Fannie Mae Criteria for Manufactured Home Appraisals
Fannie Mae, formerly known as the Federal National Mortgage Association, has criteria appraisers must follow in performing assignments involving manufactured homes. Appraisers would do well to keep these criteria in mind for all appraisals involving manufactured homes.
The Fannie Mae criteria define manufactured housing units as "single-width or multi-width units that are constructed off-site and then transported to their permanent site where they are completed and/or attached to foundation." Each manufactured housing unit must have all wheels, axles, and trailer hitches removed; be permanently attached to a foundation; and be legally classified as real estate. The criteria apply either to conventional "mobile homes" or to prefabricated or modular homes. Prefabricated or modular housing must meet local zoning and building codes. Mobile homes may also have to meet local standards, but they must meet the Federal Home Construction and Safety Standards established by HUD in June, 1976.
No specific Fannie Mae square footage minimums apply to manufactured housing. Each living unit must be of a sufficient size and have room dimensions that would be acceptable to the typical purchaser in the subject market area. An engineer must have designed the permanent foundation system. Whether the foundation consists of piers or is a perimeter foundation, the footings must extend below the frost line.
In the appraisal of a manufactured housing unit, the appraiser must address its marketability in the subject market area by commenting on:
- the adequacy of the size of the unit's living area, including room size and storage capacity;
- the roof pitch and overhangs and the compatibility of the exterior finish; and
- the marketability and general values of manufactured homes in the subject market area in comparison to the marketability and values of site-built housing in the same market area.
Location of Manufactured Housing Units
Single-width units must be located in a Fannie Mae approved project. Multi-width units may be located on individual lots or in a project. For individual lots, some Fannie Mae regional offices require subdivision approval of the project.
As always, market sales are key. The components that determine a market sale are the same as those that generally determine market value. First, the buyer and seller are motivated and well informed or well advised and acting in his or her best interest. Second, the property for sale is exposed in the open market for a reasonable amount of time. Third, a transfer of title to real estate occurs.
Where market sales are available, appraisers should use comparable sales of similar manufactured housing units. Single-width units should be compared with single-width units and multi-width units with multi-width units. Only when market sales of manufactured units are not available should appraisers consider using site-built units as comparable sales. If an appraiser determines that it is necessary to use sales of site-built units as comparables, the appraiser must explain the use of such sales. In addition, if there is a preference in the subject market for site-built housing, the appraiser must make appropriate adjustments to the site-built sales.
Likewise, if the subject property is modular or prefabricated housing, the appraiser should use market sales of similar modular or prefabricated housing. Again, only if market sales of similar housing units are not available should the appraiser use sales of site-built housing as comparable sales and then only if the appraiser explains the use of such sales and makes appropriate adjustments for marketability in the subject market area.
While these criteria are specific Fannie Mae requirements, they represent sound appraisal principles to consider in performing any appraisal of manufactured housing for any client.