Reviving this one FHA program could greatly boost homeownership

The Federal Housing Administration, or FHA, was once a major player in lending for manufactured homes titled as personal property, helping tens of thousands of families achieve homeownership each year. Today, it insures almost none, leaving borrowers to face nearly 10% interest rates in a market dominated by three lenders.

FHA’s Title I manufactured housing program peaked at 26,000 loans in 1991. By 2009, volume had fallen to 1,300, with a maximum loan limit of roughly $70,000. That limit remained unchanged for over a decade, until FHA lending in this market ceased altogether.

Personal property, or chattel, loans finance nearly 40% of manufactured home purchases, with more than 55,000 borrowers using one last year. Unlike traditional mortgages, chattel loans are secured only by the home, not by the land beneath it. They typically carry higher rates and offer fewer consumer protections, particularly in the event of default. Repossession can occur much faster than a foreclosure.

Yet for buyers who lack ownership of the land, either leasing it or living on family property, these loans are the only viable path to homeownership. Even among landowners, they are not uncommon.

Manufactured homes remain a crucial source of affordable housing for approximately 7 million households, or about 5% of all U.S. households. This exceeds the total number served by all HUD-subsidized housing programs.

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reat from manufactured housing chattel loans has created a serious market gap, leaving homebuyers with few options for obtaining these loans. Only three lenders control 76% of the market: Triad, Vanderbilt and 21st Mortgage. The latter two are both owned by Berkshire Hathaway and largely avoid competing with each other.

With so little competition, borrowers pay a premium. Average chattel loan rates were 9.7% in 2024, compared with 7.0% for manufactured-home mortgages and 6.5% for traditional site-built homes.

Renewed federal participation could help lower costs and expand credit availability by introducing competition, standardized products and additional consumer protections.

The Biden administration committed to reviving FHA’s chattel loan program and took a number of steps to modernize it. Notably, it reduced the onerous capital requirements imposed on lenders by 75%, collected the scattered program rules that had accreted over the years into a single handbook, and allowed the use of the mortgage industry’s standard loan application form. In 2024, they even raised the loan limit.

HUD officials under the Trump administration have likewise said they are “committed to exploring” ways to revive the moribund market. Yet despite the efforts of both administrations, progress has been minimal. In the past five years, FHA has been able to guarantee only a single, solitary loan.

Of course, there are hurdles to reviving a long-dormant program. Underwriters, loan officers and securitizers must reacquaint themselves with FHA requirements. Lenders have to gain FHA approval to participate in the program and will do so only if they expect sufficient volume.

Still, most of the groundwork has been laid. What’s missing now is resolve. Restoring FHA’s presence in this market would be a pragmatic, market-based step toward expanding affordable homeownership. It requires not a new policy framework, but only the determination by federal officials to act decisively and cut through bureaucratic inertia.