Key facts
- A new bipartisan housing law aims to make manufactured homes more affordable.
- The law removes an outdated requirement for a permanent steel frame on manufactured homes.
- This change is estimated to lower construction costs by up to $10,000.
- High interest rates on personal property loans, commonly used for manufactured homes, remain a barrier.
- Legislation has been introduced to encourage Fannie Mae and Freddie Mac to support these loans.
- The FHFA is exploring regulatory changes to boost support for affordable housing.
Policymakers are attempting to address the affordability crisis in manufactured housing, but challenges remain, particularly with the financing of these homes. A recent bipartisan law enacted by Congress aims to lower the purchase price by removing an outdated requirement for a permanent steel frame, a move estimated to save up to $10,000 per unit.
Despite these efforts to reduce construction costs, the interest rates on personal property loans, which are frequently used by buyers of manufactured homes, continue to be a significant hurdle. These loans often carry rates in the high single digits or even double digits because they cannot be easily bundled and sold to investors, increasing the risk for lenders.
To combat this, legislative efforts are underway to increase federal support for these loans. Senator Jeff Merkley has introduced legislation that would mandate Fannie Mae and Freddie Mac to take on some of the financial risk associated with these loans within a set timeframe. President Donald Trump has also directed the Federal Housing Finance Agency (FHFA) to find solutions for personal property loans.
The FHFA, which oversees Fannie Mae and Freddie Mac, is exploring regulatory changes to make its requirements more flexible and encourage innovative approaches to supporting affordable housing, including manufactured homes. The Department of Housing and Urban Development (HUD) also continues to work on modernizing its programs and reducing regulatory burdens for manufactured housing financing.
Even with federal support for typical mortgages, manufactured homebuyers often face slightly higher interest rates due to perceived higher risk. Advocates are also discussing how consumer protections found in other HUD and Fannie Mae/Freddie Mac programs could be adapted to safeguard manufactured homebuyers against unfair lending practices or unexpected rent increases on leased land.