[Federal Register Volume 87, Number 200 (Tuesday, October 18, 2022)]
[Proposed Rules]
[Pages 63018-63022]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-22535]



[[Page 63018]]

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 201

[Docket No. FR-6207-P-01]
RIN 2502-AJ52


Indexing Methodology for Title I Manufactured Home Loan Limits

AGENCY: Office of the Assistant Secretary for Housing--Federal Housing 
Commissioner, Housing and Urban Development (HUD).

ACTION: Proposed rule.

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SUMMARY: Section 2145 of the Housing and Economic Recovery Act of 2008 
amended the maximum loan limits for manufactured home loans insured 
under Title I of the National Housing Act and required regulations to 
implement future indexing of the loan limit amounts for manufactured 
homes originated under the Manufactured Home Loan program and the 
Property Improvement Loan program. This proposed rule would establish 
indexing methodologies using data from the United States Census Bureau 
to annually calculate the loan limits for Manufactured Home Loans, 
Manufactured Home Lot Loans, and Manufactured Home and Lot Combination 
Loans (``Combination Loans'') insured under Title I of the National 
Housing Act for the Manufactured Home Loan program.

DATES: Comment due date: December 19, 2022.

ADDRESSES: HUD invites interested persons to submit comments to the 
Office of the General Counsel, Regulations Division, Department of 
Housing and Urban Development, 451 7th Street SW, Room 10276, 
Washington, DC 20410-0500. Communications should refer to the above 
docket number and title and should contain the information specified in 
the ``Request for Comments'' section. There are two methods for 
submitting public comments.
    1. Submission of Comments by Mail. Comments may be submitted by 
mail to the Regulations Division, Office of General Counsel, Department 
of Housing and Urban Development, 451 7th Street SW, Room 10276, 
Washington, DC 20410-0500. Due to security measures at all Federal 
agencies, however, submission of comments by mail often results in 
delayed delivery. To ensure timely receipt, HUD recommends that 
comments be mailed at least two weeks in advance of the public comment 
deadline.
    2. Electronic Submission of Comments. Comments may also be 
submitted electronically through the Federal eRulemaking Portal at 
www.regulations.gov. HUD strongly encourages commenters to submit 
comments electronically. Electronic submission of comments allows the 
commenter maximum time to prepare and submit a comment, ensures timely 
receipt by HUD, and enables HUD to make comments immediately available 
to the public. Comments submitted electronically through the website 
can be viewed by other commenters and interested members of the public. 
Commenters should follow instructions provided on that site to submit 
comments electronically.

    Note:  To receive consideration as public comments, comments 
must be submitted using one of the two methods specified above. 
Again, all submissions must refer to the docket number and title of 
the notice.

    No Facsimile Comments. Facsimile (fax) comments are not acceptable.
    Public Inspection of Comments. All comments and communications 
submitted to HUD will be available for public inspection and copying 
between 8 a.m. and 5 p.m. weekdays at the above address. Due to 
security measures at HUD Headquarters, an advance appointment to review 
the public comments must be scheduled by calling the Regulations 
Division at 202-708-3055. This is not a toll-free number. Individuals 
can dial 7-1-1 to access the Telecommunications Relay Service (TRS), 
which permits users to make text-based calls, including Text Telephone 
(TTY) and Speech to Speech (STS) calls. Copies of all comments 
submitted are available for inspection and downloading at: 
www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Kevin Stevens, Department of Housing 
and Urban Development, 451 7th St SW, Room 9266, Washington, DC 20410-
4000; telephone number 202-402-2378 (this is not a toll-free number). 
Individuals can dial 7-1-1 to access the Telecommunications Relay 
Service (TRS), which permits users to make text-based calls, including 
Text Telephone (TTY) and Speech to Speech (STS) calls.

