Biden’s Affordable Housing Plan Targets Manufactured Homes, ADUs
New financing programs aim to support the production of accessory dwelling units, two- to four-unit properties, and manufactured housing.
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Biden’s Affordable Housing Strategy
America’s affordable housing shortage has long reached a crisis point, putting pressure on the country’s most vulnerable citizens. There is a shortfall of nearly 7 million rental homes available to extremely low-income households, those earning below 30% of the area median income, according to the National Low Income Housing Coalition.
The fundamental step to solving the country’s affordability crisis is to build more housing. However, several roadblocks — including general NIMBYism, outdated regulations, a lack of adequate financing options, and soaring construction and materials costs — have made widespread construction of new affordable housing units a significant challenge.
The Biden Administration’s new housing plan aims to close the housing gap within the next five years by tackling some of these issues. Methods outlined range from longer-term legislative to more immediate administrative actions to create and preserve affordable housing. Plans include the encouragement of zoning and land-use reforms, new and expanded financing programs, and addressing supply chain issues.
Smaller Buildings Equal Efficient Solutions
A key initiative of the administration’s five-year action plan is to streamline the construction of two- to four-unit properties, smaller multifamily buildings, accessory dwelling units — such as garage or basement apartments and backyard homes — and manufactured housing. The production of these types of properties has the potential to significantly expand the housing supply in constrained markets.
Although the federal government provides several financing options for the development of affordable homes, there’s a significant gap in financing products when it comes to the construction and rehabilitation of smaller-scale assets.
To close this gap, the Federal Housing Administration and Federal Housing Finance Agency will work with lenders to pilot and scale renovation and construction financing for accessory dwelling units. Additionally, Freddie® Mac® is assessing the possibility of purchasing chattel loans. Most manufactured housing homeowners rely on these, not traditional mortgages, to acquire their homes. However, due to higher interest rates and shorter loan terms, chattel loans typically cost more than traditional mortgages.
Finally, to make it easier to finance the construction and improvement of manufactured housing units, HUD is working to increase the usability of FHA’s Title I financing program for manufactured housing.
Related Questions
What are the benefits of Biden's affordable housing plan for manufactured homes?
The Biden Administration's new housing plan aims to close the housing gap within the next five years by tackling some of the issues that have made widespread construction of new affordable housing units a significant challenge. One key initiative of the plan is to streamline the construction of two- to four-unit properties, smaller multifamily buildings, accessory dwelling units, and manufactured housing. This has the potential to significantly expand the housing supply in constrained markets.
The Federal Housing Administration and Federal Housing Finance Agency will work with lenders to pilot and scale renovation and construction financing for accessory dwelling units. Additionally, Freddie® Mac® is assessing the possibility of purchasing chattel loans, which are typically used to acquire manufactured housing. To make it easier to finance the construction and improvement of manufactured housing units, HUD is working to increase the usability of FHA’s Title I financing program for manufactured housing.
These initiatives have the potential to make financing more accessible and affordable for manufactured housing, which could help to expand the housing supply and make it more affordable for those in need.
How does Biden's plan address the need for more affordable housing?
The Biden Administration's new housing plan aims to close the housing gap within the next five years by tackling some of the issues that have made widespread construction of new affordable housing units a significant challenge. Methods outlined range from longer-term legislative to more immediate administrative actions to create and preserve affordable housing. Plans include the encouragement of zoning and land-use reforms, new and expanded financing programs, and addressing supply chain issues.
A key initiative of the administration’s five-year action plan is to streamline the construction of two- to four-unit properties, smaller multifamily buildings, accessory dwelling units — such as garage or basement apartments and backyard homes — and manufactured housing. The production of these types of properties has the potential to significantly expand the housing supply in constrained markets.
To close the gap in financing products for smaller-scale assets, the Federal Housing Administration and Federal Housing Finance Agency will work with lenders to pilot and scale renovation and construction financing for accessory dwelling units. Additionally, Freddie® Mac® is assessing the possibility of purchasing chattel loans. Most manufactured housing homeowners rely on these, not traditional mortgages, to acquire their homes.
Finally, to make it easier to finance the construction and improvement of manufactured housing units, HUD is working to increase the usability of FHA’s Title I financing program for manufactured housing.
What are the potential drawbacks of Biden's affordable housing plan for manufactured homes?
The potential drawbacks of Biden's affordable housing plan for manufactured homes include higher interest rates and shorter loan terms for chattel loans, which typically cost more than traditional mortgages. Additionally, there is a gap in financing products when it comes to the construction and rehabilitation of smaller-scale assets, such as two- to four-unit properties, smaller multifamily buildings, accessory dwelling units, and manufactured housing.
Sources:
- https://www.commercialrealestate.loans/commercial-real-estate-glossary/ami-area-median-income
- https://multifamily.today/white-house-releases-affordable-housing-plan/
- https://multifamily.loans
- /hud-loans-blog/2022/4/28/rising-construction-costs-affordable-housing-impacts
- /hud-loans-blog/hud-vs-the-fha
- https://www.multifamily.loans/mobile-home-park-financing
What are the eligibility requirements for manufactured homes under Biden's plan?
Under Biden's plan, the Federal Housing Administration (FHA) and Federal Housing Finance Agency will work with lenders to pilot and scale renovation and construction financing for accessory dwelling units. Additionally, Freddie® Mac® is assessing the possibility of purchasing chattel loans for manufactured housing. To make it easier to finance the construction and improvement of manufactured housing units, HUD is working to increase the usability of FHA’s Title I financing program for manufactured housing.
The eligibility requirements for manufactured homes under the Title I program are as follows:
- The manufactured home must be built after June 15, 1976.
- The manufactured home must be at least 400 square feet.
- The manufactured home must be classified as real estate and be taxed as such.
- The manufactured home must be permanently affixed to a foundation.
- The manufactured home must be the borrower’s primary residence.
- The manufactured home must meet all applicable HUD standards.
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How does Biden's plan address the need for more Accessory Dwelling Units (ADUs)?
The Biden Administration's new housing plan aims to close the housing gap within the next five years by tackling some of the issues that have made widespread construction of new affordable housing units a significant challenge. To address the need for more Accessory Dwelling Units (ADUs), the plan outlines a key initiative to streamline the construction of two- to four-unit properties, smaller multifamily buildings, ADUs, and manufactured housing. Additionally, the Federal Housing Administration and Federal Housing Finance Agency will work with lenders to pilot and scale renovation and construction financing for ADUs.
What are the potential benefits of Accessory Dwelling Units (ADUs) for homeowners?
Accessory Dwelling Units (ADUs) can provide homeowners with a variety of potential benefits. ADUs can provide additional rental income, increased property value, and increased flexibility in terms of living arrangements. Additionally, ADUs can provide homeowners with the opportunity to age in place, as well as the ability to accommodate extended family members or guests.
The Biden administration has proposed streamlining the construction of ADUs, as well as other smaller multifamily buildings, in order to expand the housing supply in constrained markets. The Federal Housing Administration and Federal Housing Finance Agency are working with lenders to pilot and scale renovation and construction financing for ADUs.
For more information, please see the following sources: