MANUFACTURED 

HOMES

State-Based 

Replacement 

Programs May Provide 

Benefits, but Energy 

Savings Do Not Fully 

Offset Costs

Report to Congressional Requesters

March 2013

GAO-13-373

United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-13-373, a report to 

congressional requesters

March 2013

MANUFACTURED HOMES

State-Based Replacement Programs May Provide 

Benefits, but Energy Savings Do Not Fully Offset 

Costs

Why GAO Did This Study

Approximately 2 million of the nation’s 

130 million housing units are 

manufactured homes (i.e., mobile 

homes) that were built before 1976. 

These older manufactured homes are 

generally considered to have some of 

the poorest energy efficiency of all 

housing units. Many of the occupants 

of these homes qualify for federal 

assistance to help pay their energy 

bills through the U.S. Department of 

Health and Human Services’ Low 

Income Home Energy Assistance 

Program. A portion of this program’s 

funds can be used to improve the 

energy efficiency of these homes; 

however, program funding may not be 

used for new construction, or replacing 

existing homes. Some states have 

conducted pilot programs to replace 

older manufactured homes with newer, 

more energy efficient models. 

GAO was asked to identify and review 

state programs and the extent to which 

they may be cost-effective based on 

reduced energy costs. For this report, 

GAO’s objectives were to (1) identify 

states that have funded replacement 

programs and describe these 

programs; (2) identify challenges, if 

any, these states reported facing in 

implementing these programs; and (3) 

determine the extent to which these 

programs resulted in energy savings 

sufficient to offset replacement costs. 

To address these objectives, GAO 

surveyed all 50 states and the District 

of Columbia, examined data from pilot 

programs spanning about 2 years, and 

interviewed officials from three statebased programs.

HHS provided technical and clarifying 

comments, which GAO incorporated as 

appropriate.

What GAO Found

GAO identified three states—Maine, Montana, and Washington—that have 

developed pilot programs focused on replacing older manufactured homes using 

a combination of state and federal funds. The three programs were relatively 

small, accounting for about $4.5 million in spending and responsible for replacing 

81 homes, over about 2 years. The programs differed in requirements, including 

whether the land that the replacement home would occupy had to be owned or 

could be leased; the types of financing used, with some replacements requiring 

recipients to take on a partial mortgage; and the types of replacement homes. 

Program officials and representatives of organizations that aided them from the 

three state replacement pilot programs identified three key types of challenges in 

implementing these programs. First, they told GAO that many potential 

beneficiaries were not eligible to participate because (1) they had liens on their 

existing properties, (2) they did not own or have a long-term lease for the land 

the homes would be placed on, or (3) their credit histories made them ineligible 

for any type of loan. Second, these officials told GAO that some potential 

beneficiaries were unwilling to participate because they were: (1) mistrustful that 

such a program would be legitimate; (2) unwilling to take on any debt, regardless 

of the poor condition of their home; (3) unwilling to move from their current 

location; or (4) unwilling to take on increases in property taxes resulting from 

increased home value. Third, they identified challenges that were primarily 

logistical in nature, such as the need to construct wheelchair ramps or update 

utilities, which could raise the cost of replacement.

In the three pilot replacement programs GAO examined, the energy savings did 

not fully offset the costs of replacing older manufactured homes over a typical 

loan period. The two programs that maintained information on energy use and 

estimated savings spent an average of about $56,119 per unit to replace each 

older manufactured home and estimated about $489 in annual energy savings 

per home. The average cost of replacement homes varied across the three 

programs GAO examined. The least costly program GAO examined was 

Montana’s, which replaced some older manufactured homes with used, but 

newer and more energy efficient models, with an average cost of about $42,339 

per home. However, state officials told GAO that these replacement programs 

were not specifically focused on energy savings and that energy efficiency gains 

were secondary to the health and welfare benefits of getting occupants into safer, 

more weather-tight manufactured homes.

An Example of an Older Manufactured Home and a Replacement Model

View GAO-13-373. For more information, 

contact Frank Rusco at (202) 512-3841 or 

ruscof@gao.gov.
Page i GAO-13-373 Manufactured Home Replacement

Letter 1 

Background 3

Three States Have Replaced Older Manufactured Homes with More 

Energy Efficient Models 8

States Reported Facing Challenges, Including Difficulty Finding 

Potential Beneficiaries Who Were Eligible and Willing to 

Participate 12

Energy Savings Alone Did Not Fully Offset the Costs of Replacing 

Older Manufactured Homes, but Replacements May Have Had 

Other Benefits 15

Agency Comments and Our Evaluation 18

Appendix I GAO Contact and Staff Acknowledgments 19

Tables

Table 1: Comparison of the Three State-Based Manufactured Home 

Replacement Programs 12

Table 2: Average Costs of Replacement Homes for the Three 

Programs Examined 16

Figure

Figure 1: Pre-1976 Manufactured Home 5

Contents 
Page ii GAO-13-373 Manufactured Home Replacement

Abbreviations

DOE Department of Energy

EIA Energy Information Administration

HHS Health and Human Services

HUD Housing and Urban Development

LIHEAP Low Income Home Energy Assistance Program

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Page 1 GAO-13-373 Manufactured Home Replacement

United States Government Accountability Office

Washington, DC 20548

March 28, 2013

The Honorable Ron Wyden

Chairman

Committee on Energy and Natural Resources

United States Senate

The Honorable Jon Tester

United States Senate

According to the Energy Information Administration (EIA),1 the nation’s 

approximately 130 million housing units account for about 23 percent of 

total energy consumption in the United States. Approximately 2 million of 

these housing units are manufactured homes (i.e., mobile homes) that 

were built before 1976, when new standards for energy efficient 

construction went into effect.2

 

1 EIA in the U.S. Department of Energy collects, analyzes, and disseminates a wide range 

of information and data products covering energy production, stocks, demand, imports, 

exports, and prices. EIA then prepares analyses and special reports on topics of current 

interest. 

