There are a number of government-sponsored and government-owned entities involved in financing single- family homes. But none at present will get involved in financing homes in rental parks not legally affixed to the land.
A government-sponsored enterprise (GSE) like Fannie Mae and Freddie Mac is a financial services corporation created by Congress. Their intended function is to enhance the flow of credit to targeted sectors of the economy and to make those segments of the capital market more efficient and transparent, and to reduce the risk to investors and other suppliers of capital. The desired effect of the GSEs is to enhance the availability and reduce the cost of credit to the targeted borrowing sectors primarily by reducing the risk of capital losses to investors.
Ginnie Mae is a wholly-owned government corporation. As a wholly-owned government corporation, Ginnie Mae’s mission is to expand affordable housing financing by linking domestic and global capital to the nation's housing finance markets, providing market liquidity to federally sponsored mortgage lending programs.
None of these entities will underwrite financing for manufactured homes unless they are legally affixed to the land. This means that homes in rental parks are ineligible for government-backed financing. These are known as chattel loans.
The industry for years has been pressuring these entities as well as Congress to open this kind of financing to manufactured home chattel loans. But for the most part the industry at the national level has taken a nasty, adversarial attitude and has gotten nowhere.
MHCA has taken a different approach, and instead has proposed a pilot program for Arizona to see if and how manufactured home chattel financing can be made to work and to satisfy these organizations' need for investor security. After months of efforts we have been successful in getting one of the more prominent of these organizations to take a close look at this subject and see if chattel financing can be made to work.
We are in the process of arranging for a number of officials with this entity to visit Arizona, meet with industry leaders, and take a tour of several rental parks.
We have some definite ideas of additional protections to build into such loans to protect investors without sacrificing landlord flexibility and control of their communities.
Our hope is that by opening access to this kind of financing to park tenants, parks will be able to fill vacancies, bring more new homes into the community, and enhance the value of their communities. A lot of work remains to be done but we are blazing a new trail here and the ultimate payoff could be substantial.
