The Manufactured Housing Institute is calling on the Federal Housing Finance Agency to push the government-sponsored enterprises to purchase chattel loans.
The trade organization made its request regarding the loans, which apply to manufactured housing not secured by real estate, in a letter to the agency. The FHFA is currently seeking comments on its proposed "Duty to Serve" rule.
"Requiring the GSEs to purchase chattel loans as part of their statutory Duty to Serve is the single most important step the FHFA can take to improve access to mortgage credit for manufactured housing consumers," MHI senior vice president of legislative affairs Lesli Gooch said in a news release. "MHI’s written comments provide a roadmap on how FHFA and the GSEs can safely and profitably purchase these loans."
MHI believes that the Duty to Serve Credit should extend to chattel loans that meet underwriting standards and land-lease and other consumer protections. The organization noted in its release that manufactured housing was identified as an underserved market that GSEs must serve in the Housing and Economic Recovery Act passed in 2008. The organization reported that chattel loans constitute 70% of the manufactured housing market.
The FHFA issued its proposed "Duty to Serve" rule last December. At the time, the agency
But the proposal only required GSEs to aid in the financing of small manufactured housing communities with fewer than 150 pads or home sites. The proposal did not make similar requirement for chattel loans, which occur on an individual basis, though the FHFA did suggest performing a pilot program regarding these loans.
Requiring GSEs to purchase chattel loans could have a more pronounced impact, MHI argues. While the organization supports the plan as it regards smaller communities, it warns that larger manufactured housing communities are not considered underserved. So any assistance given to this segment would not help make financing more affordable for homeowners, the group said.
"If implemented, MHI's recommendations will bring to manufactured housing consumers many of the same benefits available to consumers with conventional mortgages, namely greater access to credit with potentially more affordable financing, more lenders in the market, and the ability to refinance as market conditions change," Gooch said.
MHI also called for the FHFA to draw up an Underserved Markets Plan that contains specifics regarding "new loan products, more flexible underwriting, improved outreach to qualified seller-servicers, and reasonable volume benchmarks for purchase of loans titled as real property."