These older manufactured homes are 

generally considered to have some of the poorest energy efficiency of all 

housing units. Many of the occupants of these homes qualify for federal 

assistance to help pay their energy bills through the U.S. Department of 

Health and Human Services’ (HHS) Low Income Home Energy 

Assistance Program (LIHEAP). LIHEAP helps cover home energy 

expenditures— key components of which are home heating and, in some 

cases, cooling expenditures. In 2011, LIHEAP covered about 8 million 

low-income households through payments to homeowners, occupants, 

landlords, or others. LIHEAP is a federal block grant program in which 

funds are provided to grantees, including states, territories, and tribes and 

2 In 1976, as a result of the National Manufactured Home Construction and Safety 

Standards Act of 1974 (Pub. L. No. 93-383, as amended, 42 U.S.C. § 5401 et seq.), the 

U.S. Department of Housing and Urban Development (HUD) began to issue and enforce 

standards for the construction, design, performance, and installation of manufactured 

homes to ensure that they were more energy efficient, among other things. Consistent 

with these standards, for the purposes of this report, we consider manufactured homes to 

include any home that is constructed and then transported to a site where it is occupied as 

a permanent residence. These definitions are consistent with the federal building code 

administered by HUD and the definitions used by EIA to collect information on housing. 

These codes and definitions do not consider prefabricated structures that are assembled 

on site to be manufactured homes.

 
 

Page 2 GAO-13-373 Manufactured Home Replacement

tribal organizations, based on a number of factors, such as climate and 

income. Grantees then provide LIHEAP funds to eligible beneficiaries. To 

be eligible, household income must be below varying thresholds set by 

the federal government. In fiscal year 2013, Congress appropriated about 

$3 billion for LIHEAP nationwide.

Questions have been raised about whether improving the energy 

efficiency of older manufactured homes or replacing them with newer, 

more energy efficient models would save the federal government money 

by reducing federal spending on LIHEAP. A portion of LIHEAP funds can 

be used to improve the energy efficiency of these homes but, in many 

cases, because of the ways these homes were built, and their sometimes 

poor condition, improving their energy efficiency cannot be accomplished 

cost effectively. Some states have conducted pilot programs to replace 

older manufactured homes; however, LIHEAP funds are statutorily 

prohibited from being used for new construction—which includes 

replacing existing homes.

You asked us to identify and review state-based or other programs that 

have replaced older manufactured homes—particularly those built before 

1976––with newer, more energy efficient models, and the extent to which 

these programs may be cost-effective based on reduced energy costs.

Our objectives for this report were to (1) identify states that have funded 

programs to replace older manufactured homes with more energy 

efficient models and describe these programs; (2) identify challenges, if 

any, these states reported facing in implementing these programs; and 

(3) determine the extent to which these programs resulted in energy 

savings sufficient to offset replacement costs.

To identify which states had replacement programs, we surveyed LIHEAP 

grantees from all 50 states and the District of Columbia and received a 

100 percent response rate. We examined budgets, eligibility criteria, 

beneficiary records, and program evaluations conducted at the state level 

for the three programs we identified. To learn more about these programs 

and identify challenges states reported facing in implementing them, we 

interviewed officials from each state program, as well as representatives 

of organizations and agencies that aided these programs or were 

knowledgeable about the owners of manufactured homes in each state.

We determined early in the course of our work that these programs were 

not designed to save LIHEAP funds, but we examined available 

information about the energy savings that resulted from these programs 

and the extent to which they offset replacement costs, which could inform 

deliberations about whether such programs could help reduce LIHEAP 
 

Page 3 GAO-13-373 Manufactured Home Replacement

costs. State officials provided data spanning about 2 years of operation of 

these programs on funding sources, replacement program costs, and 

energy costs, to the extent that they collected these data. To assess the 

reliability of the data, we compared summary documents with individual 

replacement records, where possible, and discussed the data with state 

officials who compiled it. We determined that the data were sufficiently 

reliable for the purposes of this report.

We conducted this performance audit from February 2012 to March 2013 

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.

A manufactured home is constructed almost entirely in a factory and 

transported to the site where it will be occupied, in contrast to a site-built 

home, which is constructed at the site where it will be occupied. Many 

manufactured homes are rectangular, wood-framed, aluminum-sided, 

single-story structures—commonly known as “mobile homes” or “house 

trailers”—built on a metal frame that can be placed on wheels or on the 

back of a commercial-grade truck and transported to sites where they are 

generally permanently installed. Camping or travel trailers—typically 

smaller structures that can be pulled by car or small truck—are another 

type of manufactured home but are generally designed to be temporary 

dwellings rather than permanent residences.

