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Fannie rolls out model mobile-home program

Across most of the United States, the buyers of manufactured homes can’t get a conventional fixed-rate mortgage unless they are purchasing land along with the mobile home. Their financing options, consequently, are very limited. They will almost always need to turn to one of the few lenders that offer chattel financing.  

But in one small pocket of the country — New Hampshire — that has changed.

For the first time on any scale, Fannie Mae loans will now be available to residents of approved resident-owned communities (known as ROCs) in the Granite State. ROCs, which were pioneered in New Hampshire in the early 1980s, are cooperatives owned by the residents of the communities, similar to a condo structure.

mobilehomeUnder New Hampshire law, manufactured homes located in ROCs can be titled as real property, which has enabled Fannie and lender partners in the state to structure a loan program.

The program features 30-year fixed mortgages that offer 95 percent financing, and rates comparable to Fannie loans and which are available to manufactured-home owners who own their land. The typical loan will be in the $50,000 to $70,000 range. These will eventually be securitized and sold to investors on the secondary market.

Fannie rolled the program out this past week in partnership with the New Hampshire Housing Finance Authority. The scale remains small, even on a statewide basis. Of New Hampshire’s 123 ROCs, just 10 have been approved as eligible for Fannie loans. This program could serve as a model for other states, however, advocates say.  

The national nonprofit ROC USA estimates that there are a total of 1,000 co-op manufactured home communities in the country, which represents just 2 percent of all mobile-home communities. There is potential for this number to grow, however. Surveys conducted by the Manufactured Housing Institute suggest that about 35 percent of all manufactured homes are located in parks.

 “If we think about the manufactured housing that exists throughout the country, some of it sits on real property and its own parcel, but a fair amount sits in parks,” said P.J. McCarthy, vice president of community lending at Fannie Mae.

“The 30-year mortgage that is now available, that these homes are now eligible for, is really an expansion of credit to that housing stock,” McCarthy told Scotsman Guide News. “Obviously, if other states take steps toward similar legislation and titling manufactured homes as real property in resident-owned communities, then this expansion of credit would be eligible elsewhere.”

 The New Hampshire blueprint

New Hampshire has been laying the groundwork for Fannie’s program for several years. The nonprofit Concord-based New Hampshire Community Loan Fund developed a 30-year fixed-rate loan in 2002 that has been made available to mobile home owners in ROCs statewide. The organization has now been tasked with determining a ROC’s eligibility for Fannie’s loan program. A ROC must be deemed eligible to offer Fannie loans to residents. It must meet certain targets, such as certain percentage of the residents must be in a lower-income bracket. The Community Loan Fund is handling that application process.

“The goal is to get into as many ROCs as we can,” said Ignatius MacLellan, managing director of the Homeownership Division at the New Hampshire Housing Finance Authority. “Frankly, we think it is a great benefit for the borrower, and we think it is a way to change the system, so that folks can actually do prudent lending on manufactured homes. The interest rates are going to be much lower than anything they can get anywhere else.”

The Community Loan Fund also is actively trying to expand the number of ROCs in the state by financing park purchases, which would in turn potentially make more people eligible for Fannie loans in the new ROCs. In New Hampshire, the mobile-home residents have a right of first refusal to purchase their mobile-home park, if the owner intends to sell. ROC USA, a nonprofit that was spun off from the Community Loan Fund a decade ago, also is currently developing a fixed-rate loan program in 13 other U.S. states where it is active, a spokesman said.   

Fannie has previously purchased “a handful of loans” from the Community Loan Fund and few other lenders in the state, prior to the partnership with the New Hampshire Housing Finance Authority. The latest move marks the first time these loans will be offered on any scale. 


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