Written By: Joel Palmer, Op-Ed Writer
Last year, the Federal Housing Finance Agency (FHFA) issued the Duty to Serve Underserved Markets Rule, a requirement of the Housing and Economic Recovery Act of 2008.
The rule required Fannie Mae and Freddie Mac to determine ways to improve access to mortgage financing to buyers of limited financial means in three key housing markets, most notablyin manufactured housing.
A major step in that initiative occurred earlier this month when Fannie Mae announced a partnership with the New Hampshire Housing Finance Authority (NHHFA) to provide affordable finance options to Fannie-approved Resident Owned Communities (ROCs) in the state.
The partnership involves making the NHHFA’s Home Preferred program available for manufactured housing in Fannie approved ROCs. The program offers 30-yearfinancing on loans of up to 95 percent LTV with low mortgage insurance coverage.
ROCs are non-profit cooperatives formed by the homeowners of a manufactured home developments. Each household is a member of the ROC and they elect a board of directors to manage day-to-day operations. Major decisions are usually conducted by membership votes. These arrangements are much different from a commercially owned community in which homeowners lease the space their homes sit on, and the park ownership makes and enforces the rules.
According to ROC USA, a non-profit that works with ROCs nationwide,there are about 1,000 ROCs, accounting for 2 percent of all manufactured (mobile) home communities.
According to a report on Scotsman Guide, this program could be duplicated in other states. The New Hampshire program features rates comparable to Fannie loans. The typical loan will be in the $50,000 to $70,000 range and will be securitized and sold to investors on the secondary market.
Manufactured home buyers can’t get a conventional fixed-rate mortgage unless they are purchasing land along with the home. Without an ownership stake in the land on which properties sit, manufactured home owners have limited financing options.
Freddie Mac has considered initiating a chattel pilot program. Chattel loans are those that are secured only by the home itself and not on the underlying property. About 80 percent of new manufactured homes placed in 2015 were titled as chattel, according to FHFA’s original request for input, published in January.
Freddie extends hurricane-related requirements
In other GSE news, Freddie Mac announced at the end of September that is has extended its temporary selling and servicing requirements to mortgages and borrowers located in eligible disaster areas impacted by all hurricanes on and after August 25, 2017 and through the 2017 hurricane season.
In addition, for mortgages secured by properties located in Eligible Disaster Areas affected by Hurricane Maria, Freddie Mac is requiring servicers to suspend all foreclosure sales through December 31, 2017.
About the Author
As an NAMU® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.