Arlington, Va., Dec. 20, 2007 – The Manufactured Housing Institute (MHI) vigorously opposes Freddie Mac’s recent announcement that, as of March 1, 2008, it will be charging an additional “delivery fee” to lenders to purchase manufactured home mortgages of 50 basis points (or 0.5 percent of the loan balance). This delivery fee will be added to the current penalty of 0.5 percent of the loan balance that they already charge for manufactured home mortgages.
These penalties applied specifically to manufactured housing are in addition to the recently announced 25 basis points charged for all mortgages. To make matters worse, the new announcement also adds yet another 50 basis points penalty for mortgages scored “A-minus” or lower by Freddie Mac (this includes the vast majority of manufactured home mortgages)—bringing the total penalty for most manufactured housing loans to 175 basis points (or 1.75 percent of the loan balance). This will dramatically impact the affordability for manufactured homes secured by real estate.
“Freddie Mac’s tax on homeownership unjustly penalizes tens of thousands of manufactured home buyers,” stated MHI President and CEO Gail Cardwell. “MHI and its affiliated state associations will vigorously oppose this homeownership tax by reaching out to Members of Congress to combat Freddie Mac’s unsubstantiated penalties. Freddie Mac already incorporates a risk premium for manufactured housing in its existing underwriting process. This additional charge does not accurately reflect risk and comes at a point in time when Freddie Mac should be providing liquidity to the marketplace and accepting a lower return to promote affordability, in accordance with its public mission and charter.”
MHI has already voiced its strong opposition to this new manufactured housing penalty to Freddie Mac officials. MHI believes this action is an unjustified reaction to the sub-prime mortgage meltdown. Neither Freddie Mac nor Fannie Mae allowed manufactured homes to be financed with these riskier mortgage products, associated with sub-prime loans. While Freddie Mac cites the “deteriorating performance of higher-risk mortgage products” as justification for their actions, that statement contradicts statements made in recent months specifically about improvement in manufactured home loan performance.
To date, Fannie Mae has not signaled its intent to match Freddie Mac’s actions.
The Manufactured Housing Institute is the preeminent national trade association for the manufactured and modular housing industries, representing 90 percent of all manufactured homes and a significant share of modular homes produced across the U.S. Its members include all segments of the industries including home producers, component suppliers, financial service providers, retailers, community owners and operators, developers, insurers, and other parties interested in manufactured and modular housing. From its headquarters just outside Washington, D.C., MHI works to promote the benefits of manufactured and modular housing to relevant audiences.
Source: Manufactured Housing Institute