Fannie Mae and Freddie Mac have both rolled out programs to make it more affordable to buy a manufactured home by treating some high-end manufactured homes the same as properties built on-site.
However, progress has been slow for several reasons, including confusion among those in the industry, the programs’ narrow reach, and consumer bias against manufactured housing.
Manufactured homes – constructed in a factory and shipped to their destination – cost about $72,000 on average. Industry representatives say they can be made for about 40% less than site-built homes.
A perception of higher risk means loans for manufactured-home buyers often have higher interest rates than traditional mortgages, but the Fannie and Freddie programs aim to back mortgages for some manufactured homes at lower interest rates. The programs allow appraisers to compare manufactured homes to those built on-site when deriving their value, lessening the chance of a low-ball appraisal.
“This product hasn’t been about volume. It’s about changing expectations,” says Jonathan Lawless, vice president of product development and affordable housing at Fannie Mae. “We’re going to get to volumes, but given all that has to change, it is going to take a frustratingly long period of time.”
However, some retailers who assemble manufactured homes on-site say they don’t work with any lenders that offer the programs. Further, the programs require eligible manufactured homes to have pitched roofs and other characteristics that make them indistinguishable from site-built properties, and these homes are at the highest end of the market, with prices between $150,000 and $250,000.
Established lenders are “pretty much scraping off the cream of the crop and just taking the high-end customers,” says Chris Jindra, finance manager at Allegany, New York-based Owl Homes.
Source: Wall Street Journal (06/20/19) Eisen, Ben; Friedman, Nicole
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