MHI SAYS THE GSEs’ PLANS FOR MANUFACTURED HOUSING NEED MORE SPECIFICITY AND COMMITMENT TO CHATTEL LOAN PURCHASES
Arlington, VA (May 9, 2017) – The Manufactured Housing Institute (MHI) issued the following statement in response to the Federal Housing Finance Agency’s (FHFA) release of Fannie Mae and Freddie Mac’s draft Duty to Serve plans. The statement is from Lesli Gooch, senior vice president for government affairs and chief lobbyist for MHI.
“We are pleased to see details of how Fannie Mae and Freddie Mac propose to move toward the creation of a secondary market for manufactured home chattel loans. However, since FHFA has acknowledged that chattel loans make up 80 percent of all new manufactured home placements, MHI believes that the Enterprises should not be able to receive a satisfactory rating without a significantly more meaningful commitment to purchase chattel loans.”
“We appreciate that Fannie Mae identified specific loan volumes as a goal, but the amounts are wholly insufficient for either Enterprise to launch a meaningful commitment to serving the market.”
“MHI is disappointed that neither Plan makes a commitment during the three-year plan period to purchase chattel loans on a flow basis — instead limiting their goals to the bulk purchase of loans.”
“Fannie Mae and Freddie Mac’s plans must lead to chattel manufactured home loan purchases. Their plans need specific volume targets that lead to meaningful purchases on a flow basis during the three-year plan period. The plans should include measurable benchmarks and Duty to Serve credit must only come from achieving these benchmarks. Duty to Serve credits should be outcome-based and focused on actual and meaningful impacts.”
Under the final rule, each Enterprise is required to prepare an Underserved Markets Plan that describes, with specificity, the actions the Enterprises will take over a three-year period to fulfill the Duty to Serve obligation. MHI has consistently called for chattel loans to be included within these plans and has argued that since chattel loans comprise 80 percent of the manufactured home loan market a Duty to Serve plan that does not include a significant effort to purchase chattel loans is inadequate.
The Enterprises’ plans each point to their lack of familiarity with chattel loans, citing the lack of recent chattel loan performance data and outdated/inappropriate data from a decade ago as the rationale to engage in additional due diligence prior to purchasing chattel loans. The focus of each of the three-year plans is on steps to ensure chattel loans can be purchased in bulk safely and soundly prior to proceeding with a chattel loan pilot.
MHI will closely assess each of the Enterprise’s plans and publicly comment on them during the public comment period, which ends on July 10, 2017.
MHI has engaged in a multi-year effort to educate FHFA, Fannie Mae and Freddie Mac on the fundamentals of the manufactured housing finance market and the importance of a secondary market for chattel loans. In 2010 and 2015, the FHFA’s proposals on Duty to Serve did not even include chattel loans. The efforts of MHI and its members led to a final rule that included the purchase of chattel loans and to the Enterprises’ consideration of chattel financing in their draft plans.
MHI will continue to serve as a resource for FHFA, Fannie Mae and Freddie Mac and strongly advocate for moving forward with the substantive purchase and securitization of chattel loans. Through its previous comment letters, participation in the Duty to Serve listening sessions, and meetings with FHFA and the Enterprises, MHI has called for an approach that results in securitization of chattel loans while remaining consistent with the Duty to Serve statute and cognizant of conservator financial and consumer concerns. Last May, MHI proposed a specific methodology for the Enterprises to follow in order to address outstanding issues and establish financial modeling for the prudent purchase of chattel loans, ultimately resulting in the purchase of chattel loans at meaningful levels. Following a diligent effort by the Enterprises to understand the market and determine how chattel loans could be purchased safely, which MHI estimated would take six to 12 months, MHI argued the Enterprises should actually start purchasing chattel loans.