SUPPLEMENTARY INFORMATION:

I. Background

    Title I of the National Housing Act authorizes the Secretary of HUD 
to insure, through the Federal Housing Administration (FHA), loans made 
by FHA-approved lenders to eligible borrowers to finance the purchase, 
refinance, or improvement of a manufactured home, with or without the 
lot. HUD insures these loans under HUD's Property Improvement Loan 
program and HUD's Manufactured Home Loan program. FHA insures the 
lender against loss if the borrower defaults. A Title I Manufactured 
Home Loan may be used for the purchase or refinancing of a manufactured 
home, a lot on which to place a manufactured home, or a manufactured 
home and lot in combination. The manufactured home must be used as the 
principal residence of the borrower. Applicable loan limits and 
requirements are codified in 24 CFR part 201.
    Section 2117 of the Housing and Economic Recovery Act of 2008 
(HERA) \1\ added the definition of real estate to include all natural 
resources and structures permanently affixed to the land, amended the 
maximum loan limits for manufactured home loans and certain property 
improvement loans insured under Title I of the National Housing Act, 
and required future changes to the amounts for manufactured home loans 
to be made through regulation. HERA also stipulated that the Secretary 
develop a metric that uses United States Census Bureau (``Census 
Bureau'') data \2\ on manufactured home prices to calculate an index 
for adjusting loan limits in the future.
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    \1\ Public Law 110-289, 2117, 122 Stat. 2654, 2844-45 (2008).
    \2\ See generally, U.S. Commerce Department, Census Bureau data 
on manufactured homes, available at: www.census.gov/programs-surveys/mhs.html.
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    In compliance with HERA, on March 3, 2009, HUD published Title I 
Letter TI-480 \3\ notifying lenders of the new statutory loan limits. 
HUD also noted in that Title I Letter the need for the Secretary to 
develop an indexing method that would determine future loan limits. HUD 
regulations still reflect the outdated, pre-HERA Loan Limits. Initially 
after HERA's enactment, Census Bureau data showed a decline in home 
prices. However, for compliance with HERA, HUD did not lower loan 
limits and the limits were kept at the

[[Page 63019]]

threshold set under HERA. The outdated Loan Limits, and the 2008 Loan 
Limits currently in effect as described in the Title I letter are 
outlined below:
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    \3\ ``Increased Maximum Loan Limits for Title I Manufactured 
Home Loans,'' https://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/letters/title1.

                        Table 1--Loan Limits Under HERA Compared to Pre-HERA Loan Limits
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                                                                                               2008 Loan limit
        Title I loan program name             Eligible loan name for     Loan limits prior      basis per HERA
                                                  property type               to HERA        currently in effect
----------------------------------------------------------------------------------------------------------------
Property Improvement Loan Program........  Manufactured Home                         $7,500              $25,090
                                            Improvement Loan for units
                                            classified as real estate.
Manufactured Home Loan Program...........  Manufactured Home Loan                    48,600               69,678
                                            (unit only).
                                           Manufactured Home Lot Loan                16,200               23,226
                                            (lot only).
                                           Manufactured Home and Lot       64,800 (48,600 +     92,904 (69,678 +
                                            (Combination Loan).                     16,200)              23,226)
----------------------------------------------------------------------------------------------------------------

    HUD has developed preliminary indexes on which future loan limits 
could be annually adjusted. This methodology uses Census Bureau data, 
as required by HERA. The indexes for Title I unit-only loan limits 
would rely on the Census Bureau's Manufactured Housing Survey, which 
collects manufactured home sale prices for units that are sold (or 
intended to be sold) for residential use. At this time, it does not 
collect prices for land or lot sales or costs for home improvements, as 
it relates to manufactured housing. However, the Census Bureau's New 
Residential Sales data do provide estimates of the median price of 
newly constructed single-family homes, which includes the value of the 
lot. For compliance with the HERA statute, the index for Title I Lot 
Loan limits would be based on Census Bureau data on prices for newly 
constructed single-family homes with land.

