II 

109TH CONGRESS 

1ST SESSION S. 2123 

To modernize the manufactured housing loan insurance program under title 

I of the National Housing Act. 

IN THE SENATE OF THE UNITED STATES 

DECEMBER 16, 2005 

Mr. ALLARD (for himself, Mr. BAYH, and Mr. MARTINEZ) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs 

A BILL 

To modernize the manufactured housing loan insurance 

program under title I of the National Housing Act. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘FHA Manufactured 

5 Housing Loan Modernization Act of 2005’’. 

6 SEC. 2. FINDINGS AND PURPOSES. 

7 (a) FINDINGS.—The Congress finds that— 

8 (1) manufactured housing plays a vital role in 

9 providing housing for low- and moderate-income 

10 families in the United States; 
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1 (2) the FHA title I insurance program for man2 ufactured home loans traditionally has been a major 

3 provider of mortgage insurance for home-only trans4 actions; 

5 (3) the manufactured housing market is in the 

6 midst of a prolonged downturn which has resulted in 

7 a severe contraction of traditional sources of private 

8 lending for manufactured home purchases; 

9 (4) during past downturns the FHA title I in10 surance program for manufactured homes has filled 

11 the lending void by providing stability until the pri12 vate markets could recover; 

13 (5) in 1992, during the manufactured housing 

14 industry’s last major recession, over 30,000 manu15 factured home loans were insured under title I; 

16 (6) in 2004, fewer than 2,000 manufactured 

17 housing loans were insured under title I; 

18 (7) the dramatic reduction in the use of the 

19 title I program is due primarily to certain structural 

20 problems of the program, which have resulted in re21 fusal by the Government National Mortgage Associa22 tion (Ginnie Mae) to accept new participants into 

23 the program since 1989, contributing to higher loan 

24 costs and fewer loan originators; 
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1 (8) the loan limits for title I manufactured 

2 housing loans have not been adjusted for inflation 

3 since 1992; and 

4 (9) these problems with the title I program 

5 have resulted in an atrophied market for manufac6 tured housing loans, leaving American families who 

7 have the most difficulty achieving homeownership 

8 without adequate financing options for home-only 

9 manufactured home purchases. 

10 (b) PURPOSES.—The purposes of this Act are— 

11 (1) to provide adequate funding for FHA-in12 sured manufactured housing loans for low- and mod13 erate-income homebuyers during all economic cycles 

14 in the manufactured housing industry; 

15 (2) to modernize the FHA title I insurance pro16 gram for manufactured housing loans to enhance 

17 participation by Ginnie Mae and the private lending 

18 markets; 

19 (3) to adjust the artificially low loan limits for 

20 title I manufactured home loan insurance to reflect 

21 the increase in costs since such limits were last in22 creased in 1992 and to index the limits to inflation; 

23 and 
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1 (4) to ensure that the title I manufactured 

2 housing loan insurance program requires no credit 

3 subsidy from the Federal Government. 

4 SEC. 3. EXCEPTION TO LIMITATION ON FINANCIAL INSTI5 TUTION PORTFOLIO. 

6 The second sentence of section 2(a) of the National 

7 Housing Act (12 U.S.C. 1703(a)) is amended by striking 

8 ‘‘In no case’’ and inserting the following: ‘‘Other than in 

9 connection with a manufactured home or a lot on which 

10 to place such a home (or both), in no case’’. 

11 SEC. 4. LOAN-TO-VALUE RATIO AND DOWNPAYMENT RE12 QUIREMENT. 

13 Section 2(b) of the National Housing Act (12 U.S.C. 

14 1703(b)) is amended by adding at the end the following 

15 new paragraph: 

16 ‘‘(8) LOAN-TO-VALUE AND DOWNPAYMENT LIMITA17 TIONS ON MANUFACTURED HOUSING LOANS.—No insur18 ance may be granted under this section to any such finan19 cial institution with respect to any obligation representing 

20 any such loan, advance of credit, or purchase by it in con21 nection with a manufactured home or a lot on which to 

22 place a manufactured home (or both) unless such loan or 

23 advance of credit, or any loan or advance of credit rep24 resented by such an obligation— 
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1 ‘‘(A) involves a principal obligation not exceed2 ing the sum of— 

