- Fannie Mae manufactured home loans are loans available to investors of qualified manufactured housing communities, including mobile home parks and other locations.
- These loans are meant to provide investors with a more affordable way to purchase, update, or otherwise utilize these properties to provide consumers with more affordable home-sites.
- Fannie Mae manufactured home loans typically allow investors to purchase, renovate, or otherwise invest in manufactured housing communities.
- Park quality is an important factor when considering access to Fannie Mae.
Manufactured Home Loan Highlights
Loan borrowing: Minimum loan amount is $1 million.
Loan term: 5 to 30 year loan terms available.
Amortization: up to a full 30 years of amortization.
Interest Rate: Typically, lower rates that compete with fixed interest rates and variable rate options are typically available. See current rates.
Loan to value: The maximum loan to value is 80 percent in most situations.
Interest rate lock: Available for between 30 and 180 day commitments; investors may use the Streamlined Rate Lock Option.
DSCR: The minimum DSCR is 1.25x
Prepayment: Typically, flexible prepayment options may be available for borrowers. It is possible for the loans to be voluntarily prepaid (such as at payment of yield maintenance for fixed rate loans), variable interest rate loans may offer graduated prepayment options.
Accrual: 30/360 as well as actual/360.
Escrows: Leverage level determines the funding of tax and insurance escrow requirements.
Non-Recourse: These are typically non-recourse loans with some standard exceptions to this for bad acts, which could include bankruptcy and fraud; Some may need to pay a Limited Payment Guaranty of 10 percent of the borrowed amount as a requirement, such as for loans with pricing incentives due to tenant site lease protections being met.
Interest only loans: May be available to qualified borrowers.
Assumption: These loans are usually assumable, though this is dependent on a full review as well as approval of the new borrower’s financial health and capacity, along with their experience.
Supplemental financing: Supplemental loans may be available.
Advantages of Fannie Mae Manufactured Home Loans
- Customizable: Tailored loan solutions to meet most needs and expectations.
- Speed: The processing and underwriting process is quick, enabling fast purchase.
- Low Interest-Rates: Typically significantly lower than other loan products.
Disadvantages of Fannie Mae Manufactured Home Loans
- Requirements: Property quality is typically high, which may exclude some areas of need.
- Experience: Borrowers may have some experience managing MHCs.
- Size Limits: Site size limitations may be limiting to some communities, though some exceptions to this rule apply.
What Are Fannie Mae Manufactured Home Loans?
Fannie Mae manufactured home loans provide financing support for commercial investors planning to build or purchase a Manufactured Housing Community (MHC). This may also include associated amenities and other infrastructure associated with MHCs.
These loans are a part of Fannie Mae’s mission to provide more affordable rents to qualified individuals. These loans enable community owners or buyers to purchase these properties with low-interest rates, with the goal of ensuring those lowered costs are passed on to the renter later. They aim to provide specific support for underserved markets.
There are a number of restrictions and limitations on these properties. They must be either age-restricted properties (such as for seniors), or they must be all age, such as a family community. They also must conform to all manufactured housing HUD code standards whenever it is possible for them to do so (some limited exceptions may apply).
An additional factor relates to tenant occupancy. Tenant-occupied homes cannot make up more than 35 percent. More so, Fannie Mae also limits the number of properties within the community. That is, Fannie Mae states that density should be based on what is normal for the market itself. Typically, it should not exceed 12 manufactured homes per acre of space. That applies to an existing community. For new communities, the guidelines require properties to have no more than 7 manufactured homes per acre.
Eligibility Requirements For Fannie Mae Manufactured Home Loans
To utilize Fannie Mae manufactured home loans, properties must meet specific requirements:
Available for existing, stabilized, and professionally managed MHCs, this may include an age restriction or not;
Properties must have at least 50 pad sites
Quality level is important with preference from Level 4 and Level 5, with Level 3 available in some situations (case by case basis)
One key principal is the borrowers should have some experience managing or otherwise operating an MHC
Lenders must also be experienced in financing these types of communities and must be approved by Fannie Mae prior to participating in these loans
Additional property considerations include:
Tenant-occupied homes may not exceed 35 percent
Density requirements are typically no more than 12 homes per acre for existing communities or no more than 7 homes per acre for new communities, with some variances
Properties typically need to meet or exceed manufactured housing HUD code requirements and standards
Leases that have terms of two years or longer must not contain a tenant option to purchase the site pad
Pricing incentives may be available for non-traditional ownerships, which could include resident-owned, government-owned, and non-profits
Within one year of loan origination, tenant site lease protections must be implemented on all sites
What is the maximum amount available through Fannie Mae manufactured home guidelines?
Fannie Mae does not set a maximum amount for borrowers. The minimum loan size is $1 million, though borrowers can secure more depending on property value as well as borrower qualifications.
Does Fannie Mae Reimburse reports costs?
Fannie Mae will provide reimbursement for third-party report costs. This is capped at $10,000. It applies to communities with tenant site lease protections that are already in place for 100 percent of the community’s sites. It may also be applicable if the community is non-profit owned. There is a range of minimum site lease protections that must be adhered to.
This includes the property needs to have a one year renewable lease term for the site unless there is some type of good cause for nonrenewal, which is made on a case-by-case basis. In addition, there must be 30 day written notice to tenants of any rent increases, and 5 day grace period must be in place for rent payments with the right to cure defaults on rents.
Additionally, the lease protections must also provide tenants with the right to sell their manufactured home without having to relocate it out of the community first. It also requires that subleases on the properties be allowed as long as the new buyer meets the minimum requirements of MHC rules and all regulations. This could include credit standards for borrowers. Tenants must also have the right to post a “for sale” sign as long as they meet all MHC rules and regulations. They have the right to sell their home in place within 45 days of an eviction and receive up to 60 days of notice of any type of planned sale or the closure of the MHC.
Other rules and restrictions may apply. Fannie Mae manufactured home guidelines may change over time. Investors may find these loans highly lucrative to meet their needs.
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