Several challenges must be considered during the
GSEs’ pilot-program stages, Ryan says.
Loan performance might be the most important
factor. The GSEs plan to collect performance data on
chattel loans, mostly from smaller lenders, before purchasing them and potentially expanding their market
reach in the future. The GSEs plan to buy about $200
million in chattel loans in 2019 and 2020. That’s a modest figure compared to the $1.8 billion in non-chattel
manufactured-home loans, which are secured by real
estate, that Fannie Mae alone purchased in 2017.
Ryan also says the GSEs should study the characteristics of chattel-loan borrowers and compare them to
single-family home mortgage borrowers.
“I think there are some differences,” Ryan says.
“Obviously, they’re typically lower income. You might
be in a more rural circumstance. You’ve got to get your
arms around appraisals. … This is a different market
than it was 20 years ago, and it’s a lot different than the
Paul Bradley, president of ROC USA, a nonprofit
organization dedicated to promoting resident-owned
communities, also believes the GSEs will be cautious in
their approach to chattel loans.
“There’s some recovery to be done,” Bradley says.
“They did this once before and they had a very substan-
tial chattel portfolio blow up on them.”
Excluding land costs, the average sales price of a
manufactured home in 2016 was $70,600, compared
to nearly $287,000 for a site-built home, according to
census figures. Although they are less expensive to
build, Blaze says potential buyers should know that
today’s manufactured homes are of higher quality than
the mobile homes of prior decades in terms of both
construction and amenities.
“The quality of the housing and per-square-foot cost
of the interior space is a much better deal than any rental
units that you can find in our marketplace,” Blaze says.
Many affordable-housing advocates are hopeful that increased participation by the government-sponsored enter- prises (GSEs) Fannie Mae and Freddie
Mac in manufactured-housing financing could boost
options for renters looking for less expensive housing
alternatives and homeownership perks.
Fannie and Freddie announced late last year that
they would begin pilot programs to buy chattel loans
over a two-year period, starting in 2019. Chattel loans
are home-only, personal-property loans that are not
secured by the underlying real estate, unlike typical
A chattel loan must be used if a homeowner does not
own the land upon which the manufactured home sits,
as in mobile-home parks or land-lease communities.
More than 17 million Americans live in manufactured
homes, according to 2016 data from the U.S. Census
Bureau. And 80 percent of new manufactured homes in
2015 were titled as chattel, the Federal Housing Finance
“I think it’s important that fair and equitable financing be available for this type of housing, because the
cost of the present chattel loans and the difficulty for
people to get them has made a very affordable product, in many cases, unaffordable to those who most
need it,” says Donna M. Blaze, chief executive officer
of the Affordable Housing Alliance, which works on
housing-development efforts in New Jersey.
Increased competition for manufactured-housing
lenders “can be beneficial to consumers across the
country,” says Doug Ryan, senior director of affordable
homeownership at Prosperity Now, a Washington,
D.C.-based organization that works on numerous
Ryan notes that 21st Mortgage Corp. and Vanderbilt
Mortgage Finance Inc. — both of which are affiliates
of Warren Buffett’s Berkshire Hathaway — originate
about one-third of all manufactured-home loans. There
are a handful of specialty lenders, credit unions, and
savings and loan associations that offer chattel loans,
but they’re not on every street corner. Being able to
securitize these loans on the secondary market could
encourage more lenders to enter the fray.
“By Fannie and Freddie getting involved, even in a
small way, I think their current seller/servicers will get
interested perhaps — certainly in some markets — and
they’ll realize that they don’t have to hold these [loans]
in portfolio. Nobody wants to do that,” Ryan says.
The secondary market for chattel loans virtually
dried up after Fannie and Freddie stopped purchasing
them when many loans defaulted in the early 2000s.
Manufactured homes within resident-owned communities (ROCs), which can contain dozens or even
hundreds of homes, differ from those placed in land-lease communities because they do not require chattel financing. ROC homeowners purchase a stake in a
nonprofit cooperative, or co-op, and share equally in
the community’s land ownership.
In New Hampshire, state law allows ROCs to be
titled as real estate instead of chattel, which prompted
Fannie Mae last year to begin offering 30-year fixed-rate
mortgages with downpayments as low as 5 percent
to the state’s ROC residents. New Hampshire could
serve as a financing model for other states, but only a
small fraction of manufactured-home communities are
resident-owned, ROC USA says.
The Uniform Manufactured Housing Act (UMHA) of
2012 allows manufactured-home owners to title their
homes as real estate or personal property. Individual states must adopt the law, however, and the vast
majority of states still do not allow homes on leased
land to be classified as real property, the National
Consumer Law Center reports.
Advocates think widespread adoption of the UMHA
would open the doors for Fannie Mae and Freddie
Mac to invest in more manufactured homes because
their “Duty to Serve” rule — which directs the GSEs
to take a leadership role in affordable housing
for low- and moderate-income populations — only
applies to real property.
“Fannie and Freddie would step into some markets if
the laws were changed — I absolutely do believe that,”
Bradley is a bit more cautious, but still thinks that
change is coming sooner rather than later.
“I just don’t frankly believe the GSEs are ultimately
going to move the meter significantly on manufactured-housing finance or development … until everybody
moves toward a home-only residential mortgage
market,” Bradley says. “It’s just not that far away. It’s
literally at people’s fingertips.” n
By Neil Pierson
“Fannie and Freddie
would step into some
markets if the laws
Senior director of affordable
homeownership, Prosperity Now
Financing options are expanding
for manufactured homes
Neil Pierson is editor of Scotsman Guide Commercial
Edition. Reach him at firstname.lastname@example.org or