3 ‘‘(i) the amount of the mortgage insurance 

4 premium paid by the borrower at the time that 

5 the loan, advance of credit, or purchase is 

6 made; and 

7 ‘‘(ii) 95 percent of the appraised value of 

8 the manufactured home or lot on which to place 

9 a manufactured home (or both) for which the 

10 loan or advance of credit is made; and 

11 ‘‘(B) is made to a borrower who has paid in 

12 cash or its equivalent, on account of the manufac13 tured home or lot on which to place a manufactured 

14 home (or both) for which the loan or advance of 

15 credit is made, at least 3 percent of the Secretary’s 

16 estimate of the costs of acquisition, alteration, im17 provements, lot preparation, or other eligible activity 

18 for which the loan or advance of credit was made 

19 (excluding the amount of the mortgage insurance 

20 premium paid by the borrower at the time that the 

21 loan or advance of credit is made).’’. 

22 SEC. 5. INSURANCE BENEFITS. 

23 Section 2(b) of the National Housing Act (12 U.S.C. 

24 1703(b)), as amended by section 4, is further amended 

25 by adding at the end the following new paragraph: 
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1 ‘‘(9) INSURANCE BENEFITS FOR MANUFACTURED

2 HOUSING LOANS.— 

3 ‘‘(A) IN GENERAL.—Any contract of insurance 

4 with respect to loans, advances of credit, or pur5 chases in connection with a manufactured home or 

6 a lot on which to place a manufactured home (or 

7 both) for a financial institution that is executed 

8 under this title before or after the date of the enact9 ment of the FHA Manufactured Housing Loan Mod10 ernization Act of 2005 by the Secretary shall be con11 clusive evidence of the eligibility of such financial in12 stitution for insurance, and the validity of any con13 tract of insurance so executed shall be incontestable 

14 in the hands of the bearer from the date of the exe15 cution of such contract, except for fraud or mis16 representation on the part of such institution. 

17 ‘‘(B) LOSSES.—With respect only to a loan, ad18 vance of credit, or purchase in connection with a 

19 manufactured home or a lot on which to place such 

20 a home (or both), the Secretary shall otherwise pro21 vide for the payment of insurance benefits under the 

22 provisions of this section for losses on such loans, 

23 advances, or purchases according to the same terms, 

24 conditions, procedures, and requirements applicable 

25 under section 204 to a mortgage insured under sec-
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1 tion 203 covering a manufactured home (and the 

2 site on which it is located).’’. 

3 SEC. 6. MAXIMUM LOAN LIMITS. 

4 (a) DOLLAR AMOUNTS.—Section 2(b)(1) of the Na5 tional Housing Act (12 U.S.C. 1703(b)(1)) is amended— 

6 (1) in subparagraph (A)(ii), by striking 

7 ‘‘$17,500’’ and inserting ‘‘$24,500’’; 

8 (2) in subparagraph (C) by striking ‘‘$48,600’’ 

9 and inserting ‘‘$68,040’’; 

10 (3) in subparagraph (D) by striking ‘‘$64,800’’ 

11 and inserting ‘‘$90,720’’; 

12 (4) in subparagraph (E) by striking ‘‘$16,200’’ 

13 and inserting ‘‘$22,680’’; and 

14 (5) by realigning subparagraphs (C), (D), and 

15 (E) 2 ems to the left so that the left margins of 

16 such subparagraphs are aligned with the margins of 

17 subparagraphs (A) and (B). 

18 (b) ANNUAL INDEXING.— 

19 (1) METHOD OF INDEXING.—Section 206A of 

20 the National Housing Act (12 U.S.C. 1712a) is 

21 amended— 

22 (A) in subsection (a)— 

23 (i) by redesignating paragraphs (1) 

24 through (7) as paragraphs (2) through (8), 

25 respectively; and 
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1 (ii) by inserting before paragraph (2) 

2 (as so redesignated) the following new 

3 paragraph: 

4 ‘‘(1) subparagraphs (A)(ii), (C), (D), and (E) 

5 of section 2(b)(1) (12 U.S.C. 1703(b)(1));’’. 

