The momentum to create a secondary market for mobile home (chattel) loans is growing. The Federal Housing Finance Agency (FHFA) is preparing a directive that would require Fannie Mae and Freddie Mac to purchase manufactured home loans from lenders, thus creating a secondary market for such loans. This is yet another positive development in our industry.
A secondary market for mobile home loans will add much needed liquidity to the market. Currently it is very difficult for tenants to secure financing for mobile homes as there are not enough lenders focused on this asset class. A secondary market should free up lender balance sheets so they can either enter the business or - for those already lending on mobile homes - originate additional loans. The net effect of this should be increased lender competition and lower interest rates for prospective mobile home owners.
This is great for park owners too. Lower interest rates on home mortgages will lead to lower defaults / home foreclosures (lower house payment means the lot rent is easier to pay each month). Furthermore, a secondary market will enable mobile home manufacturers to build / ship more homes while helping community owners (like Park Street Partners) fill vacant pads with homes that can be purchased and financed by new tenants.
All good things. Let's just hope the GSE's don't mess this up somehow with crazy restrictions on the types of mobile home loans that can be sold on the secondary market.