Rule2024-23506
Single Family Housing Section 502 Direct and Guaranteed Manufactured Housing Pilots
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
October 11, 2024
Effective
November 4, 2024
Issuing agencies
Agriculture DepartmentRural Housing Service
Abstract
The Rural Housing Service (RHS or the Agency), a Rural Development agency of the United States Department of Agriculture (USDA), is issuing this notification to extend the period to waive two regulatory requirements for the Section 502 Direct and Guaranteed Manufactured Housing program, while the Agency completes the rulemaking to remove regulatory barriers to assist eligible applicants by improving the ease of the pilot program (pilot) use for very low to moderate-income homeowners that seek to purchase more affordable housing. This continues to support the current Administration's Housing Supply Action Plan which seeks to boost new financing mechanisms to build and supply quality affordable housing units. This document briefly discusses the waivers the Agency intends to continue and provides contact information for additional details about the pilot.
Full Text
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<title>Federal Register, Volume 89 Issue 198 (Friday, October 11, 2024)</title>
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[Federal Register Volume 89, Number 198 (Friday, October 11, 2024)]
[Rules and Regulations]
[Pages 82484-82486]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-23506]
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DEPARTMENT OF AGRICULTURE
Rural Housing Service
7 CFR Parts 3550 and 3555
[Docket No. RHS-24-SFH-0031]
Single Family Housing Section 502 Direct and Guaranteed
Manufactured Housing Pilots
AGENCY: Rural Housing Service, USDA.
ACTION: Notification of extension of waivers.
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SUMMARY: The Rural Housing Service (RHS or the Agency), a Rural
Development agency of the United States Department of Agriculture
(USDA), is issuing this notification to extend the period to waive two
regulatory requirements for the Section 502 Direct and Guaranteed
Manufactured Housing program, while the Agency completes the rulemaking
to remove regulatory barriers to assist eligible applicants by
improving the ease of the pilot program (pilot) use for very low to
moderate-income homeowners that seek to purchase more affordable
housing. This continues to support the current Administration's Housing
Supply Action Plan which seeks to boost new financing mechanisms to
build and supply quality affordable housing units. This document
briefly discusses the waivers the Agency intends to continue and
provides contact information for additional details about the pilot.
DATES: The effective date of the two regulatory waivers is November 4,
2024. The duration of the pilot is anticipated to continue until May 1,
2025, or the date the Updating Manufactured Housing Provisions Final
Rule is published and effective, whichever comes first. Additionally,
the RHS may extend the pilot (with or without modifications) or
terminate it depending on the workload and resources (i.e., budget and
other considerations) required to administer the program, feedback from
the public, and the effectiveness of the program. If the pilot is
extended or terminated, the RHS will notify the public through a
document published in the Federal Register.
FOR FURTHER INFORMATION CONTACT: Stephanie Freeman, Finance and Loan
Analyst, Policy, Analysis, and Communications Branch, Single Family
Housing Guaranteed Loan Division, Rural Development, U.S. Department of
Agriculture, Email: <a href="/cdn-cgi/l/email-protection#f7848392879f96999e92d9918592929a9699b782849396d9909881"><span class="__cf_email__" data-cfemail="34474051445c555a5d511a5246515159555a74414750551a535b42">[email protected]</span></a>; Phone: (314) 457-6413
and Jeremy Anderson, Finance and Loan Analyst, Single Family Housing
Direct Loan Division, Rural Development, U.S. Department of
Agriculture, Email: <a href="/cdn-cgi/l/email-protection#8ce6e9fee9e1f5a2ede2e8e9feffe3e2ccf9ffe8eda2ebe3fa"><span class="__cf_email__" data-cfemail="fa909f889f9783d49b949e9f88899594ba8f899e9bd49d958c">[email protected]</span></a>; Phone: (202) 690-3971.
SUPPLEMENTARY INFORMATION:
Authority: Title V, Section 502 of the Housing Act of 1949, as
amended; 42 U.S.C. 1472.
Background
The RHS is committed to helping improve the economy and quality of
life in rural areas by offering a variety of programs. The Agency
offers loans, grants, and loan guarantees to help create jobs, expand
economic development, and provide critical infrastructure investments.