To implement the National Manufactured Housing Construction and 

Safety Standards Act of 1974, the Department of Housing and Urban 

Development (HUD) began to issue and enforce standards for the 

construction, design, performance, and installation of manufactured 

homes to ensure their quality, durability, affordability, and safety. HUD 

may enforce these standards directly, or they may be enforced at the 

state level. These standards preempt state and local laws that are not 

identical to the federal standards and apply to all manufactured homes 

produced after June 15, 1976.

Before 1976, there were few provisions for ensuring the safety or quality 

of manufactured homes. Many of these older homes were built with little 

or no insulation, thin walls and roofs, uninsulated heating and cooling 

systems, and inefficient louvered windows (known as jalousie windows).

Background 
 

Page 4 GAO-13-373 Manufactured Home Replacement

Further, over time many of these older manufactured homes deteriorated 

to the point that their windows and doors no longer seal tightly to protect 

the interior from the weather. According to the Maine Housing Authority, 

which conducted a study in 2007 of pre-1976 manufactured homes, many 

of these older manufactured homes have depreciated to the point where 

they have no market value. In addition, officials knowledgeable about 

housing and weatherization have stated that some pre-1976

manufactured homes may be unsuitable for weatherization (i.e., making 

long-term energy efficiency improvements). For example, these homes 

typically have roofs made of thin metal sheets seamed together and walls 

built with 2-inch by 2-inch studs; therefore, neither the ceilings nor the 

walls can accommodate insulation. In addition, most of these older 

manufactured homes are beyond the scope of federal and state 

weatherization programs;3 that is, officials responsible for implementing 

these programs have generally determined that such homes have 

become too deteriorated to warrant weatherization or are unsafe for 

weatherization crews to work on. Approximately 80 percent of older 

manufactured homes are in the South and West U.S. Census Regions, as 

are approximately 84 percent of newer manufactured homes.4

 

3 The Department of Energy’s (DOE) Weatherization Assistance Program was created 

under Title IV of the Energy Conservation and Production Act of 1976 (Pub. L. No. 94-985 

§§ 411-422 (1976)). By making long-term energy efficiency improvements, such as 

installing insulation, sealing leaks, and modernizing heating and air conditioning 

equipment, the weatherization program aims to, among other things, increase the energy 

efficiency of homes owned or occupied by low-income persons, reduce their total 

residential energy expenditures, improve their health and safety, and reduce the burden of 

energy prices. DOE makes weatherization program funds available through formulabased grants to agencies in the 50 states, the District of Columbia, U.S. territories, and 

American Indian tribes and tribal organizations. 

Figure 1 

shows an example of a manufactured home built before 1976.

4 The U.S. Census Bureau divides the United States into four regions. Each region 

includes several states: Northeast Region (Maine, New Hampshire, Vermont, 

Massachusetts, Rhode Island, Connecticut, New York, New Jersey, and Pennsylvania); 

Midwest Region (Ohio, Indiana, Illinois, Michigan, Wisconsin, Minnesota, Iowa, Missouri, 

North Dakota, South Dakota, Nebraska, and Kansas); South Region (Delaware, Maryland, 

District of Columbia, Virginia, West Virginia, North Carolina, South Carolina, Georgia, 

Florida, Kentucky, Tennessee, Alabama, Mississippi, Arkansas, Louisiana, Oklahoma, 

and Texas); and West Region (Montana, Idaho, Wyoming, Colorado, New Mexico, 

Arizona, Utah, Nevada, Washington, Oregon, California, Alaska, and Hawaii).
 

Page 5 GAO-13-373 Manufactured Home Replacement

Figure 1: Pre-1976 Manufactured Home

As part of the Energy Policy Act of 2005,5

In addition, Title XXVI of the Omnibus Budget Reconciliation Act of 1981 

established LIHEAP to help low-income households—particularly those 

with the lowest incomes that pay a high proportion of their household 

income on home energy expenditures—pay their home heating and 

Congress formally authorized 

the Energy Star program to identify and promote energy efficient products 

and buildings, including manufactured homes. The Energy Star program 

is designed to identify products that deliver the same or better 

performance as comparable models while using less energy. An Energy 

Star-rated manufactured home is a home that has been designed, 

produced, and installed by the home manufacturer to meet Energy Star 

requirements for energy efficiency. Such requirements include increased 

insulation, tightly sealed air ducts, and Energy Star-qualified windows. 

Each Energy Star-rated manufactured home is inspected while it’s being 

built in the factory and during on-site installation to verify that it meets 

Energy Star standards for energy efficiency.

 

5 Energy Policy Act of 2005, Pub. L. No. 109-58, § 131, 119 Stat. 594, 620 (2005) 

(codified as amended at 42 U.S.C. § 6294a).
 

Page 6 GAO-13-373 Manufactured Home Replacement

cooling costs.6

While the federal government establishes overall LIHEAP guidelines, 

each grantee operates its own program. For example, federal law 

stipulates that a LIHEAP-eligible household’s income generally must not 

exceed the greater of 150 percent of the poverty level or 60 percent of the 

state’s median income. However, LIHEAP grantees may not set their 

maximum income threshold for applicants below 110 percent of the 

poverty level, but they may give priority to those households with the 

highest home energy expenditures or needs in relation to income.

LIHEAP grantees may set additional criteria for allocating LIHEAP funding 

to recipients. For example, they may give priority to households with 

vulnerable occupants, which HHS defines as those who are at least 60 

years old, disabled, or 5 years old or younger.

