Titling Reform: How States Can Encourage GSE Investment in Manufactured Homes
The new Duty to Serve rule adopted by the Federal Housing Finance Agency (FHFA) will give mortgage giants FannieMae and Freddie Mac the incentive to invest in manufactured home financing. However, with the exception of a pilot project, the rule only requires investments in manufactured homes that are classified as real property. Most states have significant policy barriers to classifying manufactured homes as real property. Failure to reform the existing inadequate laws will preclude these states, the manufactured home industry and homeowners from reaping the full benefit of Fannie Mae’s and Freddie Mac’s increased investment in this area. Adoption of the Uniform Law Commission’s Uniform Manufactured Housing Act is a straightforward and well-vetted way to maximize the ability of the manufactured housing industry and homeowners themselves to benefit from the new rule and to clarify existing state titling laws.
The new rule establishes what Fannie Mae and Freddie Mac must do to meet their statutory obligation to serve three underserved markets, one of which is manufactured housing. Financing for a manufactured home will count toward this obligation if the home is titled as real property. Homes titled as personal property (chattel financing) will not be eligible for Duty to Serve credit (except for the aforementioned pilot project). Because of this distinction, Fannie Mae and Freddie Mac will be able to invest more readily in states that allow manufactured homes to be titled as real estate without unnecessary restrictions.
This guide reviews the current state laws that govern how manufactured homes are titled and describes the steps states can take to improve these laws.