304: Factory-Built Housing

Factory-built housing includes manufactured homes, modular homes, and other types of prefabricated housing. We purchase mortgages secured by factory-built housing that is designed as a one-family dwelling, assumes the characteristics of site-built housing, and is legally classified as real property. We require the factory-built home to be permanently affixed to a foundation system that is appropriate for the soil conditions of the site and designed to meet local and state codes.

The appraiser must identify the type of factory-built housing that is to be appraised since that is an important criteria in defining the appropriate market area and in selecting comparable properties.

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A manufactured home must be built (and installed) under the Federal Manufactured Home Construction and Safety Standards that HUD established in 1976, as they were in force at the time the home was manufactured. This can be verified by the presence of a HUD Data Plate/Compliance Certificate that is located inside the home. The appraiser must include as part of his or her appraisal report some of the information that is included on the certificate -- the manufacturer's name, the trade/model name, the year of manufacture, and the serial number.

•	A modular home must be built under the Uniform Building Code that is administered by the state agency that is responsible for adopting and administering building code requirements for the state in which the modular home is installed.

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A factory-built home that is any other type of prefabricated, panelized, or sectional housing does not have to satisfy either HUD's Federal Manufactured Home Construction and Safety Standards or the Uniform Building Codes that are adopted and administered by the state in which the home is installed. The home must conform with local building codes in the area in which it will be permanently located.

We do not have minimum requirements for width, size, roof pitch, or any other specific construction detail for manufactured homes, modular homes, or any other types of factory-built homes. Rather, each home must have sufficient square footage and room dimensions to be acceptable to typical purchasers in the subject market area. Since quality can account for large differences in the values of factory-built homes, it is important for the appraiser to become familiar with the features that affect the quality of a factory-built home so that the information can be included in the appraisal report (if needed) to support his or her opinion of value.

The process of selecting comparable sales for factory-built housing is generally the same as that for selecting comparable sales for site-built housing. The appraiser must address both the marketability and comparability of a manufactured home by selecting comparable sales of similar manufactured homes -- comparing single-width homes to single-width homes, multiwidth homes to multiwidth homes, etc. If at least three comparable sales of similar manufactured homes are not available, the appraiser may use either site-built housing or a different type of factory-built housing as one of the comparable sales. When that is the case, the appraiser must use at least two comparable sales of similar manufactured homes, explain why site-built housing or a different type of factory-built housing is being used for the one comparable sale, and make (and support) appropriate adjustments in the appraisal report. An appraiser who is unable to locate sales of manufactured homes that are truly comparable to the subject property may decide that it is appropriate to use as comparables either older sales of similar manufactured homes or sales of similar manufactured homes that are located in a competing market so that he or she can establish a baseline for the "sales comparison analysis" and determine sound adjustments to reflect the differences between the comparable sales that are available and the subject property. The appraiser should analyze and report a sufficient number of comparable sales to support his or her opinion of value (which may require the use of more than three comparable sales in some cases). The appraiser must not "create" comparable sales by combining vacant land sales with the contract purchase price of the home (although he or she may use this type of information as additional supporting documentation). If the appraiser is unable to develop a reliable appraisal based on at least two comparable sales of similar manufactured homes, the mortgage is not eligible for delivery to us.

We also require the appraiser to address both the marketability and comparability of modular homes and other types of factory-built housing. When the subject property is modular, prefabricated, panelized, or sectional housing, we do not require that one or more of the comparable sales be the same type of factory-built housing (although using comparable sales of similar types of homes generally enhances the reliability of the appraiser's opinion of value). We do expect the appraiser to include in the appraisal report the most appropriate comparable sales data to support his or her opinion of value for the subject property.