U.S. Department of Housing and Urban Development
                            Washington, D.C. 20410-8000
                                 August 16, 1993
OFFICE OF THE ASSISTANT SECRETARY                                 TI-424
FOR HOUSING-FEDERAL HOUSING COMMISSIONER
     MEMORANDUM FOR:  ALL TITLE I LENDING INSTITUTIONS
                      Attn:  Installment Loan Department
     SUBJECT:  Increased Maximum Loan Amounts for Title I Manufactured
               Home Loans
 
          On July 30, 1993, the Department published a final rule in the
     Federal Register, increasing the maximum loan amounts for manufactured
     home loans insured under Title I of the National Housing Act.  These
     higher loan amounts were authorized by section 503(c)(1) of the
     Housing and Community Development Act of 1992.
 
     Increased Maximum Loan Amounts
 
          The final rule amends §201.10(b), (c) and (d) of the Title I
     regulations to increase the maximum loan amounts on all types of
     manufactured home loans by 20 percent.  The higher loan limits apply
     to any new loan for which a credit application is completed and
     received by the lender on or after August 30, 1993.  The new loan
     limits are as follows:
 
          o    The maximum amount for a manufactured home purchase loan
               is increased from $40,500 to $48,600.
 
          o    The maximum amount for a manufactured home lot loan is
               increased from $13,500 to $16,200.
 
          o    The maximum amount for a combination loan is increased
               from $54,000 to $64,800.
 
          In adopting these higher loan limits, the Department recognizes
     that major changes in the market for manufactured homes have occurred
     over the past ten years.  Since 1983, multisection homes have
     increased from 26 percent to 47 percent of all manufactured homes
     being produced, and the average price of these homes has increased
     from $30,500 in 1983 to $37,200 in 1992.  Because of this growth in
     the market for multisection homes and the increase in sales prices,
     homebuyers in some regions of the country have been unable to use
     the Title I program.  The higher loan limits will make possible a
     more balanced mix of manufactured home types and prices, which will
     help assure that the Title I program remains actuarially sound and
     available to all areas of the nation.
 
_____________________________________________________________________
                                   2
 
High-Cost Area Limits for Combination Loans and Lot Loans
 
     Section 201.10(e)(2) of the regulations permits higher limits for
combination loans and lot loans in areas where the higher cost of housing
warrants such increases.  However, the percentage increase in these limits
cannot exceed the percentage by which mortgage loans on one-family
residences are increased under section 203(b) of the National Housing Act.
 
     The final rule amends § 201.10(e)(2) to implement a provision of the
1993 HUD Appropriations Act which caps high-cost area limits for
combination loans and lot loans at 185 percent of the maximum dollar
amounts specified above.  Thus, in some areas, the dollar limit for a
combination loan may be as much as $119,880 (185 percent of $64,800), and
the dollar limit for a lot loan may be as much as $29,970 (185 percent of
$16,200).
 
     To determine the combination loan limit for a particular county or
metropolitan area, call the Mortgage Credit Branch at the local HUD field
office and ask for the one-family mortgage limit for that area.  Then
multiply that dollar figure by 96 percent (which is the ratio between the
$64,800 basic loan limit for a combination loan and the $67,500 basic
one-family mortgage limit under section 203(b) of the National Housing
Act).  For example, if the one-family mortgage limit for an area is
$90,000, the limit for a Title I combination home and lot loan is $86,400
(96 percent of $90,000).  However, in no case can a combination loan exceed
the cap of $119,880.
 
     To determine the manufactured home lot loan limit for the same area,
multiply the one-family mortgage limit by 24 percent (which is the ratio
between the $16,200 basic loan limit for a lot loan and the $67,500 basic
one-family mortgage limit under section 203(b)).  For example, with a
one-family mortgage limit of $90,000, the limit for a lot loan is $21,600
(24 percent of $90,000).  However, in no case can a lot loan exceed the
cap of $29,970.
 
     Lenders should note that manufactured home loans in Alaska, Guam and
Hawaii are limited to 140 percent of the basic loan limits in  201.10(b),
(c) and (d).
 
For Further Information
 
     If you have any questions about this letter, please write to Robert
J. Coyle, Director, Title I Insurance Division, 451 Seventh Street, S.W.,
Room B-133, Washington, D.C. 20410, or call the Division at 202-755-7400.
 
                                   Sincerely yours,
 
                                   Nicolas P. Retsinas
                                   Assistant Secretary for
                                   Housing-Federal Housing Commissioner
 
                                        *U.S. G.P.O.: 1993-342-362:80181