RHS also provides technical assistance loans and grants by partnering
with agricultural producers, cooperatives, Indian tribes, non-profits,
and other local, State, and Federal agencies.
Affordable housing is essential to the vitality of communities in
rural America. Rural Development's Single Family Housing Programs give
families and individuals the opportunity to purchase, build, repair
their existing home, or to refinance their current mortgage under
certain criteria. Eligibility for these loans, loan guarantees, or
grants is based on income which varies according to the average median
income for each eligible rural area.
The objective of the Section 502 Direct Loan Program under 7 CFR
part 3550 is to assist very low and low-income applicants to own
adequate but modest, decent, safe, and sanitary housing in eligible
rural areas by providing payment assistance to increase an applicant's
repayment ability. The payment assistance is a type of subsidy that
reduces the mortgage payment for a short time and is determined by the
adjusted family income. There are a number of different factors that
determine the applicant's eligibility for this program but at minimum
they must have the adjusted income that is at or below the applicable
low-income limit for the area where they wish to purchase a home and
they must demonstrate a willingness and have the ability to repay the
debt.
The Section 502 Guaranteed Loan Program, under 7 CFR part 3555,
[[Page 82485]]
provides a 90% loan note guarantee to approved lenders to assist low-
and moderate-income households the opportunity to own decent, safe, and
sanitary dwellings as their primary residence in eligible rural areas.
Eligible applicants may purchase, build, rehabilitate, improve, or
relocate a dwelling in an eligible rural area. Applicant eligibility
for this program is determined by the lender.
RHS may authorize limited demonstration programs to test new
approaches to offering housing under the statutory authority granted to
the Secretary, as set forth in 7 CFR 3550.7 and 3555.2(b). Such
demonstration programs may not be consistent with some of the
provisions contained in this part. However, any program requirements
that are statutory will remain in effect.
In 2022, the Agency extended the existing pilot in order to
continue assessing the pilots' impact. The first pilot involves
financing existing manufactured homes; the second pilot involves the
ownership requirement for new energy-efficient manufactured and modular
homes in land-lease communities operating on a nonprofit basis. These
allowances remain unchanged from any previous extensions of this pilot.
While the number of participating states remain restricted, the pilot
ensures adequate regional representation.
Existing Manufactured Home Pilot
The Agency is continuing with the existing pilot, which was
initially implemented on August 12, 2016, and continued via a document
published in the Federal Register (at 87 FR 66075 on November 2, 2022),
which expires on November 4, 2024. In the November 22, 2022, document,
the Agency waived the regulatory restrictions in 7 CFR parts 3550 and
3555 and permitted the financing of existing manufactured homes in the
pilot states even when the home was not currently financed by the
Agency. Under the current regulations, new manufactured homes are
eligible for financing through the Section 502 Single Family Housing
(SFH) Direct and Guaranteed Loan Programs. Existing manufactured homes
are not eligible unless the home is already financed through Rural
Development (RD) (7 CFR 3550.52(e)(l); 3550.73(b); 3555.208(b)(3)). The
Agency anticipates the completion of rulemaking in the near future that
will codify the waivers into 7 CFR parts 3550 and 3555, and which will
be applied program wide.
Eligibility Requirements
Approved lenders in the SFH Guaranteed Loan Program do not require
additional approval to participate provided the home is in a pilot
state. The loan request must be from an eligible applicant, all the
pilot conditions listed in this section must be met, and all other
program requirements that have not been waived must also be met.
The following States are included in this pilot:
Colorado, Iowa, Louisiana, Michigan, Mississippi, Montana, Nevada,
New Hampshire, New York, North Dakota, Ohio, Oregon, Pennsylvania,
South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington,
West Virginia, Wisconsin, and Wyoming.
The following unit requirements below must be met:
The unit must have been constructed on or after January 1, 2006, in
conformance with the Federal Manufactured Home Construction and Safety
Standards (FMHCSS), as evidenced by an affixed Housing and Urban
Development (HUD) Certification Label, and the unit must not have been
previously installed on a different homesite, or had any structural
alterations to it since construction in the factory, except for
porches, decks, or other structures which were built to engineered
designs or were approved and inspected by local code officials.
The unit inspection is required using one of two methods:
Option 1--Form HUD-309, ``HUD Manufactured Home Installation
Certification and Verification Report'' completed in accordance with 24
CFR 3286.511 by a qualified party as follows: A manufactured home or
residential building inspector employed by the local authority having
jurisdiction over the site of the home, provided that the jurisdiction
has a residential code enforcement program; a professional engineer,
registered architect a HUD-accepted Production Inspection Primary
Inspection Agency (IPIA) or a Design Approval Primary Inspection Agency
(DAPIA), or an International Code Council (ICC) certified inspector;
Or
Option 2--Obtain a certification that the foundation design meets
the requirements of either HUD Handbook 4930.3G or HUD Publication
7584, which updated and revised the pre-1996 version of HUD Handbook
4930.3G, ``Permanent Foundations Guide for Manufactured Housing
(PFGMH).'' Certifications referencing either Publication 7584 or
Handbook 4930.3G are acceptable. The foundation certification must be
from a licensed professional engineer or registered architect who is
licensed/registered in the state where the manufactured home is located
and must attest to current guidelines of the PFGMH. The certification
must be site specific and contain the engineer's or registered
architect's signature, seal, and/or state license/certification number.
This certification can take the place of Form HUD 309.
Guaranteed loan applications submitted under this pilot must be
manually submitted and underwritten; however, the documents may be
submitted through GUS. A job aid for this type of submission is
available in the USDA LINC Training and Resource Library in the ``Loan
Origination'' tab or directly here: <a href="https://www.rd.usda.gov/sites/default/files/linc_manual_submission_job_aid.pdf">https://www.rd.usda.gov/sites/default/files/linc_manual_submission_job_aid.pdf</a>. Agency staff will
need to select ``MANUFACTURED (PILOT)'' for ``Construction Type'' in
the Property Information section in GLS. This will allow for the proper
identification of pilot loans for tracking and monitoring purposes.
Direct loan applications submitted under the pilot are submitted
directly to the local RD office. Agency staff will need to select
Program Type Code 1014 (very low income) or 1015 (low income) unless
the property is located in a persistent poverty county, in which case
Program Type Code 1114 (very low income) or 1115 (low income) will be
used. In addition, Agency staff will need to select a Construction Type
of ``Manuf/Home'' and a Dwelling Type of ``Purchase Old, Refinance,
Purchase Old/Repair, or Refinance/Repair'' in UniFi. This will allow
for the proper identification of pilot loans for tracking and
monitoring purposes.
The applicant and property must meet all other criteria set forth
in 7 CFR part 3550 and HB-1-3550 for Direct loans or 7 CFR part 3555
and HB-1-3555 for Guaranteed loans, as applicable. These criteria
include, but are not limited to, the following: The unit must have a
floor area of not less than 400 square feet; the unit must meet the
Comfort Heating and Cooling Certificate Uo Value Zone for the location;
the towing hitch and running gear must have been removed; the
manufactured home must be classified and taxed as real estate; the
remaining economic life of the property must meet or exceed the 30 year
term of the proposed loan; and the unit replacement cost coverage must
be equal to the insured value of the improvements or the unpaid
principal balance with deductible(s) of up to but not exceeding the
greater of $1,000 or one percent (1%) of the policy. For
[[Page 82486]]
Guaranteed Loans, the unit should have replacement cost coverage in an
amount that is at least equal to the guaranteed value of the
improvements or the unpaid principal balance, with the deductible not
exceeding five percent (5%) of the total coverage amount.
Ownership Requirement Pilot for Energy Efficient Manufactured and
Modular Home Financing in Land-Lease Communities Operating on a
Nonprofit Basis
The Agency is continuing with the existing pilot that involves the
ownership requirement for new energy-efficient manufactured and modular
homes in land-lease communities operating on a nonprofit basis.
According to 7 CFR 3550.58(b), a leasehold interest must have an
unexpired term that is at least 150 percent of the term of the mortgage
for Direct loans. According to 7 CFR 3555.203(b)(3), a leasehold
interest must have an unexpired term of at least 45 years from the date
of loan closing for a Guaranteed loan.
Eligibility Requirements
Under this pilot, RD will accept a lease with an unexpired term
that is at least two years beyond the term of the promissory note in
the pilot states.
The following States are included in this pilot: California,
Michigan, Minnesota, New Hampshire, Oregon, Pennsylvania, Vermont, and
Wisconsin.
