The Housing Opportunities portfolio recently hosted a panel presentation and discussion among three nonprofit partners of Meyer’s Affordable Housing Initiative (AHI) work on manufactured housing and our trustees to provide awareness and context for why Meyer works in this space.
The hour-long presentation was a compilation of people’s stories, pictures and data focused on the manufactured housing repair and replacement work these organizations do to help preserve some of Oregon’s most “naturally occurring” affordable housing, housing that doesn’t require government subsidies to retain its affordability.
The presentation, informative as well as emotional, caused me to reflect on what is being done beyond Meyer's effort to support manufactured housing replacement both locally and nationally.
There’s no dispute that manufactured housing has an important role in the affordable housing market in Oregon, accounting for nearly 8.2 percent of the overall housing stock. In some counties — especially rural counties — it is a much larger percentage of the housing stock. Manufactured housing offers more low-income rural individuals the opportunity to buy an affordable home.
However, many more could be served with access to manufactured homeownership, yet are unable due to specific barriers. The lack of access to fair and competitive financing (conventional mortgages) and lending policies that don’t lend themselves to manufactured housing present clear barriers, as do state manufactured housing titling policies.
Titling of manufactured homes is based on state law and thus varies from state to state. Some manufactured homes are titled as real property by default and offer a definite advantage for owners, while others are titled as chattel or personal property. Oregon uses both titling descriptions, and depending on where a home is located or placed, the property description (fee owned property), and the date a home was manufactured, they can be titled as either conventional or chattel. There are notable disadvantages of chattel titling and associated financing:
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Shorter loan terms – on average 20 years;
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Higher interest rates;
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Fewer rights when in default;
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Limited pool of lenders/reduced opportunities to shop for competitive loans; and
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Chattel mortgage lenders do not provide ample opportunities for manufactured homebuyers to comparison shop for best loans prior to purchasing the home, whereas conventional lenders do
Manufactured homes titled as chattel offer an owner little if any benefits associated with homeownership, specifically the ability to earn equity, even though anecdotal evidence proves many manufactured homes are in essence real property and just as permanent as traditional homes once they are placed on private land and the axles are removed. Today the practice of titling manufactured homes as chattel is being challenged, and financial institutions are shifting toward encouraging financing of manufactured homes with conventional mortgages.
Another “roundabout” way to increase conventional financing for manufactured housing lies in the finance industry’s willingness to increase the pool of lenders who originate chattel mortgages. The increase of chattel mortgages increases the number of folks who can buy a manufactured home. With new lending policies supporting conversions of chattel loans to conventional mortgages, the number of manufactured homes financed with conventional mortgages increases.
As more lenders originate chattel loans, more individuals have access to these products. A demonstrative change in finance practices provides occasions for chattel mortgages to convert to conventional mortgages for manufactured homes set on foundations or slabs. The Oregon Housing and Community Services Department has committed to making its single-family financing program available to manufactured homes affixed on “acceptable foundations.” The push for more commitment to serve rural communities in this space is evident on a national level as well.
The agency that oversees the nation’s large federal mortgage lenders Fannie Mae and Freddie Mac, the Federal Housing Finance Agency, has urged both to meet their obligations or their “duty to serve” three underserved markets: manufactured housing, affordable housing preservation and rural housing. The new law, aptly titled Duty to Serve, has been in place since January 2017 and requires Fannie Mae and Freddie Mac to create plans that develop a secondary market for mortgages that serve very low-, low- and moderate-income families. Each has proposed Underserved Markets Plans, plans that describe activities they will undertake from 2018 to 2020 to meet their obligations in each market. This is a huge win for rural manufactured housing and could not have been accomplished without the support of many key players.
Yet, there’s more work to do.
Duty to Serve only serves manufactured homeowners with homes titled as real property, and therefore Fannie Mae and Freddie Mac will invest only in states that title manufactured homes as such. There’s an effort through the Uniform Manufactured Housing Act to standardize titling of manufactured homes to real property nationally. Oregon is well on its way to reforming its titling laws, which will increase investments in manufactured homes for the many Oregonians who need an affordable and safe place to call home.
In addition to financing/titling barriers, high poverty rates and lower incomes endemic to rural Oregon exacerbate issues surrounding manufactured homeownership. In 2015, Oregon’s rural median incomes were around 20 percent lower than the national average and its urban counterparts while poverty rates in rural Oregon were higher than those in Oregon metropolitan areas. Both poverty and income issues alone are enough to impact an individual’s ability to access affordable homeownership. Antiquated financing and titling policies makes the quest nearly unimaginable for many rural Oregonians.
An article published in The Atlantic magazine in 2015 caught my attention. It was titled “Rural America's Silent Housing Crisis.” But what kept me reading wasn’t the title, it was the last six resounding words of the subtitle: ”Accounting for only 20 percent of the population, residents of more isolated areas struggle to find a safe, affordable place to live — and to make anyone else care.”
— Sharon Wade Ellis