LIHEAP is a federal block grant program that provides 

funding grants to states and other entities that, in turn, provide the funds 

to eligible households. States, territories, and tribes and tribal 

organizations that wish to assist low-income households in meeting home 

energy expenditures may apply for a LIHEAP block grant. These grantees 

then provide payments on behalf of the eligible households directly to 

energy providers (e.g., utilities), homeowners, occupants, landlords, or 

others. Grantees provide LIHEAP assistance to eligible beneficiaries up 

to the maximum eligible payment for that beneficiary as determined by 

the grantee. Grant funds are distributed in this manner until the grantees’ 

annual funding has been entirely expended or the fiscal year has ended. 

LIHEAP funding, adjusted for inflation, was highest from 1981 to 1986 

and from 2009-2011, witnessing a decline in real terms in the years in 

between these two periods. For 2012, LIHEAP allocated to state grantees 

funding that ranged from about $6.1 million, for Hawaii, to about $375.5 

million, for New York. For 2012, LIHEAP allocated to U.S. territory 

grantees funding that ranged from about $58.7 thousand, for the Northern 

Mariana Islands, to about $4.2 million, for Puerto Rico, and for all tribes 

and tribal organizations funding of about $38.4 million.

LIHEAP does not require grantees to match federal funds, but some 

grantees choose to supplement funds. Grantees also have the flexibility 

to use up to 15 percent of their LIHEAP funds—or up to 25 percent under 

certain circumstances—for state weatherization programs that provide 

funds to improve home energy efficiency, typically by upgrading insulation 

 

6 Pub. L. No. 97-35, 95 Stat. 357 (1981). 
 

Page 7 GAO-13-373 Manufactured Home Replacement

and heating and cooling equipment.7 However, because funds from 

LIHEAP, which assists low-income families in reducing their energy bills 

by making long-term energy efficiency improvements to their homes, 8

In August 2012, we reported

are 

precluded from being used for new construction, they cannot be used to 

replace existing homes with newer, more efficient models.

9 on the home energy costs and LIHEAP 

benefits for occupants of manufactured homes, site-built detached 

homes, site-built attached homes, and apartments of any size.10 We 

reported in 2005, the most recent year for which complete data were 

available, occupants of older manufactured homes paid over twice as 

much on average per square foot for energy—$1.75 per square foot as 

compared with $0.87—as was paid by occupants of detached homes. We 

also reported that annual energy expenditures for older manufactured 

homes––about 906 square feet on average––were about $1,369, 

compared with detached homes––about 2,919 square feet on average—

were about $2,060.11

 

7 Up to 25 percent of LIHEAP funds may be used for weatherization programs with an 

approved waiver from HHS. HHS evaluates states’ requests for these waivers after March 

31 each year. 

Furthermore, we found that in 2005, LIHEAP 

provided more assistance on a per square foot basis—about $0.33 per 

square foot—to occupants of older manufactured homes than to those of 

detached homes—about $0.20 per square foot. However, we also found 

that this assistance covers slightly less of the annual energy expenditures 

8 DOE’s Weatherization Assistance Program assists in making energy efficiency 

improvements such as installing insulation, sealing leaks, and modernizing heating 

equipment and air-conditioning equipment.

9 GAO, Home Energy Assistance for Low-Income Occupants of Manufactured Homes, 

GAO-12-848R (Washington, D.C.: Aug. 24, 2012).

10 EIA defines detached homes as single-family houses as long as they are not divided 

into more than one housing unit and have an independent outside entrance. A singlefamily house is contained within walls extending from the basement (or the ground floor, if 

there is no basement) to the roof. Town houses, row houses, and duplexes are 

considered single-family attached housing units as long as there is no household living 

above another one within the walls extending from the basement to the roof to separate 

the units.

11 Energy expenditures—both per square foot and annually—varied significantly by 

region, reflecting regional differences in the types and costs of fuels commonly used to 

heat and cool homes, income levels, and climate, among other things. 
 

Page 8 GAO-13-373 Manufactured Home Replacement

of occupants of older manufactured homes than occupants of detached 

homes—15 and 17 percent, respectively.12

We identified three states––Maine, Montana, and Washington—that have 

used a combination of state and federal funds to conduct pilot programs 

that replaced older manufactured homes with more energy efficient 

models. The three programs were relatively small, accounting for about 

$4.5 million in spending and responsible for replacing 81 homes, over 

about 2 years. The programs differed in program requirements, the types 

of financing used, and the types of replacement homes used.

Maine. Maine has conducted one replacement pilot and has one ongoing 

program. Maine Housing Authority’s (MaineHousing) replacement pilot—

conducted from November 2008 through August 2010—was the largestscale pilot we identified to replace older manufactured homes. Under the 

pilot, Maine replaced 35 older manufactured homes with new, Energy 

Star-rated manufactured homes. The program was funded with 

approximately $2 million in state funds provided by the Housing 

Opportunities for Maine (Maine HOME) Fund13 along with $148,000 in 

mortgage financing from MaineHousing’s Home Mortgage Program.14

 

12 Based on our analysis of EIA data, we estimate that about 3 percent of LIHEAP funds—

about $57 million—spent in 2005 were used to assist occupants of older manufactured 

homes. For more information see GAO, Home Energy Assistance for Low-Income 

Occupants of Manufactured Homes, 

According to Maine officials, the intent of the program was for the 

beneficiary to secure a 30-year first mortgage at a 5.25 percent interest 

GAO-12-848R. 

13 The Maine HOME Fund was implemented in 1983 to provide a flexible financial

resource to help MaineHousing address the state’s affordable housing needs. The HOME 

Fund is financed by a small tax on the buyers and sellers of real estate when property is 

bought and sold. From 2002 through 2010, the HOME Fund generally received from $5 

million to $9 million annually to, among other things, assist buyers in making their first 

home purchase and finance smaller programs such as making homes safer for children, 

the disabled, and others.

14 MaineHousing’s Home Mortgage Program offered the first mortgage to the extent that 

the participating bank determined that the borrower has the ability to repay such a loan. 

The Home Mortgage Program issued bonds to fund the purchase of these first mortgages 

as a guarantee to the lender in case of a beneficiary defaulting on their mortgage 

payments. Generally, the Maine HOME Fund issues bonds to conduct financing activities 

and repays these bonds through mortgage payments and other revenues produced by the 

projects funded by the HOME program. However, pilot officials told us that the Maine 

HOME funds used for deferred second mortgages were viewed as a grant. 

Three States Have 

Replaced Older 

Manufactured Homes 

with More Energy 

Efficient Models
 

Page 9 GAO-13-373 Manufactured Home Replacement

rate with Home Mortgage Program funds for part of the cost of the 

replacement home and a second deferred mortgage with the Maine 

HOME funds for the balance—deferred in this case meaning that 

beneficiaries made no interest or principal payments if they stayed in the 

home. However, of the 35 beneficiaries, 9 could afford the 30-year first 

mortgage. Loans for these 9 beneficiaries ranged from $8,000 to $40,000, 

which covered an average 24 percent of the cost of their replacement 

homes, with the balance covered by the second, deferred Maine HOME 

mortgage. For the remaining 26 beneficiaries who were unable to afford 

the 30-year first mortgage, the replacement was wholly funded using a 

Maine HOME deferred mortgage. Under either loan structure, no down 

payment or application fee was required. According to Maine officials, 

potential beneficiaries were selected with input from community action 

agencies and were drawn from LIHEAP rolls.15 To be eligible, 

beneficiaries’ manufactured homes were required to have been built 

before 1976 and deemed unsuitable for weatherization.16 Beneficiaries 

were also required to own the land on which the home was situated. The 

first pilot ended in 2010 when all the available funding was used, and 

officials told us they have another pilot ongoing.17

Montana. Montana’s replacement pilot—conducted from December 2008 

through September 2010—replaced 19 manufactured homes with more 

energy efficient models. It was initially conceived not as a pilot, but as an 

ongoing program; however, when private underwriting for loans for 

replacement homes could not be secured, the program was turned into a 

pilot. Under the pilot, beneficiaries received a replacement home using a 

combination of state funds and federal grant funds. Total funding for the 

 

15 Community action agencies are local private and public non profit organizations that 

carry out community action programs, such as LIHEAP, the Weatherization Assistance 

Program, and numerous other federally- and state- funded programs. Community action 

agencies are sometimes referred to as human resource councils or community action 

program agencies.

16 According to a representative from a community action agency in Maine, MaineHousing 

prohibits the use of weatherization funds on pre-1976 manufactured homes. Federal 

funds used for weatherization are generally restricted from being used on manufactured 

homes deemed by weatherization officials to be unsafe or in too poor a condition to be 

weatherized.

17 MaineHousing officials told us they were conducting a $4 million follow-up replacement 

program. As of February 2013, the officials said that the ongoing program had replaced 

eight manufactured homes and was scheduled to continue through the current fiscal year, 

but MaineHousing did not provide any additional information on this ongoing program.
 

Page 10 GAO-13-373 Manufactured Home Replacement

program was approximately $804,448 and consisted of $354,886 from the 

state’s general fund and about $449,562 funded by a combination of 

Montana Board of Housing first-time homebuyer assistance and the U.S. 

HUD’s HOME Investment Partnerships (HUD HOME) Program.18 Funding 

for each replacement home was determined on a case-by-case basis. 

Under the program, money from Montana’s general fund was used to 

provide direct, 15- to 20-year loans at a 2 percent interest rate for all 

program beneficiaries, which beneficiaries were required to repay in full 

with monthly payments. Based on the beneficiaries’ ability to pay, these 

loans ranged from $9,500 to about $20,000. The remainder of the 

financing was provided using HUD HOME and Montana Board of Housing 

funds, which the beneficiary was not required to pay back as long as they 

complied with program rules, such as the requirement that beneficiaries’ 

homes be owner-occupied. Potential beneficiaries were identified through 

community outreach by participating community action agencies based 

on the condition of the homes and household income and the presence of 

vulnerable occupants.19

 

18 The Montana Board of Housing partners with several statewide groups to provide 

assistance in covering certain home purchase costs. This first-time homebuyer down 

payment assistance was used in some cases to finance the purchase of the replacement 

home. 

Unlike Maine, the pilot did not require the 

beneficiary to own the land on which the home was situated but required 

that the beneficiary’s lease on the land exceed the terms of the loan. 

Montana’s pilot was unique among the pilots we reviewed in that nearly 

half of the replacement homes were previously owned manufactured 

homes. Officials told us they chose to purchase previously owned homes 

to reduce costs. In addition, unlike the other state pilots we reviewed, 

Montana’s pilot did not require replacement homes to be Energy Star 

rated; however, according to program officials they were generally 

significantly more energy efficient than the homes they replaced. The pilot 

ended in October 2010, when it had used all the available funds. Montana 

The HUD HOME Investment Partnerships Program is designed exclusively to create 

affordable housing for low-income households. Each year it allocates approximately $2 

billion among the states and hundreds of localities nationwide. HOME funds are awarded 

annually as formula grants to participating jurisdictions. The program allows states and 

local governments to use HOME funds for grants, direct loans, loan guarantees, or other 

forms of credit enhancement, or rental assistance, or security deposits.