II. Proposed Rule

    As required by HERA, this proposed rule would update the loan 
limits in Sec.  201.10 to establish an index for which future loan 
limits would be revised through notice. HUD is also proposing to amend 
the definition of ``manufactured home'' in Sec.  201.2 to conform to 
the loan limit change. HUD proposes to index loan limits based on sale 
prices, unit sizes, and property data collected by the Census Bureau. 
HUD seeks comments on the proposed indexes and methodology for the 
different loan types. Further, commenters are invited to suggest 
whether the methodology should include an additional or alternative 
index for specific loans and how they could better represent adjustment 
in the loan limits.
    HUD proposes to establish separate indexing methodologies to 
annually calculate future loan limits for manufactured home loans, 
manufactured home lot loans, and manufactured home and lot combination 
loans under the Manufactured Home Loan program. HUD assigns ``Index 
100'' to the loan limit amounts enacted by HERA, as shown in Table 3 of 
this preamble.
    First, the proposed rule would create a dual index based on 
purchase prices of manufactured homes, which are collected by the 
Census Bureau. The dual index would distinguish purchase prices based 
on the number of sections that make up a home. An index for single-
section manufactured homes would use only single-section home sale 
data. A separate index for double- and multi-section manufactured homes 
would use only double-section home sale data.\4\ This would allow HUD 
to apply loan limits which more closely reflect the prices of homes 
with one section (single-section) and homes with more than one section 
(double or multi-section).
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    \4\ For an example of the latest data according to Census, see 
``MHS Latest Data,'' https://www.census.gov/data/tables/time-series/econ/mhs/latest-data.html.
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    HUD proposes to adjust loan limits for single-section and double or 
multi-section manufactured home loans annually based on changes to 
indexes for the average price of single-section and double-section 
manufactured homes, respectively. To determine each index, HUD proposes 
to use the average price data for the most recent 12 months available 
at the time HUD calculates the adjustment, weighted according to the 
number of manufactured units shipped during that same period. Each 
index would be calculated separately, using shipping and price data for 
single-section units for the single-section index and shipping and 
price data for double-section units for the double- or greater section 
index. Consistent with HERA, HUD would not decrease loan limits even if 
an annual index reflects a decline.
    Second, HUD proposes creating an index for Manufactured Home Lot 
Loans based on median home prices in Census Bureau's New Residential 
Sales data.\5\ Since these estimates reflect sales of newly constructed 
single-family housing including land, they are a suitable general 
indicator of the movement of prices for land to be financed with 
Manufactured Home Lot Loans. HUD would set Manufactured Home Lot Loan 
limits annually by indexing the loan limit established by HERA in 2008 
to the growth in median new home prices.
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    \5\ The New Residential Sales data come from Census's Survey of 
Construction. More information can be found here: www.census.gov/construction/nrs/index.html.
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    Finally, the loan limit for manufactured home and lot Combination 
Loans would be determined by adding the manufactured home lot loan 
limit to either the single- or double-section loan limit, depending on 
the home.
    HUD's proposed indexes are demonstrated in table 2 of this 
preamble:

[[Page 63020]]



Table 2--Proposed Index Methodologies for Title I Manufactured Home Loan
                                 Limits
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     Three eligible loan types           Proposed methodology/index
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1. Manufactured Home Loan (Home      Single-Section Index for
 only).                              single-section homes: average
                                     single-section home price with
                                     future indexing based on movement
                                     in single-section home prices or
                                     Double Section Index for
                                     homes composed of two or more
                                     sections: average double-section
                                     home price with future indexing
                                     based on movement in double-section
                                     home prices *
2. Manufactured Home Lot Loan (Lot  Manufactured Home Lot Loan limit
 only).                              indexed using changes in the median
                                     new home price *
3. Manufactured Home and Lot Loan   Manufactured Home and Lot
 (Combination Loan).                 Combination indexed using the
                                     Manufactured Home Lot Loan Index,
                                     plus the applicable index for
                                     sections in a Manufactured Home
                                     Single-Section Index for
                                     single-section homes, or
                                     Double Section Index for
                                     homes composed of more than one
                                     section.
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* Single-and double-section price averages based on data at:
  www.census.gov/data/tables/time-series/econ/mhs/latest-data.html. The
  median new home price comes from: www.census.gov/construction/nrs/historical_data/index.html.

    Table 3 below shows examples of the loan limits, based on recent 
data from Census Bureau.

