New financing alliance between Fannie Mae and lenders focuses on

St. Louis Daily Record & St. Louis Countian, Feb 20, 2004 by Mike Nixon

In an effort to increase opportunities for working families needing affordable housing, Fannie Mae has entered into an alliance with nine nationally chartered lenders across the country to provide access to moderately priced 30-year mortgages for purchasers of owner occupied, totally attached manufactured homes with down payments as low as 5 percent.

The selected lenders and Fannie Mae confirmed this past week that due in part to the housing boom in traditional single family real estate, manufactured home sales slipped in 2003 to their lowest level in decades. Delinquencies and loan losses in this segment of the residential real estate market added to a negative stereotype for residents of both mobile and modular homes. Predatory lending practices have also been prevalent in this area where many borrowers, who are often unskilled concerning lending procedures, have been taken advantage of when making a contract. But most significantly, according to Fannie Mae, limited finance options have blocked some responsible low wage earners from being able to purchase a home of any sort.

Fannie Mae has invested in manufactured housing mortgages for over 20 years, and we're committed to working with our housing partners to ensure access to low-cost homeownership for the large part of the population, especially seniors and people living in rural communities that relies on manufactured housing as an affordable option, said Fannie Mae CEO Frank Raines in a prepared statement. We want to strengthen the market for manufactured housing financing, and eliminate predatory and anti-consumer features that have contributed to instability in the marketplace over time.

This is definitely a need, said Pettina Duencke, executive director of the Missouri Manufactured Housing Association. The cost of a manufactured home is one-third to half the cost of a site-built home. Maybe now more people can afford them. Duencke offered information illustrating the manufactured home market as being one that has moved far beyond the trailer park image of past years. Modern manufactured homes, according to industry insiders, are better built than the old mobile homes and architecturally designed in a manner that compliments houses priced over $150,000 in many markets - just on a more modest scale and in some instances at a third of the cost.

According to a study by Foremost Insurance Co., 55 percent of manufactured home residents are full-time wage earners, and 8 percent are part-time workers. Thirty percent of property owners in this category are retired. Only 8 percent of individuals living in manufactured homes are unemployed.

The annual median income for residents of manufactured homes is $28,000. Of those living in these structures, fewer than 9 percent of these households earn less than $10,000 per year. Twenty percent of manufactured home occupants earn between $10,000 and $19,999. Twenty- three percent of these households make an annual wage of between $20,000 and $29,000. Eighteen percent post earnings of between $30,000 and $39,999; while 13 percent make $40,000 to $49,999; and 17 percent of manufactured home households annually earn in excess of $50,000.

According to Fannie Mae research, lenders whose manufactured housing loans performed best are those that closely monitor loan origination, appraisals and closing procedures. Raines said that Fannie Mae views this new initiative as a mission to increase affordable housing by expanding liquidity to a segment of the population that is frequently left out when it comes to purchasing a home. The lenders joining with us have developed processes and procedures that help lessen the risks associated with lending on mortgages secured by manufactured homes, and employ the best practices to insure that consumers purchasing a manufactured home will have a successful experience, Raines said.

Lenders joining Fannie Mae in this initiative include: AgFirst Farm Credit Bank, Flagstar Bank, GMAC Manufactured Housing, Huntington Mortgage Group, Origen Financial, RBC Mortgage, 21st Mortgage, Vanderbuilt Mortgage and Washington Mutual.

Our goal is to get lower served borrowers into homes, said Ted Ahern, senior vice president for RBC Mortgage. This is an alternative affordable purchase that makes a lot of sense for working class people. It's a change to have ownership, build equity and set up roots in a community.

Ahern admitted it might take time before there is a substantial increase in the purchasing of manufactured homes, based simply on public perception and available information. But he suggested that as suburban communities grow and the population ages, more people will begin considering these purchases as well as traditional site-built structures. What Fannie Mae is trying to do is remove the stigma and make this an attractive alternative for people. It will help tens of thousands of families, but it could take years and will not answer all the housing problems.

Nobody else is doing manufactured homes anymore, said Flagstar Bank loan center manager Matthew Kent as the noted the significance of this lenders' alliance with Fannie Mae. It's an alternative because [traditional] housing costs are so high.