule permitting this increase ready to be 

implemented at the end of 2014.
Page 48 GAO-14-410 Regulation of Manufactured Housing

fund goals, establishing minimum and maximum reserve levels, justified 

by program data and risk management considerations, may also be 

advisable. However if agencies and Congress are not deliberate in their 

design of a reserve fund to effectively manage an agency’s user fee 

program, any unobligated funds built up may be rendered ineffective as a 

reserve fund. In an era of limited resources, these steps will help HUD 

provide the most reliable information to Congress as it considers program 

funding and the sufficiency of fund reserves.

To better ensure the viability and safety of manufactured housing 

produced in accordance with the HUD Code, the Secretary of the 

Department of Housing and Urban Development should take the following 

three actions:

• Develop and implement a plan for updating construction and safety 

standards for manufactured homes on a timely, recurring basis to 

include:

• addressing unresolved issues related to defining and developing 

sufficient economic analyses tied to proposed changes to the 

construction and safety standards; and

• ensuring sufficient resources and capacity within HUD and the 

MHCC and its administering organization; or

if such a plan cannot be devised and implemented, identify and report 

to Congress on alternative methods of ensuring the quality, durability, 

safety, and affordability of manufactured homes, including the 

possibility of relying more extensively on existing industry standards.

• Develop a plan to assess how FHA financing might further promote 

the affordability of manufactured homes and identify the potential for 

better securitization of manufactured housing financing.

• Strengthen the oversight of inspections and enforcement-related 

activities by

• consistently documenting actions taken to resolve 

recommendations from completed audits and the outcome of such 

actions,

• completing a Transition Plan for the monitoring contractor activity, 

and

• exploring the feasibility of developing a cost-effective systematic 

process for collecting and evaluating information on the content of 

complaints.

Recommendations for 

Executive Action
Page 49 GAO-14-410 Regulation of Manufactured Housing

To better ensure that Congress, stakeholders, and agencies have 

complete information about changing costs and whether a fee needs to 

be changed, HUD should:

• Complete the necessary rulemaking changes to allow the Office of 

Manufactured Housing Programs to adjust its label fees from the $39 

per label toward levels up to the congressionally authorized level that 

better reflect the current levels of manufactured home production, 

while considering the impact that such fees may have on the industry; 

put in place a process for regular fee reviews to determine whether 

the fees currently being charged will allow the program to respond to 

spikes and surges in label fee revenue and to identify any factors that 

may drive label fee revenue instability; and identify any additional 

sources of funding that may mitigate initial revenue shortfalls and the 

program’s fixed and variable costs.

• Assess the feasibility, including an analysis of the benefits and costs, 

of putting in place user fees for its dispute resolution and installation 

programs.

• Establish the goals for use of reserves of the Manufactured Housing 

Fees Trust Fund, and the minimum and maximum thresholds for the 

reserves appropriate for meeting these goals.

We provided a draft of this report to HUD for review and comment. HUD 

provided written comments that are discussed below and presented in 

Appendix I. HUD agreed with two recommendations, partially agreed with 

two recommendations, and stated its intent to consider the remaining two 

recommendations. HUD also described actions it planned to take or had 

taken in response after receiving the draft report. We reiterate the 

importance of HUD addressing fundamental program weaknesses and 

that it efficiently use the resources it has and take advantage of all 

potential sources of revenue. We therefore continue to recommend that 

HUD act on the report’s recommendations. HUD also provided technical 

comments that were incorporated as appropriate.

HUD agreed with our first recommendation to develop a plan to 

accelerate future updating of the construction and safety standards on a 

timely, recurring basis. Specifically, this plan would address, among other 

things, unresolved issues related to the economic analyses that must 

accompany proposed rules and ensuring that MHCC has sufficient 

resources to perform its duties. However, HUD said that implementing 

such a plan would be contingent upon its appropriations levels. As we 

Agency Comments 

and Our Evaluation
Page 50 GAO-14-410 Regulation of Manufactured Housing

stated in our report, HUD will likely face continued financial challenges in 

ensuring that its standards are followed and will need to make the most 

efficient use of available resources to enforce them. However, as stated 

in the report, we found that the lack of updates to the HUD Code had 

delayed implementation of important safety devices, reducing the 

effectiveness of the standards and, over time, creating discrepancies 

between the HUD Code and other commonly accepted residential 

building standards, which are updated every 3 years. For example, 

several states require carbon monoxide detectors, which are not 

addressed by the HUD Code. The IRC and the American Society of 

Heating, Refrigerating, and Air-Conditioning Engineers have required 

carbon monoxide detectors for all residential site-built and modular 

homes since 2009 and 2010, respectively. Until HUD addresses the 

backlog of MHCC proposals, purchasers of manufactured homes could 

face increased costs due to a need to retrofit these homes and, in some 

cases, potential safety hazards. We also recommended that if HUD 

cannot devise and implement a plan for more timely HUD Code updates 

and improve its workforce planning efforts and budget submissions, it 

should identify and report to Congress alternative methods of ensuring 

the quality, durability, safety, and affordability of manufactured homes, 

such as relying more extensively on existing industry standards.

