Under the proposal, GSEs would be required to offer financing for small MHCs with 150 or fewer home sites, which would allow them to earn “duty to serve” credits if they make blanket loans secured by the land and the home site in those communities. However, for this to work, the MHC owner must grant the residents a minimum one-year lease, and the right to post for sale signs and be able to sell their home on its current site.
The FHFA proposal would also require MHC owners to offer their communities for sale to the residents if they decide to sell.
In addition, the plan would create an opportunity for a secondary market for manufactured housing loans that are secured by real estate. Currently, lenders for buyers of MH have to carry their own paper. The Consumer Financial Protection Bureau (CFPB) reports, while two-thirds of MH buyers site their homes on land they own, they tend to finance the homes using chattel loans.
An FHFA official said, “A growing number of manufactured housing buyers are opting to place their homes on land they are purchasing or already own. These real estate loans perform better and have lower default rates than chattel loans.“
Moreover, the FHFA is encouraging the GSEs to conduct a pilot program financing manufactured home loans not secured by land, and is also seeking comment on how chattel loans could be made safer for purchase by the GSEs.
David Stevens, president and chief executive of the Mortgage Bankers Association (MBA), said, “Manufactured housing is an important entry point for many low income homebuyers. Conducting a pilot program in order to gauge the effectiveness of purchasing these types of loans is the smartest, most efficient way to understand their performance.”##
(Image credit: Federal Housing Finance Agency)
