Adam Johnston is chief appraiser and director of investigations for Genworth Mortgage Insurance. In addition to
his 25 years of appraisal experience, Johnston is a former
police officer and served in the United States Marine Corps.
Johnston is a designated member of the Appraisal Institute
and also was elected as 2018 chair of The Appraisal Foundation Board of Trustees. The statements in this article are
solely Johnston’s opinions and do not reflect the views of
Genworth or its management. Reach Johnston at
Opportunity Awaits in the
After taking a closer look, you may find this market is a net plus
for your mortgage-origination playbook
By Adam Johnston
Modern manufactured homes have vastly improved from the trailers of the 1960s and early 1970s. Significant advancements in construction materials, assembly technology and logistics efficiency
have resulted in factory-built homes that rival many
Unfortunately, manufactured housing continues to
suffer from a poor image problem among many
groups in the mortgage industry, as historical perceptions obscure the many benefits afforded by modern
Although concerns about low commissions and the
added complexities of underwriting manufactured
housing may have merit, originators should consider
manufactured housing as an emerging financing
opportunity, especially for those willing to view it
through a different lens.
A manufactured home is built in a factory and
constructed to comply, at a minimum, with the Manufactured Home Construction and Safety Standards
(the Department of Housing and Urban Development,
or HUD, Code) enacted in 1976. All factory-built homes
constructed after June 15, 1976, must comply with
the HUD Code or local building codes.
A manufactured home will be identified by HUD-certification labels and a data plate. A mobile home,
on the other hand, lacks such certification and is
generally a factory-built home constructed prior to
June 15, 1976.
There are many reports about the national challenges
of housing availability and affordability. Many markets
are experiencing shortages of construction labor.
These shortages manifest in delayed construction
starts, increased construction cost, inconsistent quality and isolation of rural markets from new housing
In addition, because housing plays a critical role in
our national economy and the needs of our population, Congress and federal regulators have instituted
actions to encourage housing opportunities for underserved markets. These efforts include the so-called
Duty to Serve requirements of the 2008 Housing and
Economic Reform Act.
That legislation created the Duty to Serve obliga-
tions assigned to government-sponsored enterprises
Fannie Mae and Freddie Mac by their regulator, the
Federal Housing Finance Agency (FHFA). Among the
obligations, there is a focus on rural markets, manufac-
tured housing and affordable-housing preservation.
Because manufactured housing is closely associated
with rural locations and represents an affordable-housing solution, all three Duty to Serve focus areas
can be addressed by supporting manufactured-housing lending. Along this same line, Fannie Mae
recently announced its Manufactured Housing Advantage program. The program prescribes additional
construction requirements and features for eligibility
that may further encourage manufactured housing as a
conventional alternative to site-built housing.
Manufactured housing leverages the advantages and
efficiencies gained from producing in a controlled
environment. Those advantages include the following:
■ ■ Reduced construction cost, including assembly-line efficiencies, automation as well as centralized
labor, materials and equipment.
■ ■ Dependable construction timing, including
predictable scheduling, no weather delays and
ease of inspection.
■ ■ Availability of continuous assembly, including
■ ■ Reduction of risks from weather, including
damage to construction materials from outside
exposure and weather stoppages.
To leverage manufactured housing as an opportunity for expanded housing availability and affordability, the mortgage industry should continue its focus
on prudent and sustainable lending practices. At the
same time, it should examine whether antiquated
negative biases towards manufactured housing
result in credit policies and practices that neglect this
valuable component of our housing market.