6 (2) 2004 AND 2005 ADJUSTMENTS.—Not later 

7 than 30 days after the date of the enactment of this 

8 Act, the Federal Reserve Board shall calculate the 

9 adjustments for 2004 and 2005 pursuant to para10 graph (1) of section 206A(a) of the National Hous11 ing Act (12 U.S.C. 1712a(a)(1)), as added by the 

12 amendment made by paragraph (1) of this sub13 section, and shall notify the Secretary of Housing 

14 and Urban Development pursuant to subsection (b) 

15 of such section 206A. Such adjustments shall take 

16 effect upon the date of such notification. 

17 (3) TECHNICAL AND CONFORMING CHANGES.— 

18 Section 2(b)(1) of the National Housing Act (12 

19 U.S.C. 1703(b)(1)), as amended by subsection (a), is 

20 further amended— 

21 (A) by striking ‘‘No’’ and inserting ‘‘Ex22 cept as provided in the last sentence of this 

23 paragraph and in paragraph (8), no’’; and 

24 (B) by adding after and below subpara25 graph (G) the following flush language: 
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1 ‘‘The Secretary shall, by regulation, increase the dol2 lar amount limitations in subparagraphs (A)(ii), (C), 

3 (D), and (E) (as such limitations may have been ad4 justed in accordance with section 206A of this 

5 Act).’’. 

6 SEC. 7. INSURANCE PREMIUMS. 

7 Section 2(f) of the National Housing Act (12 U.S.C. 

8 1703(f)) is amended— 

9 (1) by inserting ‘‘(1) IN GENERAL.—’’ after 

10 ‘‘(f)’’; and 

11 (2) by adding at the end the following new 

12 paragraph: 

13 ‘‘(2) MANUFACTURED HOME LOANS.—Notwith14 standing paragraph (1), in the case of a loan, ad15 vance of credit, or purchase in connection with a 

16 manufactured home or a lot on which to place such 

17 a home (or both), the premium charge for the insur18 ance granted under this section shall be paid by the 

19 borrower under the loan or advance of credit, as fol20 lows: 

21 ‘‘(A) At the time of the making of the 

22 loan, advance of credit, or purchase, a single 

23 premium payment in an amount not to exceed 

24 2.25 percent of the amount of the original in25 sured principal obligation. 
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1 ‘‘(B) In addition to the premium under 

2 subparagraph (A), annual premium payments 

3 during the term of the loan, advance, or obliga4 tion purchased in an amount not exceeding 1.0 

5 percent of the remaining insured principal bal6 ance (excluding the portion of the remaining 

7 balance attributable to the premium collected 

8 under subparagraph (A) and without taking 

9 into account delinquent payments or prepay10 ments). 

11 ‘‘(C) Premium charges under this para12 graph shall be established in amounts that are 

13 sufficient, but do not exceed the minimum 

14 amounts necessary, to maintain a negative cred15 it subsidy for the program under this section 

16 for insurance of loans, advances of credit, or 

17 purchases in connection with a manufactured 

18 home or a lot on which to place such a home 

19 (or both), as determined based upon risk to the 

20 Federal Government under existing under21 writing requirements.’’. 

22 SEC. 8. REVISION OF UNDERWRITING CRITERIA. 

23 (a) IN GENERAL.—Section 2(b) of the National 

24 Housing Act (12 U.S.C. 1703(b)), as amended by the pre-
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1 ceding provisions of this Act, is further amended by add2 ing at the end the following new paragraph: 

3 ‘‘(10) FINANCIAL SOUNDNESS OF MANUFACTURED

4 HOUSING PROGRAM.—The Secretary shall establish such 

5 underwriting criteria for loans and advances of credit in 

6 connection with a manufactured home or a lot on which 

7 to place a manufactured home (or both), including such 

8 loans and advances represented by obligations purchased 

9 by financial institutions, as may be necessary to ensure 

10 that the program under this title for insurance for finan11 cial institutions against losses from such loans, advances 

12 of credit, and purchases is financially sound.’’. 

13 (b) TIMING.—Not later than the expiration of the 6- 

14 month period beginning on the date of the enactment of 

15 this Act, the Secretary of Housing and Urban Develop16 ment shall revise the existing underwriting criteria for the 

17 program referred to in paragraph (10) of section 2(b) of 

18 the National Housing Act (as added by subsection (a) of 

19 this section) in accordance with the requirements of such 

20 paragraph. 

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