19 HHS defines vulnerable households as including an occupant who is 60 years old or 

older, disabled, or 5 years old or younger; LIHEAP requires states to report data on these 

households annually.
 

Page 11 GAO-13-373 Manufactured Home Replacement

officials told us they have no immediate plans to make the pilot an 

ongoing program or to conduct another pilot.

Washington. Washington’s replacement pilot—conducted from July 2008 

through March 2009—replaced 27 manufactured homes with new, 

Energy Star-rated manufactured homes. The pilot was funded by a $2 

million grant funded by HUD’s HOME Program.20 Under the pilot, 

beneficiaries received a deferred, forgivable 15-year loan, which required 

no down payment and no monthly payments on the loan.21

Table 1 provides a comparison of the three replacement programs.

Like 

Montana’s pilot, the beneficiary was not required to own the land on 

which the home was situated; however, unlike Montana, the pilot required 

the beneficiary to have only a 1-year lease on the land. Initially, each 

project was limited to $60,000 total cost; however, in some cases, utility 

upgrades and other costs necessitated granting waivers to the investment 

limit and making amendments to replacement contracts. Like Montana’s 

and Maine’s pilots, potential beneficiaries were selected with input from 

participating community action agencies from a list of occupants who 

were vulnerable (e.g., older individuals and families with young children) 

and whose homes were in need of weatherization assistance but were 

deemed to be beyond repair. The pilot ended in March 2009 when all the 

available funding was used. State officials told us that they would like to 

make the pilot an ongoing replacement program or conduct another pilot, 

but that they have no immediate plans to do so because of a lack of 

funding sources, among other challenges.

 

20 A portion of the $2 million in federal funding was kept in reserve to handle 

contingencies related to the replacement of homes and is not reflected in the average cost 

per replacement appearing later in this report.

21 “Deferred forgivable” in this case means that a beneficiary was not required to make 

any payments and, if the beneficiary of the replacement home stayed in the home for the 

15-year period, the loan was forgiven. If the home was sold before the end of the 15-year 

period, then the balance of the sale was to be paid to the Washington Department of 

Commerce.
 

Page 12 GAO-13-373 Manufactured Home Replacement

Table 1: Comparison of the Three State-Based Manufactured Home Replacement Programs

Program characteristics Maine Montana Washington

Number of manufactured 

homes replaced

35a 19 27

Funding levelb (in dollars) $2 million $449,562 $2 million

Funding source State State and federal (HUD HOME) Federal (HUD HOME)

Approximate duration of 

program

2 yearsc 2 years 8 months

Selection criteria LIHEAP beneficiaries rolls; 

existing home built pre-1976

LIHEAP/Weatherization beneficiaries

and based on home condition

Identified with input from 

community action agencies 

based on home condition

Land ownership of 

replacement site 

Required Not required Not required

Loan terms Either a 30-year mortgage; 

and/or deferred loan

15- to 20-year mortgage at 2 percent 

interest

Deferred forgivable 15-year 

mortgage

Down payment 

requirement

Not required In some cases Not required

Replacement homes type New New and used New

Energy Star rating Required Not required Required

Cost limit per replacement None None $60,000

Source: GAO analysis of state replacement pilot data.

a

This number includes the 35 replacements of the original pilot. It does not include the 8 replaced 

under the ongoing program, as of February, 2013. 

b

Funding level represents the cost to the program, either in the form of a grant or the amount financed 

as a deferred, forgivable loan, and it does not include the portion of the program costs that the states 

expect to be paid back. 

c

Maine’s pilot replacement program lasted 2 years. They currently have a follow-up pilot under way.

Officials from all three state replacement pilot programs and 

representatives of organizations and agencies that aided these programs 

told us that they faced three key types of challenges: (1) many potential 

beneficiaries were not eligible to participate; (2) some potential 

beneficiaries were not willing to participate; and (3) other logistical 

challenges, such as finding suitable replacement homes within a 

reasonable distance to transport them to beneficiaries, which resulted in 

higher costs.

Specifically, officials and representatives of organizations and agencies 

that aided these programs told us that many potential beneficiaries were 

not eligible to participate for three key reasons:

States Reported 

Facing Challenges, 

Including Difficulty 

Finding Potential 

Beneficiaries Who 

Were Eligible and 

Willing to Participate
 

Page 13 GAO-13-373 Manufactured Home Replacement

• Liens on their property. Officials in Maine with an agency helping to 

identify potential participants told us that their program stipulated that 

potential beneficiaries could not have any liens—such as outstanding 

property taxes or sewage fees, or foreclosure proceedings—on the 

property that would receive the replacement home. They told us that a 

property with a lien had a higher risk of foreclosure. These officials 

told us that, as a result, many potential beneficiaries were disqualified 

due to liens on their properties.

• Did not own or have a long-term lease for the land. In Maine, potential 

beneficiaries were required to own their properties and, in Montana, 

they were required to have long-term leases. Officials from these 

programs told us that these policies were intended to improve the 

likelihood of beneficiaries staying in their replacement homes. 

