MANUFACTURED HOUSING LOANS / Duty to Serve
Manufactured housing is a significant source of unsubsidized affordable housing for those living on modest incomes, and an accessible opportunity for home ownership. There are 22 million people living in manufactured homes, including those placed in the nation’s estimated 55,000 park communities. Since 1989, manufactured housing has accounted for 21% of all new single-family homes sold; in 2009, manufactured housing accounted for 43% of all new homes sold under $150,000 and 23% of all new homes sold under $200,000. In part, this is because of their extreme affordability. In fact, as of 2020, the median income served by manufactured home ownership was $38,087 and by manufactured home rental was $28,280.
However, because the homes are classified as “personal property” rather than “real property,” buyers are most often only able to receive high-cost, poor-quality chattel loans; despite presenting the same collateral assets as a site-built home buyer. (The National Conference of Commissioners on Uniform State Laws actually recommended changing the classification of manufactured homes in 2012.) In fact, 88% of new manufactured homes are titled as chattel even though 66% are located on privately-owned land and only 34% in manufactured home communities. In 2015, two-thirds of manufactured home loans were classified as “high cost” (having a substantially high interest rate) with rates as high as 9-10% and terms as short as 7-18 years; which makes high-cost loans for manufactured homes 7 times more likely than for site-built homes. As a result, manufactured home owners are more likely than single-family home owners to purchase their homes for cash, rather than through financing, 33% to 12%, respectively.
Federal Housing Finance Agency's Duty to Serve
In 1992, Congress passed the Federal Housing Enterprises Finance Safety and Soundness Act, imposing on the Federal Housing Finance Agency (FHFA), Fannie Mae and Freddie Mac a "Duty to Serve" three underserved markets – affordable housing preservation, rural housing, and manufactured housing - with increased and improved support for loan financing. In 2017, FHFA issued a final set of regulations that included financing for manufactured homes and manufactured home communities. FHFA is required to annually evaluate and rate its efforts and the efforts of Fannie Mae and Freddie Mac.
NMHOA Comments on Duty to Serve
NMHOA staff and board members encouraged adoption of the Duty to Serve rule and has continued to comment on the status of the program and areas for improvement. You can read NMHOA’s comment letters here:
However, because the homes are classified as “personal property” rather than “real property,” buyers are most often only able to receive high-cost, poor-quality chattel loans; despite presenting the same collateral assets as a site-built home buyer. (The National Conference of Commissioners on Uniform State Laws actually recommended changing the classification of manufactured homes in 2012.) In fact, 88% of new manufactured homes are titled as chattel even though 66% are located on privately-owned land and only 34% in manufactured home communities. In 2015, two-thirds of manufactured home loans were classified as “high cost” (having a substantially high interest rate) with rates as high as 9-10% and terms as short as 7-18 years; which makes high-cost loans for manufactured homes 7 times more likely than for site-built homes. As a result, manufactured home owners are more likely than single-family home owners to purchase their homes for cash, rather than through financing, 33% to 12%, respectively.
Federal Housing Finance Agency's Duty to Serve
In 1992, Congress passed the Federal Housing Enterprises Finance Safety and Soundness Act, imposing on the Federal Housing Finance Agency (FHFA), Fannie Mae and Freddie Mac a "Duty to Serve" three underserved markets – affordable housing preservation, rural housing, and manufactured housing - with increased and improved support for loan financing. In 2017, FHFA issued a final set of regulations that included financing for manufactured homes and manufactured home communities. FHFA is required to annually evaluate and rate its efforts and the efforts of Fannie Mae and Freddie Mac.
NMHOA Comments on Duty to Serve
NMHOA staff and board members encouraged adoption of the Duty to Serve rule and has continued to comment on the status of the program and areas for improvement. You can read NMHOA’s comment letters here:
| nmhoa_dts_comment_letter_3.08.16.pdf |
