FHA Single Family Housing Policy Handbook 4000.1, Part II — b. Dealer Loan (05/09/2022)

FHA Single Family Housing Policy Handbook 4000.1, Part II — b. Dealer Loan (05/09/2022)

b. Dealer Loan (05/09/2022) i. Definition A Dealer Loan refers to a Loan where a Dealer assists the Borrower in preparing the credit application or otherwise assists the Borrower in obtaining the Loan from the Lender. This may include completing the loan application for the Borrower, and II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 3. Direct and Dealer Loan Process for Manufactured Home Loan Program Handbook 4000.1 999 Last Revised: 11/26/2025 collecting any other documentation or information as required by the Lender that is necessary to support the lending decision. When a Dealer does not assist the Borrower in obtaining the Loan from the Lender, then the transaction is not considered a Dealer Loan. ii. Standard The Dealer may assist the Borrower in obtaining the Loan from the Lender. This may include completing the loan application for the Borrower, and collecting any other documentation or information as required by the Lender that is necessary to support the lending decision. To facilitate the sale of Manufactured Homes, the Dealer may enter into a Business Relationship with an FHA Title I approved Lender that will provide financing to the home purchaser. The Dealer and Title I Lender may agree to require partial or full recourse in a provision in the loan documents against the Dealer to reduce or eliminate the Lender’s loss in the event of foreclosure or repossession. Recourse provisions are subject to the requirements described in Recourse from Dealer. The loan documents may provide for partial or full recourse against the Dealer, and must comply with requirements described in Recourse from Dealer. iii. Dealer Approval and Monitoring The Lender is responsible for approving Dealers prior to the Dealer’s participation in the Dealer Loan process. The Lender must complete an investigation of the Dealer and document the findings for approval before the Dealer may begin originating Title I Loans through the Lender. (A) General Criteria Each Dealer must demonstrate previous business experience in manufactured home retail sales. The Lender must evaluate the Dealer on the basis of experience and approve only those Dealers that the Lender considers to be reliable, financially responsible, and qualified to satisfactorily perform their contractual obligations. At a minimum, each Dealer must comply with the following requirements for Dealer approval. (1) Dealer Eligibility for Participation in HUD Programs The Lender must verify that the Dealer and the Principal Owners of the dealership are not excluded from participation in federal government programs and document the results of their review. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 3. Direct and Dealer Loan Process for Manufactured Home Loan Program Handbook 4000.1 1000 Last Revised: 11/26/2025 The Lender may not contract with entities or persons that are suspended, debarred, or otherwise excluded from participation in HUD programs, or under a Limited Denial of Participation (LDP) that excludes their participation in FHA programs. The Lender must ensure that no TPO or contractor engages such an entity or person to perform any function relating to the origination of an FHA- insured Loan. The Lender must check the System for Award Management (SAM) and the Credit Alert Verification Reporting System (CAIVRS) and must follow appropriate procedures defined by that system to confirm eligibility for participation. The Dealer, if the Dealer is acting as a Lender, must comply with all laws, rules, and requirements applicable to the loan transaction, including full compliance with the Consumer Financial Protection Bureau (CFPB). (2) Net Worth Requirement A Dealer must have and maintain a net worth of not less than $63,000 in assets acceptable to HUD. The following asset types and sources are not eligible for inclusion toward the minimum net worth: • any assets of the Dealer that are pledged to secure obligations of another person or entity; • any asset due from either officers or stockholders of the Dealer or related entities, in which the Dealer’s officers and stockholders have a personal interest (unrelated to their position as an officer or stockholder). “Personal interest” refers to a relationship between the Dealer and a person or entity in which that specified person (e.g., spouse, parent, grandparent, child, brother, sister, aunt, uncle, or in-law) has a financial interest in or is employed in a management position by the Dealer; • any investment in related entities in which the Dealer’s officers or stockholders have a personal interest unrelated to their position as an officer or stockholder for the Dealer; • that portion of an investment in joint ventures, subsidiaries, Affiliates and/or other related entities which is carried at a value greater than equity, as adjusted. “Equity as adjusted” means the book value on the books of the related