The Veterans Administration will guarantee loans for some manufactured houses on the same terms as loans for traditional, site-built homes starting this week.
Representatives of the manufactured-housing industry, which built one-third of all new homes in the United States last year, hailed the move as another step toward gaining widespread acceptance for manufactured homes, once lumped together with mobile homes and spurned by communities, consumers and lenders.
According to the new regulations published this week, the VA will guarantee home mortgages for manufactured houses so long as the homeowner owns the property underneath it as well, said Judith A. Caden, a VA loan specialist. Under previous VA rules, an owner of a manufactured home was not eligible for a home mortgage, but instead had to apply for a personal property loan with tougher terms.
The VA guarantees personal property loans at 15 percent interest and a 20-year payback rate, whereas the VA will guarantee a home mortgage or real property loan at 12 1/2 percent interest over 30 years, Caden said.
"So, it will be real savings for those eligible," she said. Owners of manufactured homes who now hold personal property loans may roll over to the newly allowed, lower-term real property loans, she said.
However, Caden said, the new regulations do not apply to manufactured homes on rented property -- traditional trailer parks. "Those homes are still considered personal property legally by tax laws, local laws and the industry in general," she said. "Mobile-park residents are not eligible for real estate loans."
The VA loan change was voted into law by Congress in March, but it took the administration several months to write the necessary regulations, Caden said. The VA law followed on the heels of a federal law passed in 1983 allowing the Federal Housing Administration to insure mortgages for manufactured homes.
Under the FHA regulations, a manufactured home must be placed on a permanent foundation on privately owned land and be certifiably energy-efficient before the owner can qualify for the insurance, said D. Earl Jones, FHA chief engineer.
"There is a slow but general acceptance of manufactured houses," he said. "The industry has been lobbying very hard."
Leonard S. Homa, counsel to the Maryland Manufactured Housing Association, said the new VA law will bolster the public's confidence in manufactured homes as well as make them more affordable.
"A buyer with doubts about a manufactured home will feel better knowing a goverment agency like the VA has accepted them and are even willing to guarantee it," he said.
Homa said the industry launched an extensive lobbying effort to get the federal laws changed because manufacturers face stiff compitition in the real estate market from developers with traditional, site-built homes. "It seemed unfair that we couldn't get parity with a site-built home," he said. "This is still a relatively new industry. It needs things like this to keep it competitive."
Caden said the VA guaranteed 198,431 home loans in 1984 alone and 11,935 loans for manufactured homes under the old rules during the same period. She said the VA has not estimated how many people will take advantage of the new regulations, but she said her office has been surprised by the number of people who have called to ask about the change.
"We've had developers from Cheyenne, Wyo., and lots from Alabama call us," she said. "They are really ready to go to market on this."
Caden said that the VA, like the FHA, changed the laws in response to demands of a growing industry.
"It is becoming more prevalent to put manufactured homes on private land; whole developments are springing up," she said. "We are changing as the business changes."
Caden said that among tasks the VA faced in changing the regulations was deleting the term "mobile homes" from relevant regulations and replacing it with "manufactured housing."
"It's like when you had to start saying 'women' instead of 'girls,' " she said. "This industry really wants to be taken seriously."