The loan request must be from an eligible applicant, all the pilot
conditions must be met, and new manufactured and modular homes must
meet the following pilot conditions:
At a minimum, new manufactured and modular homes must be Energy
Star compliant. Additionally, the unexpired term of the lease must be
at least two years longer than the mortgage term. While the lease terms
in 7 CFR 3550.58(b) and 3555.203(b)(3) offer borrowers some
protections, many states have statutes that promulgate fair lease terms
and safeguard residents of land-lease communities.
For the SFH Guaranteed Loan Program, pilot states should consider
following the recommendations in HUD's interim guidance related to 24
CFR 3285.312 on the use of frost-free foundations or frost protected
shallow foundations.
For the SFH Direct Loan Program, pilot states may use the
recommendations from HUD's interim guidance on frost-free or frost-
protected shallow foundations in lieu of RD Instruction 1924-A, Exhibit
J. Under the HUD interim guidance recommendations, the installer should
install all footings and piers below the frost line depth, or for Frost
Free Foundations, have a site investigation performed by a soil
engineer or geotechnical engineer to verify if the soil condition at
each home site is of a non-frost susceptible classification and is well
drained. In lieu of a site soil investigation, a layer of washed
gravel, or crushed stone, or course or dense sand may be provided to
the frost line depth. For either of these alternatives, subsurface
drains need to be provided; or use a Frost Protected Shallow Foundation
system that utilizes below ground insulation to protect the soil from
freezing with subsurface drains provided at each site.
The applicant and property must meet all other criteria set forth
in 7 CFR part 3550 and HB-1-3550 for Direct loans or 7 CFR part 3555
and HB-1-3555 for Guaranteed loans, as applicable for application
guidance. Program Directors should use the tracking tool under the
``Energy Efficient Housing'' link on the SFH SharePoint tracking site
to report loans made under this pilot.
Paperwork Reduction Act
The regulatory waivers for this pilot contains no new reporting or
recordkeeping burdens under OMB control number 0575-0179 that would
require approval under the Paperwork Reduction Act of 1995 (44 U.S.C.
chapter 35).
Non-Discrimination Statement
In accordance with Federal civil rights laws and USDA civil rights
regulations and policies, the USDA, its Mission Areas, agencies, staff
offices, employees, and institutions participating in or administering
USDA programs are prohibited from discriminating based on race, color,
national origin, religion, sex, gender identity (including gender
expression), sexual orientation, disability, age, marital status,
family/parental status, income derived from a public assistance
program, political beliefs, or reprisal or retaliation for prior civil
rights activity, in any program or activity conducted or funded by USDA
(not all bases apply to all programs). Remedies and complaint filing
deadlines vary by program or incident.
Program information may be made available in languages other than
English. Persons with disabilities who require alternative means of
communication to obtain program information (e.g., Braille, large
print, audiotape, American Sign Language) should contact the
responsible Mission Area, agency, or staff office; or the 711 Federal
Relay Service.
To file a program discrimination complaint, a complainant should
complete a Form AD-3027, USDA Program Discrimination Complaint Form,
which can be obtained online at U.S. Department of Agriculture USDA
Program Discrimination Complaint from any USDA office, by calling (866)
632-9992, or by writing a letter addressed to USDA. The letter must
contain the complainant's name, address, telephone number, and a
written description of the alleged discriminatory action in sufficient
detail to inform the Assistant Secretary for Civil Rights (ASCR) about
the nature and date of an alleged civil rights violation. The completed
AD-3027 form or letter must be submitted to USDA by:
(1) Mail: U.S. Department of Agriculture Office of the Assistant
Secretary for Civil Rights 1400 Independence Avenue, Washington, DC
20250-9410; or (2) Fax: (833) 256-1665 or (202) 690-7442; or (3) Email:
<a href="/cdn-cgi/l/email-protection#d383a1bcb4a1b2befd9abda7b2b8b693a6a0b7b2fdb4bca5"><span class="__cf_email__" data-cfemail="6535170a021704084b2c0b11040e0025101601044b020a13">[email protected]</span></a>.
Joaquin Altoro,
Administrator, Rural Housing Service.
[FR Doc. 2024-23506 Filed 10-10-24; 8:45 am]
BILLING CODE 3410-XV-P
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