                                          Table 3--Example Loan Limits--Title I Manufactured Home Loan Program
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                                                                                                                    Example 2022  loan limits  (based on
                                                                              Future  index        Current limits            2021 Census data)
       Title I loan program name            Description of property            methodology           (per HERA)   --------------------------------------
                                                                                                                           Index            Loan limit
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Manufactured Home Loan Program........  Single-section Manufactured     Indexed to average single-        $69,678  104.2................         $72,600
                                         Home (unit only).               section manufactured
                                                                         home price. Note 1.
Manufactured Home Loan Program........  Double- or greater-section      Indexed to average double-         69,678  189.4................         132,000
                                         Manufactured Home (unit only).  section manufactured
                                                                         home price. Note 1.
Manufactured Home Loan Program........  Manufactured Home Lot (lot      Indexed to median sales            23,226  160.2................          37,205
                                         only).                          price for new single-
                                                                         family homes. Note 2.
Manufactured Home Loan Program........  Single-section Manufactured     Limit for Single-Section   92,904 (69,678  NA...................         109,805
                                         Home and Lot (Combination       + Limit for Lot Loan.          + 23,226)                              (72,600 +
                                         Loan).                                                                                                  37,205)
Manufactured Home Loan Program........  Double- or greater-section      Limit for Double- or       92,904 (69,678  NA...................         169,205
                                         Manufactured Home and Lot       Multi-Section + Limit          + 23,226)                             (132,000 +
                                         (Combination Loan).             for Lot Loan.                                                           37,205)
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Table 3 Notes:
1. Indexing to occur at the beginning of each year, based on the weighted average price data for the most recent 12 months available from the
  Manufactured Housing Survey.
2. Indexing to occur at the beginning of each year, based on the median sales price of the most recent 12 months available from the New Residential
  Sales data.

    As discussed in the proposed Sec.  201.10(h), HUD would annually 
adjust future loan limits using the above methodology and post new loan 
limits, including an explanation of the calculation by notice, such as 
through a Title I letter and on HUD.gov.

III. Manufactured Home Improvement Loans

    This proposed rule does not propose an index for Manufactured Home 
Improvement Loans, which are insured under regulations for the Property 
Improvement Loan program. While HERA authorized adjustments to the 
limit of loans that finance improvements to manufactured homes under 
the Property Improvement Loan program, that authorization was not 
extended to site-built condominiums, townhomes, or detached dwellings. 
HUD does not believe any existing Census Bureau data fully reflect 
changes in the manufactured housing property improvement loan market. 
Therefore, the implementation of HERA regarding Manufactured Home 
Improvement Loans would be subject to inaccuracy. Additionally, setting 
different loan limits for only this subset of the broader Property 
Improvement Loan program would cause complication, as the program and 
market for property improvements makes no other differentiation between 
improvements to manufactured homes vs. non manufactured homes. 
Therefore, HUD intends to publish an advanced notice of proposed 
rulemaking requesting public comment seeking input on implementation of 
a Property Improvement Loan index for manufactured homes.
    Because the Manufactured Home Improvement Loan program is such a 
small subset of the overall Property Improvement Loan program, HUD 
believes that this delay in the implementation of HERA to Manufactured 
Home Improvement Loans would have minimal, if any, effect on the 
Property Improvement Loan program. However, HUD seeks comment on the 
impact of delaying increases to the loan limit for Manufactured Home 
Improvement Loans.

IV. Findings and Certifications

Regulatory Review--Executive Orders 12866 and 13563

    Pursuant to Executive Order 12866 (Regulatory Planning and Review), 
a determination must be made whether a regulatory action is significant 
and therefore, subject to review by the Office of Management and Budget 
(OMB) in accordance with the requirements of the order. Executive Order 
13563 (Improving Regulations and Regulatory Review) directs executive 
agencies to analyze regulations that are ``outmoded, ineffective, 
insufficient, or excessively burdensome, and to modify, streamline, 
expand, or repeal them in accordance with what has been learned.'' 
Executive

[[Page 63021]]

