Markdown_files/FHA handbook/page_1161.md

## II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT

### E. Title I Insured Programs

#### 4. Manufactured Home Loan Program

##### (7) Late Charges

The Note may provide for a Late Charge unless specifically precluded by state law. The Late Charge may be imposed only for a payment which is in arrears for the greater of 15 Days or the number of Days required by applicable state law. Late Charges must be billed to the Borrower or reflected in the payment coupon. Evidence of Late Charges paid by the Borrower must be in the case binder if an insurance claim is made.

###### (a) Amount of Late Charge

The Late Charge must not exceed the lesser of 4 percent for each installment of P&I, or the maximum amount permitted by applicable state law.

###### (b) Method of Payment

Payment of any Late Charge cannot be deducted from the monthly payment of P&I. Late payment fees must be calculated and shown as an additional charge to the Borrower.

###### (c) Daily Interest in Lieu of Late Charges

In lieu of Late Charges, the Note may provide for interest to accrue on installments in arrears, continuing daily, based on the interest rate in the Note.

##### (8) Prepayment Provision

Borrowers cannot be charged a prepayment penalty on any FHA Title I Manufactured Home Loan product.

##### (9) Recourse from Dealer

The Dealer and Title I Lender may agree to require partial or full recourse of 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 in the loan documents may provide for:

- A Default occurring within a period of not more than three years from the date of the Loan;
- Reimbursement from the Dealer for:
  - A fixed percentage of the unpaid amount of the loan obligation, after deducting the proceeds from the sale of the Property; and
  - Any amounts received or retained by the Lender after the date of Default; or
- A maximum liability to the Dealer of 100 percent of the unpaid amount of the loan obligation prior to such deductions.

**Handbook 4000.1**  
Last Revised: 01/1132  
10/2025