However, these officials told us that many potential beneficiaries were 

disqualified because they lived in manufactured home parks, where 

lots are typically held on shorter-term leases.

• Poor credit histories. Officials from all states told us that, in some 

cases, potential beneficiaries’ credit histories, which made them 

ineligible for any loan, were so poor that it was deemed too risky to 

enroll them in the replacement program.

In addition, these officials and representatives of organizations and 

agencies that aided these programs told us that, in the pool of eligible 

potential beneficiaries, some were unwilling to participate because they 

were:

• Mistrustful of program’s legitimacy. Some potential beneficiaries were 

doubtful that such a program would be legitimate. For example, one 

organization assisting with the program in Montana told us that they 

spent a lot of time in the early stages of the replacement program 

convincing potential beneficiaries that the pilot was not a scam. In 

Washington and Maine, where some community action agencies had 

already replaced dilapidated homes, they told us that trust in the 

larger program was not a significant issue.

• Unwilling to take on any debt. One official in Maine and an 

organization assisting with the program in Montana told us that some 

potential beneficiaries, especially among the elderly population, were 

just not willing to take on new debt regardless of the poor condition of 

their home, and there were no loan terms under which they would 

accept a replacement home.
 

Page 14 GAO-13-373 Manufactured Home Replacement

• Unwilling to move from their current location. Older manufactured 

homes are typically smaller than new ones, so many replacement 

homes were larger than the homes they replaced. In some cases––

particularly when homes were located in older manufactured home 

parks––the replacement homes would not fit on the lots. In some 

cases, organizations assisting in programs told us that they were able 

to find another location, but it would have required a move to a new 

school district, which caused some potential beneficiaries with schoolaged children to choose not to participate in the program.

• Unwilling or unable to pay tax increases. Some potential beneficiaries 

may be unwilling, or unable, to pay the increased property taxes that 

would result from the increased value of their homes. For example, a 

Maine official described a situation where a potential beneficiary’s 

home was built in 1957 and had no taxable value, so property taxes 

were assessed solely on the value of the land. After replacement, the 

sales value of the new home would be added to the land value, and 

the beneficiary’s property taxes would have tripled. Because this 

potential beneficiary could not afford this tax increase, he or she 

chose not to participate.

Officials from all three pilots also identified other challenges that were 

primarily logistical in nature. For example, a representative assisting the 

Montana program told us that it was difficult and time-consuming to find 

suitable replacement homes within a reasonable distance to transport 

them to beneficiaries. In addition, in Maine, where the homes to be 

replaced were required to have been built before 1976, officials told us 

they faced difficulties in confirming the date of construction of some 

homes. Officials from all three pilots told us that some of these logistical 

challenges would translate into higher costs. For example, officials in 

Washington and Montana told us that many of their administrative costs 

were not covered by the program funding. These officials told us they 

were willing to take on these costs under a pilot, but that their 

administrative costs would have to be covered if the pilot became an 

ongoing program. A representative assisting the Montana program told us 

that some replacement homes were damaged during transport, leading to 

additional costs. In addition, representatives knowledgeable of the 

replacements in all three states told us that some replacement homes 

required unforeseen additional ad hoc construction such as wheelchair 

ramps or updates to utilities.
 

Page 15 GAO-13-373 Manufactured Home Replacement

In the three replacement pilot programs we examined, the energy savings 

alone were not sufficient to fully offset the costs of replacing older 

manufactured homes, but program officials told us that these programs 

were not specifically focused on doing so and that they had health and 

welfare benefits for beneficiaries. Specifically, the two programs that 

maintained information on energy use and estimated savings spent an 

average of about $56,119 per unit to replace each older manufactured 

home and estimated about $489 in annual energy savings per home.22

The average cost of replacement homes varied across the three 

programs we examined. The least costly program we examined was 

Montana’s, which replaced some older manufactured homes with used, 

but newer and more energy efficient models, with an average cost of 

about $42,339 per home. Maine’s replacement program was the most 

costly but replaced homes with new Energy Star-qualifying homes, and 

cost about $62,024 per home. Officials from all three programs noted that 

the costs of a specific replacement can vary widely depending on whether 

other site-specific steps are required, such as installing foundations and 

upgrading utilities. Because of the varied costs, and the varying extent to 

which programs tracked and recorded those costs, we were not able to 

consistently compare total replacement costs across programs. Table 2 

provides a comparison of the number of replacements, cost per 

manufactured home, and estimated annual energy savings, where data 

were available.

 

22 These averages reflect data for the replacement units in the two programs that 

maintained data on energy usage and/or estimated energy usage—15 units in Montana 

and 35 in Maine.

Energy Savings Alone 

Did Not Fully Offset 

the Costs of Replacing 

Older Manufactured 

Homes, but 

Replacements May 

Have Had Other 

Benefits 
 

Page 16 GAO-13-373 Manufactured Home Replacement

Table 2: Average Costs of Replacement Homes for the Three Programs Examined

Program Characteristics Maine Montana Washington

Number of manufactured homes replaced 35 19 27

Average cost per replacementa $62,024 $42,339 $47,539

Estimated annual energy savings per home $240 $1,070b Not available

Source: GAO analysis of state replacement pilot data.

