WASHINGTON (8/17/15)--An expected upcoming proposal from the Federal Housing Finance Agency (FHFA) could require Fannie Mae and Freddie Mac to purchase manufactured housing loans from mortgage lenders.
According to a report in National Mortgage News, the “duty to serve” plan would require the purchase of mobile home loans, where two-thirds of lending is backed by the vehicle, not the property.
Roughly 2.9 million households live in 50,000 manufactured housing communities nationwide, and industry groups have said the FHFA’s proposal is desperately needed to improve lending standards and increase credit availability for manufactured housing.
According to National Mortgage News, most mobile-home owners pay rent to the owner of the manufactured housing community and pay a separate mortgage on their vehicle. Low- and moderate-income borrowers are often left vulnerable if the community owner sells to a developer, forcing homeowners to move or sell their homes.
There is no secondary market for manufactured home loans that are unsecured by land, usually called “chattel loans.” Lenders that offer those loans generally have to hold them in portfolio.
Fannie and Freddie currently do not buy manufactured housing loans, but occasionally provide financing to owners of rental communities.
The FHFA proposed a “duty to serve” regulation in 2009, which would establish a duty to serve manufactured housing markets, as well as two other underserved markets. The rule has not been finalized.