HUD partially agreed with our second recommendation. HUD stated that 

Ginnie Mae agreed to develop a plan to identify the potential for better 

securitization of manufactured housing financing and that FHA would 

coordinate with Ginnie Mae as needed. However, HUD did not agree to 

develop a plan to assess how FHA financing might further promote the 

affordability of manufactured homes. HUD responded that FHA 

continuously monitors its programs to ensure that affordable credit is 

available. HUD added that FHA manufactured home policies and 

information on FHA Title I loans is to be included in HUD’s Single Family 

Policy Handbook, which is under development. Consolidating such 

program guidance may help lenders better understand FHA programs, 

but there is more that FHA could do to systematically assess how FHA 

financing might further promote the affordability of manufactured homes. 

The first step is to plan for such an assessment, as we recommend. As 

we state in our report, owners of manufactured homes use the Title I 

program, which was intended in part to serve the needs of the 

manufactured housing market, less often than Title II. FHA officials were 

not aware of barriers that might have precluded homeowners from

applying for Title I loans. Recognizing the impact that a lack of low-cost 

financing could have on the affordability of manufactured homes, 

Congress directed HUD to review the FHA loan programs. However, as 
Page 51 GAO-14-410 Regulation of Manufactured Housing

noted in the report, HUD has not taken action to fully address this 

requirement. As such, we recommended that HUD first develop a plan to 

formulate its actions to help ensure that the goals and objectives of these 

loan programs can be met. Without an analysis of and research into the 

contribution financing might make toward the affordability of 

manufactured housing, HUD has little assurance that its loan programs 

are appropriately promoting the availability of affordable manufactured 

homes. Thus, we continue to believe HUD should take action to fully 

implement this recommendation.

HUD agreed with our third recommendation to strengthen oversight of 

inspections and enforcement-related activities. For example, HUD stated 

that it will consistently document actions taken to resolve 

recommendations from completed audits and their outcomes. In addition, 

after the agency received our draft report, HUD accepted a completed 

transition plan for the new monitoring contract. This action is consistent 

with our recommendation. Finally, HUD agreed to explore the feasibility of 

establishing a cost-effective systematic process for collecting and 

evaluating information on the contents of complaints. For example, HUD 

stated it would evaluate monitoring contractor findings resulting from 

manufacturer records during in-plant record reviews and from information 

collected by IPIAs resulting from their expanded requirements to review 

manufacturer service records at least monthly. HUD stated the process 

will include the establishment of a complaint log that the agency could 

use to regularly review complaints it received to determine whether 

investigations were warranted under HUD’s enforcement regulations. We 

note in the draft that such a log would help assure that safety standards 

are followed.

HUD partially agreed with our fourth recommendation about implementing 

the necessary rulemaking changes to raise the label fee and putting in 

place a process for regular fee reviews. HUD reported that it had 

published a proposed rule in the Federal Register to increase the label 

fee from $39 to around $100 (as we provided the draft report for review 

and comment). Therefore, we revised the recommendation to direct HUD 

to complete the necessary rulemaking changes to allow for the label fee 

to be increased. HUD stated that it already had a process in place to 

regularly review user fees and that it was considering seeking authority to 

allow it to change the fee by Notice, rather than under full rulemaking 

procedures to better address possible revenue fluctuations in the future. 

However, as we noted in the report, the current user fee analysis 

provided by HUD was based on production estimates, appropriations, the 

amount of carryover from the previous year, and anticipated expenses. 
Page 52 GAO-14-410 Regulation of Manufactured Housing

We noted that best practices for user fee reviews, such as examining the 

fixed and variable programmatic costs in relation to the user fees 

charged, and additional sources of funding that may mitigate initial 

revenue shortfalls or instability in the future, should be performed in 

maintaining the Manufactured Housing Fees Trust Fund. As a result, 

HUD continues to risk being unable to properly manage future revenue 

shortfalls if user fees are insufficient. Thus, we continue to believe HUD 

should take action to fully implement this recommendation.

HUD agreed to consider our fifth recommendation that it assess the 

feasibility of putting in place user fees for dispute resolution and 

installation programs, but stated that its ability to do so is dependent upon 

appropriations levels. As we noted in the report, future user fee reviews 

must take into account additional sources of funding that could help 

prevent shortfalls, such as user fees from dispute resolution and 

installation programs. As discussed in the report, HUD has not collected 

such fees as authorized by Congress citing reasons such as insufficient 

resources. HUD officials explained that HUD label fees are to be used to 

pay for dispute resolution and installation programs. However, we found 

that because HUD had not increased label fees that it had not generated 

sufficient revenue to meet the program’s costs. As such, we believe that 

HUD should assess how it might put in place a program for assessing 

and collecting installation and dispute resolution feeds to strive to align 

these fees with costs in order to actively manage revenue instability. 

