Chattel Financing Still in Pilot for Enterprises
The Federal Housing Finance Agency released a 128-page report on the progress that Fannie Mae and Freddie Mac have made in addressing affordable housing concerns. Each of the entities exceeded goals for the purchase and securitization of land-home loans, the report states.
Freddie Mac and Fannie Mae have been in conservatorship since 2008, far longer than anticipated at the time. Each of the entities is planning to exit government oversight, which also is a stated goal of both the FHFA and the White House.
The share of 2018 loans purchased by the Enterprises for low- to moderate-income borrowers in the manufactured housing market was higher than in previous years.
In addition to increasing the number of land-home loans, Fannie and Freddie each independently engaged with industry stakeholders to inform the development of pilot criteria and standards for chattel financing programs that will increase support of loans to home-only borrowers.
The organizations used three-year historical averages for loan purchases to inform the 2018 goals. Below is a comparison of Enterprise baselines, goals and actual loan purchases.
Fannie Mae – Land-Home Loans
- Three-year average baseline: 8,072
- Year 1 Goal: 8,750 loans
- Year 1 Purchases: 12,604
Freddie Mac – Land-Home Loans
- Three-year average baseline: 2,985
- Year 1 Goal: 3,075 loans
- Year 1 Purchases: 3,601
The numbers show that Fannie Mae finished 2018 44% ahead of its goal, and Freddie Mac completed the year 17% above its goal.
“As both Enterprises entered 2018, they had insufficient capital reserves to absorb losses due to the deficit at the end of 2017,” the reports states. “However, during 2018, the Enterprises generated sufficient income to allow each Enterprise to re-establish the agreed-upon $3 billion Capital Reserve Amount.”
FHFA Director Comments on Secondary Loan Markets
FHFA Director Mark Calabria commented on his then-pending recommendations to Congress during the Innovative Housing Showcase on the National Mall in Washington, D.C. in June.
“One of the things I will be asking Congress to do is to authorize me to issue additional charters so that if we can have more than just Fannie and Freddie, we can have other competitors come to the marketplace that’ll push Fannie and Freddie to be leaner and meaner and more aggressive and more innovative, but also to bring new thinking,” Calabria said.
“How do we make sure it’s not just Fannie and Freddie, but how do we get banks more involved? How do we get insurance companies more involved? How do we get other types of lenders more involved? It really has to be a variety of different processes that bring this, so that at the end of the day lenders who are successful are successful because they have great management, they have great execution, and they have great innovation,” he said. “Not because they’ve got rules and regulations stacked in their favor.”
From The Manufactured Housing Institute
The Manufactured Housing Institute, which represents all aspects of the factory-built housing industries nationwide, issued a “Housing Alert” following the publication of the report, which has been delivered to Congress with suggestions for ending government sponsorship and generally strengthening the Enterprises.
“As Congress considers reforms to the housing finance system, MHI will continue its advocacy efforts to ensure that manufactured housing is included in discussions and deliberations,” MHI state in its alert. “In February, MHI joined in an industry letter in support of housing finance reform, with MHI successfully adding language to the letter singling out manufactured housing as an important component of any government-sponsored financing effort. MHI also offered recommendations about housing finance reform to the Senate Banking Committee for retaining a Duty to Serve or some other directive for any government-sponsored enterprises to serve manufactured housing.”