Manufactured Housing Industry Counts on Final FHFA Ruling To Allow Government Backed Financing
Mortgage Financing For Manufactured Homes Not Attached To Real Property Could Give Many More Citizens Access To Affordable Homeownership.
Manufactured housing advocates are “guardedly optimistic” that the Federal Housing Agency (FHFA) will soon issue a long-awaited final rule that they hope will expand the secondary financing market for what is commonly known as mobile homes, reports National Mortgage News.
The manufactured home industry is pushing for a pilot program in a final rule by the FFHFA that will let the government-sponsored enterprises invest in manufactured home loans that are not backed by real estate – otherwise known as chattel loans. Currently, approximately 70% of manufactured homes are financed with chattel loans.
“We are optimistic it can do lots of good for manufactured home owners,” said Doug Ryan, the director of affordable homeownership at the Center for Economic Development.
FHFA Pilot Program
The pilot program is expected to be part of the GSE’s “duty to serve” rule, which details how Fannie Mae and Freddie Mac should help low and moderate-income borrowers.( MFH sources believe that Freddie Mac will be the lone GSE participating in the Pilot Program.)
“Requiring the GSEs to purchase chattel loans as part of their statutory requirement is the single most important step the FHFA can take to improve access mortgage credit for manufactured housing consumers,” said Leslie Gooch, executive director of the Manufactured Housing Institute.
The Center for Responsible Lending is also encouraging the FHFA to embrace such a pilot program. “The pilot should have the explicit goal of expanding or making permanent a program to support safe chattel lending,” the group sad in a March comment letter.
As to be expected the National Association of Homebuilders and Independent Community Bankers of America are opposed to the idea. “Chattel loans carry higher risk. We don’t think it is a good idea,” said Ron Haynie, a senior vice president at ICBA, in an interview.
The GSE regulator should “direct the Enterprises to work with mortgage insurers to develop mortgage insurance products for manufactured home loans,” Haynie wrote in ICBAs March 17 comment letter. CFEDs Ryan expects the chattel pilot program will focus on manufactured homes sited in manufactured housing communities owned by non-profits, state and local housing authorities and cooperatives that are stable and offer their tenants long-term leases. The major concern is that an owner of a community might suddenly sell the property to a developer and force the homeowner to move, which can be expensive.
Manufactured Housing Institute (MHI) officials have also been encouraged by their dialog with the GSEs about chattel lending, “We are very encouraged by their attention.” Gooch said. She also expects the Fannie and Freddie will start a pilot program where the manufactured homes are sited on land owned by the borrower. “Like a farm.”
But at the end of the pilot, Gooch wants to see the GSEs get into the business of purchasing chattel loans on a meaningful level. “We think it is very important that they move ahead on the chattel side. Otherwise, the statutory Duty to Serve requirement in the manufactured housing space will not be fulfilled,” Gooch said.
“We will continue to work on a final Duty to Serve rule.”
FHFA spokeswoman Stefanie Johnson said in an email last week. “The rule is not yet complete so we won’t be commenting on the substance of it.”
The Duty to Serve Rule was mandated by the passage of the Economic Recovery Act (HERA) in 2008, FHFA has steadfastly refused to implement the rule, despite aggressive input by political and industry leaders, until now. There are questions of course, about whether the incoming Trump administration will have an impact on the duty to serve regulation, and the agency leadership, if it is not issued before the president takes office.
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