Order 13563 also directs that, where relevant, feasible, and consistent 
with regulatory objectives, and to the extent permitted by law, 
agencies are to identify and consider regulatory approaches that reduce 
burdens and maintain flexibility and freedom of choice for the public.
    This proposed rule has been determined to be a ``significant 
regulatory action,'' as defined in section 3(f) of the order, but not 
economically significant under section 3(f)(1) of the order. The docket 
file is available for public inspection in the Regulations Division, 
Office of General Counsel, Department of Housing and Urban Development, 
451 7th Street SW, Room 10276, Washington, DC 20410-0500. Due to 
security measures at the HUD Headquarters building, please schedule an 
appointment to review the docket file by calling the Regulations 
Division at 202-402-3055 (this is not a toll-free number). Individuals 
can dial 7-1-1 to access the Telecommunications Relay Service (TRS), 
which permits users to make text-based calls, including Text Telephone 
(TTY) and Speech to Speech (STS) calls.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) 
generally requires an agency to conduct a regulatory flexibility 
analysis of any rule subject to notice and comment rulemaking 
requirements, unless the agency certifies that the rule will not have a 
significant economic impact on a substantial number of small entities.
    Accordingly, the undersigned certifies that the proposed rule will 
not have a significant economic impact on a substantial number of small 
entities. Notwithstanding HUD's determination that this rule will not 
have a significant effect on a substantial number of small entities, 
HUD specifically invites comments regarding any less-burdensome 
alternatives to this rule that will meet HUD's objectives as described 
in the preamble to this rule.

Environmental Impact

    This proposed rule would establish and review loan limits. 
Accordingly, under 24 CFR 50.19(c)(6) this proposed rule is 
categorically excluded from environmental review under the National 
Environmental Policy Act of 1969 (42 U.S.C. 4321).

Executive Order 13132--Federalism

    Executive Order 13132 (entitled ``Federalism'') prohibits an agency 
from publishing any rule that has federalism implications if the rule 
either: (i) imposes substantial direct compliance costs on state and 
local governments and is not required by statute, or (ii) preempts 
state law, unless the agency meets the consultation and funding 
requirements of section 6 of the Executive order. This proposed rule 
does not have federalism implications and does not impose substantial 
direct compliance costs on state and local governments or preempt state 
law within the meaning of the Executive order.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1531-1538) (UMRA) establishes requirements for Federal agencies to 
assess the effects of their regulatory actions on state, local, and 
tribal governments, and on the private sector. This proposed rule would 
not impose any Federal mandates on any state, local, or tribal 
governments, or on the private sector, within the meaning of the UMRA.

List of Subjects in 24 CFR Part 201

    Claims, Health facilities, Historic preservation, Home improvement, 
Loan programs-housing and community development, Manufactured homes, 
Mortgage insurance, Reporting and recordkeeping requirements.

    For the reasons discussed in the preamble, HUD proposes to amend 24 
CFR part 201 as follows:

PART 201--TITLE I PROPERTY IMPROVEMENT AND MANUFACTURED HOME LOANS

0
1. The authority for 24 CFR part 201 continues to read as follows:

    Authority:  12 U.S.C. 1703; 15 U.S.C. 1639c; 42 U.S.C. 3535(d).

0
2. Amend Sec.  201.2 by revising the definition of ``Manufactured 
home'' to read as follows:


Sec.  201.2   Definitions.

* * * * *
    Manufactured home means a transportable structure, comprised of one 
or more modules, each built on a permanent chassis, with or without a 
permanent foundation, designed for occupancy as a principal residence 
by a single family. For purposes of the annual adjustments to loan 
limits under this part, a manufactured home may be a single-section 
home comprised of one module, a double-section home comprised of two 
modules, or a multi-section home comprised of three or more modules. A 
new manufactured home shall comply with the minimum property standards 
prescribed by the Secretary to assure its livability and durability 
that are published as the Manufactured Home Construction and Safety 
Standards implementing the National Manufactured Housing Construction 
and Safety Standards Act of 1974, 42 U.S.C. 5401-5426, at 24 CFR part 
3280. To qualify for a manufactured home loan insured under this part, 
an existing manufactured home must have been constructed in accordance 
with standards published at 24 CFR part 3280 and must meet standards 
similar to the minimum property standards applicable to existing homes 
insured under title II of the Act, as prescribed by the Secretary.
* * * * *
0
3. Amend Sec.  201.10 as follows:
0
a. In paragraph (a)(1)(i), remove ``$17,500'' and add in its place 
``$25,090'';
0
b. Revise the introductory texts of paragraphs (b)(1) and (2), 
paragraph (c), the introductory texts of paragraphs (d)(1) and (2), and 
the introductory text of paragraph (f)(5); and
0
c. Add paragraph (h).
    The revisions and addition read as follows:


