Manufactured Homes and GSE backed loans...

The manufactured-housing industry wants Freddie Mae and Freddie Mac to be required to fund higher-risk loans most commonly used to purchase mobile homes.

Industry reps said this week that the Federal Housing Finance Agency (FHFA), the agency that oversees the government-sponsored enterprises, has been too slow to adopt a mandate in the 2008 Housing and Economic Recovery Act (HERA) that required additional financing for the industry.

The FHFA proposed a rule known as the “duty-to-serve plan” in 2009, which was formerly introduced in 2010. The agency, however, never adopted the rule.

Some trade groups say they expect the FHFA to reintroduce a plan soon.

“It has been five years since the proposed rule came out, and they have to do something,” said Doug Ryan, director of affordable housing initiatives at the Corporation for Enterprise Development.

Industry trade groups want the agencies to provide financing for “chattel loans,” which are the most typical kind of loan in the industry. These loans are secured by the manufactured home itself and not by land, and usually carry a much higher interest rate.

Fannie and Freddie already purchase manufactured home loans secured by land, and also back loans for the mobile home parks, but do not finance chattel loans.

The trade groups say that most lenders aren’t willing to do chattel loans because there is no secondary market for them. The lender has to hold them in portfolio, and assumes all the risk.

By backing chattel loans, the agencies would make these loans more attractive a wider range of mainstream lenders, the industry said. If the loans become mainstream, chattel-loan borrowers might be able to refinance when rates change, which they can’t do now.

Written by Victor Whitman commentary and redactions by Jayden Hakunti.

As an industry professional, I have come across many clients who desired to purchase a manufactured home. But because the FHFA doesn't back such loans, the clients usually have to come in with much more down payment at much worse terms than someone buying a largely more expensive house. It never made sense to me that the FHFA would not back loans secured by the manufactured homes. Hopefully this is about to change very soon! The community will be better served.