Fannie Mae makes mobile home loans cheaper to boost affordable housing

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Fannie Mae is lowering down payment requirements and lender fees on manufactured housing loans to improve affordable housing access.

Mortgage lenders can immediately start submitting the new manufactured housing loan product to Fannie Mae, according to a selling guide update. The new MH Advantage loans require a 3% down payment, down from 5% in Fannie's existing manufactured housing loan offerings. In addition, Fannie is not charging the 50-basis-point loan-level price adjustment that typically applies to manufactured housing loans.

MH Advantage loans give lenders more leeway to fund loans secured by manufactured housing that have higher loan-to-value ratios. To qualify for a MH Advantage loan, the manufactured home must be "designed to meet specific construction, architectural design and energy efficiency standards," Fannie said. The new offering builds off of Fannie's existing HomeReady program, which allows borrowers to get a mortgage with a 3% down payment.

The loans can be delivered to Fannie's automated underwriting system and submitted as whole loans or in securitizations. The loans can be sold into mortgage-backed securities with pool issue dates after May 1.

MH Advantage borrowers can also obtain a second-lien loan under Fannie Mae's Community Seconds program, which allows for a 105% combined loan-to-value ratio. The new manufactured loan product also can be combined with loans Fannie Mae offers for renovation or home improvements that provide energy savings.

The appraisal report must contain a photo of a Fannie Mae-issued "MH Advantage" sticker that confirms eligible homes meet quality standards. The stickers are affixed by the home's manufacturer next to the Department of Housing and Urban Development "data plate," a separate label that contains the home's serial number and other construction information.

Both Fannie and its main competitor, Freddie Mac, are expanding support for manufactured housing, affordable housing preservation and rural housing under Duty to Serve, a directive issued by their regulator and conservator, the Federal Housing Finance Agency.