Perspectives

Innovative Solutions to Support Non-Traditional Ownership of Manufactured Housing Communities

Jose VillarrealUnder the Duty to Serve initiative, Fannie Mae has an important role in developing solutions to address several critical housing challenges for underserved communities including manufactured housing, affordable housing preservation, and rural housing.

The Duty to Serve initiative has provided an opportunity to develop innovative products and ideas. Manufactured Housing Communities (MHCs) are a reliable source of affordable housing for homeowners and renters in suburban and rural locations across the country and Fannie Mae is working to think differently about how MHCs are viewed and financed.

Manufactured Housing is an important source of workforce housing. As part of our Duty to Serve plan, we have developed new strategies to support non-traditional owners of MHCs.

Fannie Mae conducted extensive outreach and research to identify opportunities to serve non-profit entities that own – or are planning to own – MHCs. In addition to identifying several opportunities for non-profit owned MHCs, our research concluded that to acquire and preserve MHCs, non-profit entities rely on a patchwork of capital resources ranging from private loans to tax-exempt bonds. The process to get such funds is highly competitive, time consuming, and costly.

MHC residents largely make 80% of Area Median Income (AMI) or less. In many suburban areas, land value has risen creating an attractive selling option for MHC owners. Once sold, new development tends to be commercial or traditional apartment dwellings, which reduces access to affordable options for many residents. The problem worsens in rural areas where MHCs are older and in need of upgrades – reinvestment in the properties that owners are often reluctant to finance.

Non-traditional and non-profit ownership structures are a useful option, which allows non-profits to purchase and preserve MHCs and with a stronger incentive to complete necessary repairs in rural communities.

In 2019, Fannie Mae began testing a product enhancement specifically for resident-owned communities as well as a new product enhancement that lowers financing costs and provides third-party report reimbursement for non-profit MHCs. This product provides non-profit owners with a guaranty fee discount of 7.5 basis points and a servicing fee discount of 7.5 basis points, as well as up to $10,000 in reimbursement for third-party reports such as appraisals and environmental assessments.

Fannie Mae has been a leading source of liquidity for manufactured housing transactions since 2000. As part of our Duty to Serve plan, we are continuing to develop new strategies to support manufactured housing communities and the people who live there.

View Fannie Mae's complete Multifamily Economic and Commentary Report on the need for Non-Traditional Ownership of Manufactured Housing Communities here.

Jose Villarreal
Manager, Multifamily MHC Product Development

July 2, 2019