Note: We calculated average costs using the total financing costs for each replacement, including the 

portion of the financing which—in the cases of Maine and Montana—the state expects to be paid 

back.

a

Costs per replacement include the cost of the home and some administrative costs (e.g., loan 

origination fees); however, it does not include other costs such as for site-preparation or septic 

system upgrades.

b

Montana maintained information on estimated energy savings for 15 of the replacements it 

completed, and this is the average savings from those replacements.

Officials reported that the replacement homes in these programs were 

significantly more energy efficient, resulting in improved quality of life for 

the beneficiaries and significantly lower projected energy costs on a 

square foot basis; however, officials in all three states said these energy 

savings alone were generally not sufficient to pay for the cost of the 

replacement over a typical loan period. In the case of Maine and 

Montana, where some beneficiaries paid a monthly payment toward the 

cost of their replacement homes, those payments may slightly reduce the 

total cost of the program. However, in both cases, officials told us that 

those payments were so small that they had little impact in offsetting the 

overall total replacement costs across the program, though they may 

have offset the costs of a specific replacement.23

In addition, we analyzed costs and projected energy savings for individual 

replacement homes where data were available, and we found the data 

confirmed that the energy savings were not sufficient to recover the costs 

 

23 Officials told us that, in an ongoing replacement program, it may be possible to put 

these funds in a revolving fund to pay for future replacements, but that pilot was too smallscale for the payments to have much of an impact. 
 

Page 17 GAO-13-373 Manufactured Home Replacement

of replacing the homes over a typical loan period.24

In addition, these state-funded replacement programs were not designed 

to help save LIHEAP funds. Because the eligibility for and level of 

LIHEAP benefits are determined primarily by income, replacing older 

manufactured homes does not eliminate the beneficiaries’ eligibility for 

LIHEAP benefits. State officials informed us that, in virtually all cases, the 

beneficiaries of the replacement programs continued to qualify for and 

receive LIHEAP benefits. As a result, the replacement of older 

manufactured homes with newer, more efficient homes may not eliminate 

the need for assistance to recipients in paying their energy bills.

For example, in 

Montana—where the average replacement cost was $42,339—the 

average projected energy savings on a replacement home were 

estimated to be $1,070 per year. In Maine—where the average cost was

$62,024, the post-replacement energy savings were approximately $240 

per year. Newer manufactured homes are often larger, so the total annual 

home energy costs increased for some beneficiaries; which may account 

for the lower average energy savings in Maine, where all replacement 

homes were new. For example, there were six cases in Maine where 

annual home energy costs increased by at least $300 per year after 

replacement, and three of those six cases increased by more than $500 

per year. According to Maine officials, these could have been cases 

where a beneficiary’s existing one-bedroom home was replaced by a 

new, two- or three-bedroom home. Nonetheless, there were eight cases 

in Maine where annual energy costs decreased by more than $500. 

Officials overseeing the program in Washington state did not track 

estimated or actual energy savings and, as a result, we were not able to 

examine those figures for Washington. Washington state officials told us 

they did not collect data on home energy costs before and after 

replacement because the programs were focused on improving housing 

and not on energy savings.

 

24 Projected energy savings in Maine are based on individual annual energy costs before 

and after replacement. In the Montana pilot, officials from one participating agency 

estimated the annual energy savings for seven replacement homes based on expected 

energy costs of the replacement model compared with annual energy cost before 

replacement, which we used in our analysis of replacement costs. However, in 

Washington, state officials told us they did not collect data on home energy costs before 

and after replacement because the programs were focused on improving housing and not 

on energy savings. Data on estimated annual energy savings were generally one-time 

estimates provided by program officials or participating agencies and not verified by GAO.
 

Page 18 GAO-13-373 Manufactured Home Replacement

Nonetheless, state officials told us that these replacement programs were 

not specifically designed for energy savings to offset replacement costs, 

and some officials told us that energy efficiency gains were secondary to 

the health and welfare benefits of getting occupants into safer, more 

weather-tight manufactured homes. Program officials cited less 

measureable benefits of replacement, including fewer trips to the doctor, 

greater physical security; improved safety in the home, especially for 

vulnerable beneficiaries; and strengthened community identity. For 

example, they told us that beneficiaries of replacement homes reported 

being sick less often, reducing the beneficiary’s health bills and—as all 

beneficiaries were below the poverty level—public health costs. State 

program officials we spoke with had not quantified these benefits.

We provided a draft of this report for review and comment to HHS. HHS 

provided technical and clarifying comments, which we incorporated as 

appropriate.

We are sending copies of this report to the appropriate congressional 

committees, the Secretary of Health and Human Services, and other 

interested parties. In addition, this report is available at no charge on the 

GAO website at http://www.gao.gov.

If you or your staff members have any questions about this report, please 

contact me at (202) 512-3841 or ruscof@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

the last page of this report. GAO staff members who made major 

contributions to this report are listed in appendix I.

Frank Rusco

Director, Natural Resources and Environment

Agency Comments 

and Our Evaluation
Appendix I: GAO Contact and Staff 

Acknowledgments

Page 19 GAO-13-373 Manufactured Home Replacement

Frank Rusco, (202) 512-3841 or ruscof@gao.gov

In addition to the contact named above, GAO staff who made key 

contributions to this report were Jon Ludwigson, Assistant Director; 

Michael Kendix; Alison O’Neill; Cheryl Peterson; Kelly Rubin; James W. 

Turkett; and Jarrod West.

Appendix I: GAO Contact and Staff 

Acknowledgments 

GAO Contact

Staff 

Acknowledgments 

(361408)
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