entity reduced by the amount of unacceptable assets carried by the related entity; • all intangibles, such as goodwill, covenants not to compete, franchisee fees, organization costs, etc., except unamortized servicing costs carried at a value established by an Arm’s Length Transaction and presented in accordance with Generally Accepted Accounting Principles (GAAP); • that portion of an asset not readily marketable, and for which appraised values are very subjective, carried at a value in excess of a substantially discounted appraised value; and II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 3. Direct and Dealer Loan Process for Manufactured Home Loan Program Handbook 4000.1 1001 Last Revised: 11/26/2025 • any asset which is principally used for the personal enjoyment of an officer or stockholder and not for normal business purposes. (3) Resale Agreements As a condition of approval, a Lender may require a Dealer to execute a written resale agreement. If a Loan originated by the Dealer results in the repossession of the Manufactured Home, the agreement would require the Dealer to assist the Lender in reselling the Manufactured Home, if requested by the Lender. (B) Approval Procedure for the Dealer Lenders must follow the procedures listed below to approve a Dealer to participate in the Title I Manufactured Home Loan program. (1) Application Form A prospective Dealer must complete form HUD-55013, Dealer/Contractor Application: Title I Property Improvement and Manufactured Home Loans. The Lender must retain form HUD-55013 and all supporting documentation in its dealer file for each Dealer. (2) Financial Statement The Lender must obtain and review the Dealer’s most recent annual financial statement(s) to confirm that the Dealer meets HUD’s net worth requirement. The financial statement must have been prepared by a Certified Public Accountant (CPA) or a licensed public accountant. If the annual financial statement provided at application is more than six months old, the Lender must also obtain and review the Dealer’s current Profit and Loss (P&L) statement and balance sheet to verify that the Dealer’s net worth is sufficient. (3) Dealer Credit Report The Lender must obtain and evaluate a commercial credit report on the dealership. The Lender must also obtain and evaluate an individual credit report on the Principal Owner(s) of the dealership to ensure that the owner(s) does not exhibit a disregard for credit. (4) Documentation of Approval Upon completion of the Lender’s thorough review and investigation of a Dealer, an authorized official of the Lender must sign the bottom of form HUD-55013 to document the Lender’s decision to approve the Dealer. The Lender must retain the approved application and all supporting documentation obtained during the application review. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 3. Direct and Dealer Loan Process for Manufactured Home Loan Program Handbook 4000.1 1002 Last Revised: 11/26/2025 (5) Annual Renewal A Dealer is approved for a period of one year. To be re-approved, a Dealer must provide the Lender with a new form HUD-55013 and its most recent financial statement. In addition to the steps outlined above for the initial approval, the Lender must also evaluate its experience with the Dealer during the prior year. This evaluation must address performance factors such as: • the Dealer’s approval and rejection rates; • the collection history for Loans purchased from the Dealer; and • the Dealer’s complaint resolution practices. (C) Monitoring the Dealer In addition to the initial and annual dealer approval reviews, a Lender must monitor each approved Dealer’s activities with respect to Loans insured by HUD on an ongoing basis. The Lender must take prompt action to resolve any dealer deficiencies discovered. A Lender’s monitoring of Dealers must include the following. (1) Quality of Borrower Applicants The Lender must monitor the quality of applicants submitted by the Dealer. If a Dealer’s rejection rate is too high, the Lender should meet with the Dealer to review the Dealer’s marketing and borrower qualification practices. (2) Loan Documentation Quality The Lender must monitor the quality and completeness of the loan documentation submitted by the Dealer. (3) Dealer Advertising The Lender must monitor dealer advertising and other marketing material to ensure against misleading or false claims. Of particular concern is advertising that uses “Federal Housing Administration,” “Department of Housing and Urban Development,” “FHA,” or “HUD” to convey the impression that the Dealer has a special relationship with the federal government. Other prohibited marketing practices include material that states or implies that it is an official government notice, Title I is a grant program, Title I provides Special Benefits for a particular area or group, government funding for the program is limited in amount or for a limited time period, the Borrowers are pre-approved, poor credit is acceptable, HUD approved the Dealer, or the loan funds can be used for debt consolidation. Copies of dealer advertisements and other marketing materials issued by the Dealer must be maintained in the Dealer’s file with the other required documents. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 3. Direct and Dealer Loan Process for Manufactured Home Loan Program Handbook 4000.1 1003 Last Revised: 11/26/2025 Special Benefits refer to benefits other than volume incentives for Dealers which a home manufacturer funds from general corporate revenues by charging them against corporate overhead and profit without changing the wholesale (base) price of a Manufactured Home (or series of homes), as reflected in the manufacturer’s published wholesale (base) price list, and which are limited to payments by the manufacturer directly to: • a financial institution to buy down or reduce the interest rate, Discount Points, or other fees or charges related to a lending agreement for a Dealer’s manufactured home inventory or floor plan financing needs; or • one or more advertising media for all or part of the costs of advertising the manufacturer’s homes, one or more Dealer’s services, and related manufactured home materials and products in such media. (4) Monitor Complaints The Lender must monitor complaints received on Loans originated by the Dealer. Documentation for all complaints and their resolution must be maintained in the Dealer’s file. Particular attention should be focused on the quality of service offered, whether warranties are honored in a timely manner, and the general manner in which the Dealer resolves complaints and conducts their business. (5) Prohibition of Kickbacks and other Irregularities All credible allegations of irregularities (kickbacks, false statements, etc.) must be promptly reported to either HUD’s QAD or to HUD’s Office of the Inspector General (OIG). All referrals to the OIG should be made to the OIG Hotline’s call center at 1-800-347-3735 or via the OIG Hotline’s website at www.hudoig.gov/hotline. (6) Material Changes of Dealer A Lender is responsible for monitoring each Dealer, including any material change in their trade name, places of business, type of ownership, type of business, or principal individuals who control or manage the business. Upon discovery of any material change, the Lender must determine that the eligibility of the Dealer has not changed. (7) Maintain Dealer Files The Lender is to maintain a separate file for each approved Dealer. The file is to include the initial application and documentation used for approval and any information regarding the Lender’s experience with Title I Loans involving the Dealer. Each file must consist of information regarding borrower Default rates, records of inspections of homes delivered and installed by the Dealer, copies of letters concerning borrower complaints and their resolution, material changes, II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 4. Manufactured Home Loan Program Handbook 4000.1 1004 Last Revised: 11/26/2025 copies of dealer advertisements and other marketing materials, and records of the Lender’s visits to the Dealer’s premises. (8) Termination of the Dealer A Dealer’s approval will be terminated if a Dealer does not satisfactorily perform its contractual obligations to Borrowers, does not comply with Title I program requirements, or is unresponsive to inquiries pertaining to lender supervision and monitoring requirements. The Lender is required to notify HUD immediately with written documentation of the reason(s) for termination. A Dealer whose approval is terminated as a result of these circumstances may not be re-approved by a Lender without prior written approval from HUD. Notices of termination for cause and requests for permission to re-approve a terminated Dealer must be in writing and sent to: U.S. Department of Housing and Urban Development Quality Assurance Division 451 Seventh St., SW Washington, DC 20410 A Lender may, at its discretion, terminate the approval of a Dealer for other reasons at any time. 4. Manufactured Home Loan Program The Title I Manufactured Home Loan Program, Origination/Processing through Post- closing/Endorsement sections in this FHA Single Family Housing Policy Handbook (Handbook 4000.1) is applicable to all Manufactured Home Loans insured under Title I of the National Housing Act. The Lender must fully comply with all of the following standards and procedures for obtaining Federal Housing Administration (FHA) insurance on a Loan. If there are any exceptions or program-specific standards or procedures that differ from those set forth below, the exceptions or alternative program or product specific standards and procedures are explicitly stated. Terms and acronyms used in this Handbook 4000.1 have their meanings defined in the Glossary and Acronyms and in the specific section of Handbook 4000.1 in which the definitions are located. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 4. Manufactured Home Loan Program Handbook 4000.1 1005 Last Revised: 11/26/2025

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