Most manufactured and modular homes are built to a higher quality than the average site-built home. Manufactured and modular homes use 2×6 construction on exterior walls, unlike the 2×4 site-built industry standard. Many of the individual products in a manufactured or modular home are the same as those found in site-built homes. Both industries use the very same windows, siding, roof truss systems and more.
Manufactured and modular houses are also built in a controlled, factory environment, the homes are inspected for design, construction, strength and durability, fire resistance, energy efficiency and performance of internal systems. Inspectors are on the scene regularly, and every home has to be inspected in at least one station by an independent inspector. RMHA learned through energy testing that models tested for air leakage off the assembly line qualified for a four-star rating through Colorado’s Public Service Energy Rated Program (and they’re currently working towards five, which is the highest you can achieve). That exceeds the rating received by some custom built Colorado homes.
Some buyers of new manufactured and modular homes finance their homes through their retailer, while some buyers arrange their own financing through their local bank, savings association, mortgage broker, or credit union.
Historically, manufactured and modular homes were financed as personal property as they were most frequently sold without land. Currently, the Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA) offers lenders loan insurance and loan guaranty programs for personal property home loans. But more than 90 percent of new manufactured and modular homes are placed on permanent foundations on private land, and are never intended to be relocated. These homes are financed as real estate.
Manufactured and modular homes may be financed as real estate when the home and land are both purchased or owned by the homeowner, the home is on a permanent foundation, and the home and land are treated as a single real estate property under state law. FHA, VA, and most conventional lenders have programs for real estate mortgages that accept these loans.
Secondary markets provide an important source of capital for lenders. Just as most home buyers raise the money for their home purchase through a primary lending source, many housing lenders raise money to lend through secondary markets.
Secondary Markets: Personal Property
The Government National Mortgage Association, known as Ginnie Mae, provides a secondary market source to personal property manufactured and modular housing lenders who make FHA and VA backed loans. Personal property lenders also access the secondary market through Wall Street by issuing what are called asset-backed securities.
Secondary Markets: Real Property
The Federal National Mortgage Association, known as Fannie Mae, and the Federal Home Loan Mortgage Corporation, known as Freddie Mac, both accept manufactured and modular housing loans as long as they are real estate mortgages rather than personal property loans. Also, FHA- and VA-backed mortgage loans on manufactured and modular homes are eligible for Ginnie Mae’s single-family home loan secondary market program.
Contact any of our manufactured home lenders for more information.
They are built as well as – if not better than – site-built homes. Even the type of kiln-dried lumber used favors manufactured homes. Both manufactured, modular, and site-built homes use pre-hung windows, doors, siding, and roof-truss systems.
Manufactured and modular houses, because they are built in a factory environment, are carefully controlled and built economically.
All the materials are gathered in quantity, avoiding extra handling and middleman mark-ups. They are stored indoors, out of the weather, which preserves quality and reduces waste and loss.
A factory environment eliminates site vandalism, weather delays, material shortage and shipment delays.
Please see this eye-opening NBC TV news video report about the least expensive manufactured home that survived a hurricane wind test that caused a conventional “on site-built” home to lose its roof and suffer a major loss!
Foremost Insurance, an insurance company specializing in manufactured and modular housing safety issues, found that manufactured and modular homes are safer than site-built homes in many ways. In the past, Colorado had restrictive zoning laws that forced manufactured and modular homes to be sited in the least desirable areas of a municipality. This meant homes were placed in floodplains.
A University of Michigan report revealed that manufactured and modular homes have a lower rate of fires than site-built homes. When fires do occur, research shows no fire safety differences between the two types of homes.
In a full-scale experiment conducted May 16 and 17, 2001 by researchers at the Wind Science and Engineering Research Center at Texas Tech University, the propeller wash from a C-130 aircraft was used to produce high-speed winds, and a manufactured home was used as a test specimen to collect data on structural response. The propeller wash from a C-130 aircraft can generate winds up to 90 miles per hour.
The building was instrumented to measure its internal and external pressures, its deformation (deflection or movement) during exposure to extreme winds, and changes in its insulating properties. During the test, the structure was exposed to wind gusts and sustained winds at normal wind speeds, around 20-30 miles per hour. The speed was increased gradually to approximately 90 miles per hour. Collaborating with personnel from the National Institute of Standards and Technology, the U.S. Department of Energy, the Oakridge National Laboratory, and the Texas Air National Guard, Texas Tech researchers tested the data acquisition system and collected a significant amount of data during the two-day testing period. The data will be analyzed to determine the speed of the wind generated during the test and to characterize the response of the structure to the high wind speed. When that data is published we will make it available to you, but the important thing is that the test home was not only still intact, but the only visible signs of damage were a few shingles blown from the roof.
“Trailer” typically refers to an older product, usually from the ’40s or ’50s, that predates the HUD code. To help clarify some of the terms associated with manufactured and modular housing, we’ve included the following definitions:
Factory-Built (Modular) Homes
Many types of structures are built in the factory and designed for long-term residential use. In the case of manufactured or modular homes, units are built in a factory, transported to the site, and installed.
Manufactured Home – HUD
This refers to homes built entirely in the factory under a federal building code administered by HUD. Manufactured homes may be single or multi-section and are transported to the site and installed. The federal standards regulate design and construction, strength and durability, transportability, fire resistance, energy efficiency, and quality. The HUD Code also sets performance standards for the heating, plumbing, air conditioning, thermal and electrical systems. It is the only national building code. The Manufactured Home Safety and Construction Standard (the HUD Code) was adopted by Congress June 15, 1976.
This is the term used for homes built prior to June 15, 1976, when the HUD Code went into effect.
People assume that the value of manufactured or modular homes depreciates. However, recent studies conducted at the Universities of Michigan and North Carolina reveal that the location for both manufactured and modular homes and conventional site-built homes is the most telling forecast for real estate appreciation.
With the building costs of manufactured and modular homes significantly below those of site-built homes, there is an immediate appreciation of value between what the home actually costs and its fair market value. In fact, multi-section manufactured and modular homes sold for more the second time than the first – the best definition of a profitable investment.