With all that has been going on with Fannie Mae and Freddie Mac recently with respect to the conforming land/home mortgage market, it’s easy to become disheartened about the state of manufactured home financing. With Fannie making moves to make it more difficult to obtain 30-year mortgages and Freddie digging its heals in over converting homes to real property (both fee simple and leasehold estates), it makes one pause to think about whether the financing problem will ever get better. Coupled with their lack of involvement in the chattel market, except as a passive investor on Fannie’s part, makes one wonder how they can seriously be interested in meeting their Congressionally-mandated affordable housing goals.

While there is plenty of blame to spread around about the current state of manufactured home financing, both Fannie and Freddie have a responsibility to foster affordable housing opportunities for low-income and first-time homebuyers. Their cookie-cutter solutions for improving loan performance will do nothing except deny homeownership opportunities and perhaps reduce some risk for their shareholders. Their draconian policy changes will not improve default and severity rates and will only scare more lenders out of the market altogether. The federal government needs to take a serious look at both organizations’ affordable housing goals and require them to become more, not less, involved in the manufactured housing market—both conforming and chattel financing.

At the same time, FHA needs to finish its study of the Title I program so reforms can be instituted and the program revitalized. It played a key role in the industry’s recovery in the early 1990s and can do so again. Since Fannie and Freddie have had little involvement in the chattel market in any meaningful way, FHA needs to step up to the plate to expand financing in the home-only market. MHI continues to press FHA for Title I reform and has also proposed a Title II leasehold estate mortgage program to FHA Commissioner John Weicher, which would build upon the Freddie version yet eliminate the systemic problems of the Freddie program. The MHI National Communities Council will continue to press for these changes over the coming year.

As always, I appreciate you sharing your thoughts and comments.

Richard J. Rand is chairman of the MHI National Communities Council and president of Asset Development Group, Inc. in Milwaukee, Wisc. He can be contacted at rrand@assetdevelopment.com