Thus, we continue to believe HUD should take action to fully implement 

this recommendation.

HUD stated it would consider our sixth recommendation to establish goals 

for the use of reserve funds and the minimum and maximum thresholds 

for the reserves appropriate for meeting those goals. HUD stated that it is 

interested in obtaining more information on best practices for trust fund 

reserves for evaluating future fee amount changes. HUD also noted that 

by fiscal year 2015 it expects to operate solely on fee income after fiscal 

2015 and does not foresee any remaining carryover balances at that time. 

However, as stated in the report, agencies may wish to use a reserve to 

help ensure the long-term financial stability of a user fee-funded program, 

to position the agency to respond to varying economic conditions, to 

smooth expected fluctuations in costs or collections, or to build capital for 

necessary infrastructure improvements or mitigate unforeseen and 

unavoidable revenue shortfall. To further ensure accountability and 

adherence to any reserve fund goals, establishing minimum and 

maximum reserve levels, justified by program data and risk management 
Page 53 GAO-14-410 Regulation of Manufactured Housing

considerations levels, may be advisable. Thus, we continue to believe 

HUD should take action to fully implement this recommendation.

In other comments, HUD officials voiced concerns over the manner in 

which we characterized efforts to update the HUD Code. Specifically, 

HUD officials took issue with a summary statement that it had not 

completed actions on recommendations from the MHCC within one year 

of their submission. We clarified the statement to specify that HUD had 

not accepted, modified, or rejected MHCC recommendations within one 

year of submission. HUD pointed to its position, already included in the 

draft report, that the one-year time period has never been triggered 

because HUD has never received recommendations with the proper 

economic analysis or format for rulemaking. In other comments HUD 

listed a series of administrative and legislative impediments to producing 

more timely updates to the standards. For example, HUD said that a 

requirement to publish a proposed rule within the 30-day time frame 

stipulated in the 2000 Act is unrealistic. In response, we further describe 

these concerns in the report. The challenges HUD faces in addressing 

these longstanding issues underscores the need for HUD to develop and 

implement a plan for updating construction and safety standards for 

manufactured homes on a timely, recurring basis, as we recommended.

Further, as we recommended, if such a plan cannot be devised and 

implemented, HUD should identify and report to the Congress alternative 

methods of ensuring the quality, durability, safety, and affordability of 

manufactured homes, including the possibility of relying more extensively 

on existing industry standards.

As agreed with your office, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies of this report to the 

Secretary of Housing and Urban Development and interested 

congressional committees. The report also is available at no charge on 

the GAO website at http://www.gao.gov. If you or your staff have any 

questions about this report, please contact me at (202) 512-8678 or 

sciremj@gao.gov. Contact points for our Offices of Congressional 

Relations and Public Affairs may be found on the last page of this report. 
Page 54 GAO-14-410 Regulation of Manufactured Housing

GAO staff who made major contributions to this report are listed in 

appendix II.

Mathew J. Scirè

Director

Financial Markets and Community Investment
Appendix I: Comments from the Department of 

Housing and Urban Development

Page 55 GAO-14-410 Regulation of Manufactured Housing

Appendix I: Comments from the Department 

of Housing and Urban Development
Appendix I: Comments from the Department of 

Housing and Urban Development

Page 56 GAO-14-410 Regulation of Manufactured Housing
Appendix I: Comments from the Department of 

Housing and Urban Development

Page 57 GAO-14-410 Regulation of Manufactured Housing
Appendix I: Comments from the Department of 

Housing and Urban Development

Page 58 GAO-14-410 Regulation of Manufactured Housing
Appendix II: GAO Staff Contact and 

Acknowledgments

Page 59 GAO-14-410 Regulation of Manufactured Housing

Mathew J. Scirè, (202) 512-8678 or sciremj@gao.gov

In addition to the contact named above, Andy Finkel (Assistant Director), 

Barry Kirby (Analyst in Charge), Tim Bober, Stephen Brown, Tarik Carter, 

Emily Chalmers, Pamela Davidson, Alexandra Edwards, Juliann Gorse, 

Felicia Lopez, John McGrail, Marc Molino, Ruben Montes de Oca, Dae 

Park, Nadine Garrick Raidbard, Katherine Trimble, and James Vitarello 

made key contributions to this report.

Appendix II: GAO Staff Contact and 

Acknowledgments

GAO Contact

Staff

Acknowledgments

(250698)
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