Sec.  201.10   Loan amounts.

* * * * *
    (b) * * *
    (1) The total principal obligation for a loan to purchase a new 
manufactured home shall not exceed the sum of the following itemized 
amounts, up to a maximum set according to an index established by HUD 
in paragraph (h)(1) of this section and updated through notice which 
shall establish separate loan limits for single-section homes and 
double-section or multi-section homes:
* * * * *
    (2) The total principal obligation for a loan to purchase an 
existing manufactured home shall not exceed the lesser of the following 
amounts, up to a maximum set according to an index established by HUD 
in paragraph (h)(1) of this section and updated through notice which 
shall establish separate loan limits for double-section or multi-
section homes:
* * * * *
    (c) Manufactured home lot loans. The total principal obligation for 
a loan to purchase and, if necessary, develop a lot suitable for a 
manufactured home, including on-site water and utility connections, 
sanitary facilities, site improvements and landscaping, shall not 
exceed 95 percent of either the appraised value of the developed lot 
(as determined by a HUD-approved appraisal) or the total of the 
purchase price and development costs, whichever is less, up to a 
maximum set according to an index established by HUD in

[[Page 63022]]

paragraph (h)(2) of this section and updated through notice.
    (d) * * *
    (1) The total principal obligation for a loan to purchase a new 
manufactured home and a lot on which to place the home shall not exceed 
the sum of the following itemized amounts, up to a maximum set 
according to an index established by HUD in paragraph (h)(3) of this 
section and updated through notice which shall establish separate loan 
limits for single-section homes and double-section or multi-section 
homes:
* * * * *
    (2) The total principal obligation for a Combination Loan, to 
purchase an existing manufactured home and lot, shall not exceed the 
lesser of the following amounts, up to a maximum set according to an 
index established by HUD in paragraph (h)(3) of this section and 
updated through notice which shall establish separate loan limits for 
single-section homes and double-section or multi-section homes:
* * * * *
    (f) * * *
    (5) When a borrower's existing manufactured home is being 
refinanced in connection with the purchase of a manufactured home lot, 
the total principal obligation of the combination loan shall not exceed 
the lesser of the following amounts, up to the maximum established in 
paragraph (h)(3) of this section:
* * * * *
    (h) Annual adjustments. HUD shall adjust the following loan limits 
annually through notice:
    (1) In paragraphs (b)(1) and (2) of this section, the single-
section manufactured home loan limit shall be adjusted to reflect 
changes in the average price of single-section manufactured home sales 
and the double-section or multi-section manufactured home loan limit 
shall be increased to reflect changes in double-section manufactured 
home sales, according to data published by the Census Bureau, except 
that the loan limits shall not be set below $69,678.
    (2) In paragraph (c) of this section, the manufactured home lot 
loan limit shall be increased to reflect changes in the average price 
of all single-family home sales according to data published by HUD, 
except that the loan limit shall not be set below $23,226.
    (3) In paragraphs (d)(1) and (2) of this section, the combination 
manufactured home and lot loan limits shall be increased to be the sum 
of the applicable loan limit for the manufactured home loan in 
paragraph (b)(1) of this section and the lot loan limit in paragraph 
(c) of this section, except that the loan limit shall not be set below 
$92,904.

Julia R. Gordon,
Assistant Secretary for Housing, FHA Commissioner.
[FR Doc. 2022-22535 Filed 10-17-22; 8:45 am]
BILLING CODE 4210-67-P