The manufactured housing industry is dealing with supply chain issues and challenges meeting the high demand for housing, so why would conventional lending appraisals be our first LearnMH webinar topic for 2022? We’re seeing a change coming that could evolve manufactured housing and it leverages non-chattel lending.
Our industry has been very effective in supporting the affordable housing space served by chattel (home-only) financing, and it makes up the majority of lending on manufactured housing. Conventional and government lending require the manufactured home and land to be titled together as real estate, or real property. This type of financing has been historically small but that will be changing.
We are now beginning to see real estate developers, spec builders, and others recognizing the value of using manufactured homes in their subdivisions, communities, and neighborhoods instead of traditional on-site home construction. We are seeing a change in consumer perception as the younger generation of first-time home buyers recognize the affordability and quality of today’s modern manufactured homes. These factors point to an increase in business for conventional lending and manufactured homes titled as real estate.
Freddie Mac and Fannie Mae are required by the Duty to Serve rule to support the growth and buy more loans on manufactured homes titled as real estate. As the largest buyers of loans in the U.S. they offer the potential to scale the growth and are under tremendous pressure to do so. This is where conventional loan appraisals play a critical role. Many residential real estate appraisers aren’t familiar with today’s manufactured homes and are undervaluing them which negatively affects financing for the borrower. To address this Freddie Mac has teamed up with the Appraisal Institute to create resources and training for appraisers. Fannie Mae has created its version of tools and resources as well and both organizations recognize their success with manufactured housing requires accurate appraisals and valuation.
As the conventional lending industry streamlines the financing process and more consumers demand today’s manufactured housing for their choice of housing, we will see an increase in new manufactured homes titled as real estate. To be successful, we’ll need access to residential real estate appraisers who can value today’s manufactured homes.