S. 4804: Manufactured Housing Lending Act

This bill would require the Federal Housing Finance Agency to tell

Fannie Mae

and

Freddie Mac

to each create a pilot program for buying or sharing risk on certain manufactured home loans.

In practical terms, the bill is aimed at helping finance personal property manufactured homes—that is, manufactured homes financed as movable property rather than as real estate. The agency would have up to 18 months after enactment to direct the two mortgage companies to set up the pilot programs.

Once a pilot program is in place, each company would have to begin, within 1 year, purchasing or otherwise taking on financial risk for:

• newly originated loans, or
• existing loan portfolios.

The bill also sets out several conditions for these pilot programs:

• They should, as much as practical, include consumer lending and servicing protections from federal mortgage rules.
• The financed manufactured homes would have to be located in nonprofit, government, or resident-owned manufactured housing communities.
• The housing arrangement would need to include either a lease term longer than the loan term or a perpetual right to occupy the site.
• The Federal Housing Finance Agency Director could require additional risk controls and standards for the business counterparties involved.
• Fannie Mae and Freddie Mac would be allowed to earn a reasonable return on this activity, but that return would have to be lower than the return they earn on comparable mortgage lending.

Overall, the bill would not directly create a new federal loan program for consumers. Instead, it would require the two government-sponsored mortgage companies to test whether they can safely buy or support certain manufactured home loans, with specific consumer-protection and community-ownership conditions attached.

Relevant Companies

• FNMA — Fannie Mae would be required to establish and operate the pilot program and could begin purchasing or sharing risk on qualifying manufactured home loans.
• FMCC — Freddie Mac would be required to establish and operate the pilot program and could begin purchasing or sharing risk on qualifying manufactured home loans.