FHFA pushes Fannie, Freddie to ramp up chattel lending

The Federal Housing Finance Agency called for the large government-sponsored enterprises it oversees to get more involved in chattel lending in a proposed revision of the Duty to Serve rule.

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The FHFA notice of proposed rulemaking published in the Federal Register on Wednesday calls for replacing the current system of support for manufactured homes, affordable housing preservation and rural residences with a new one that could be more effective.

The push for the enterprises to do more to support chattel loans in the manufactured home market may expand access to a more affordable housing type, but also may revive a debate over whether they should work outside of their core expertise in real-estate secured financing.

Current leaders at the agency appear to be of the mind that the numbers show access to affordable housing available through manufactured home loans titled as personal property makes it worthwhile, but are also opening up public comment on the proposal.

“It would be particularly timely and appropriate for the enterprises to focus more attention on chattel lending: today approximately 70-80% of new manufactured homes are titled as personal property,” FHFA wrote in its rulemaking notice signed by General Counsel Clinton Jones.

A focus on the numbers

The rulemaking notice also goes on to cite figures showing GSE support for chattel manufactured homes could potentially do a lot to open up a market with a denial rate far higher than for traditional site-built properties at 65.6% compared with 8.8%.

Rates for loans on manufactured housing titled as personal property in the private sector also have generally been far higher than for typical single-family homes at 9.24% compared with 6.63% and could benefit from the lower rates GSE loans usually have.

In addition to proposing to put more emphasis on chattel lending in the manufactured home sector, which the GSEs have not historically gotten past pilot stage on, the rulemaking notice suggests various types of deregulation in line with broader Trump administration policies.

Requirements the notice proposes rolling back include “unduly burdensome or costly energy efficiency improvement standards for Duty to Serve properties” and other directives that “constrain residential development.”

FHFA Director Bill Pulte, who informally refers to his agency as U.S. Federal Housing, has aggressively pursued efficiencies and staff cuts both in his housing role and in his current temporary post as acting intelligence director.