Pushed by their regulator, Fannie Mae and Freddie Mac are planning to support the market for chattel loans on manufactured housing.
It has been more than 10 years since I last looked at the market for manufactured housing, my excuse being that nothing much had happened that justified another look. But now something has happened: Fannie Mae and Freddie Mac are planning to support the market for chattel loans on manufactured housing. The agencies are being pushed to do this by their regulator, the Federal Housing Finance Agency (FHFA), in compliance with their “duty to serve” requirement under the Safety and Soundness Act.
This makes sense because, according to the U.S. Census, the average price of a manufactured house today is about $70,000, compared with $350,000 for a site-built home. So long as Fannie and Freddie remain in conservatorship operating as wards of the federal government, their principal mission remains that of meeting the housing finance needs of low- and moderate-income households. The big question for the agencies is how to provide financing for manufactured housing without incurring excessive risk.
What is a manufactured home?
A manufactured home is built in a factory, transported to a site and installed there. Usually, they are built without a particular site in mind. They are subject to a federal building code administered by the U.S. Department of Housing and Urban Development. Most often, manufactured homes are financed with chattel loans rather than mortgage loans.
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A manufactured home is distinguished from “modular,” “panelized” and “pre-cut” homes, in which parts are factory-built but are assembled on a pre-specified site.
These types of factory-built housing comply with the local, state or regional building codes that apply to that site and are financed with mortgages, in the same way as houses constructed entirely…