Last month, the U.S. Department of Housing and Urban Development (HUD) announced the launch of a new program designed to allow for the purchase, refinance or renovation of manufactured housing under a loan program sponsored by the Federal Housing Administration (FHA).
The Manufactured Home Community loan product “will help entities to preserve, stabilize, and revitalize these vital sources of affordable housing,” the department explained in its announcement. The program was announced by HUD acting secretary Adrianne Todman during a kickoff event for HUD’s Innovative Housing Showcase at the National Mall in Washington, D.C.
But the characterization of the program’s intent was a point of concern for Lesli Gooch, CEO of the Manufactured Housing Institute (MHI). With Todman’s emphasis on mission-driven entities and nonprofit access to the program, Gooch said its portrayal was needlessly negative toward private owners of land-lease communities, where many MHI-backed manufactured homes are ultimately placed.
Program details
Gooch explained that MHI is encouraged by greater government involvement in the manufactured housing sector — especially considering the affordability challenges that persist nationwide.
“This is a commercial loan program. It’s very different from Title I, which helps people living in a community or wanting to live anywhere by taking a loan on the home as a personal property loan, making it more consumer facing than this program,” Gooch said in an interview with HousingWire. “That’s why I find it interesting. About 30% of our houses today go into what we call land-lease communities, manufactured housing communities, where individuals lease the land and own their house.”
The new program helps provide a source of capital for the purchase of such communities, Gooch explained. While this wasn’t an “area MHI considered critical for FHA engagement,” Gooch said, she would like to see additional support from FHA that would allow more people to purchase manufactured homes.
“Fannie Mae and Freddie Mac’s loan volumes on a land home basis aren’t where we would think they should be. They don’t have a personal property loan program at all,” she explained. “We’ve been calling for more consumer support from the government. That said, it’s good that policymakers are finally recognizing the value of manufactured housing and considering ways to support it. We’re pleased that attention is being paid to this issue.”
Alienation of private partners?
MHI’s issues tied to the government’s announcement of the new program stem from the way private interests are characterized, Gooch said. The way it was framed by FHA focused mainly on mission-driven entities, which Gooch said could be construed negatively by private entities that MHI views as critical partners in making manufactured housing more available.
“They talked about trying to provide an alternative for mission-driven entities to finance and purchase these communities, so it was very negative in their discussion,” Gooch said. “I actually have asked HUD to moderate the way they are talking about this, because when I talk to them, they assure me this was just a first step to include mission-driven and government entities, and it wasn’t intended to exclude private owners.”
In HUD’s original announcement, the department said that the program “provides an alternative to purchase of these communities by private equity funds and similar financial interests, whose track record reportedly includes unaffordable rent increases, failure to invest in community infrastructure, and regulations that don’t respect the community’s culture.”
But MHI “wholeheartedly rejects” this characterization of the dynamic playing out in manufactured housing communities, Gooch explained.
“We think that for an administration that needs to lean in on affordable housing in America, comments like that are not helpful,” she said. “If they truly want to move the needle toward quality affordable homeownership options, they need to support the housing providers that exist in America today, and that includes the owners and operators of land-lease communities.”
Gooch said that MHI research indicates a high level of satisfaction among residents of land-lease communities, and she contends that rent increases — while present — are not as severe as they are in other segments of the housing market.
“Consumers acknowledge that their rent has gone up but not as much as comparable housing options in their area,” she said. “We have strong information showing that consumers love living in these communities.”
Infrastructure assistance
Gooch said that MHI welcomes the Biden administration’s engagement on issues related to aging infrastructure in land-lease communities, which she calls “very important.”
“There haven’t been many new developments in the land-lease community space, largely due to zoning issues,” she explained. “Planners are reluctant to allow a ‘trailer park,’ but we all know that’s not what we’re doing today. We’re producing quality houses that are within reach in terms of attainability and income, offering a quality lifestyle at land-lease communities.”
Manufactured housing standards have seen a lot of evolution in recent years but remain somewhat stigmatized and demonstrably underutilized. According to a 2023 report from the Niskanen Center, a D.C.-based think tank, the stigma could be seen as a contributor to the underutilization.
“Today’s manufactured homes are not your grandma’s vacation trailer or 1970s-era mobile home,” the report said. “Modern manufactured homes have strict standards for structural integrity, material durability, and safety.”
Indoor construction on an assembly line helps to increase the efficiency of the manufacturing process compared with site-built homes, and manufactured housing can “offer the factory-floor automation and steady productivity growth that we expect from other mass-produced goods to bring down costs and improve quality over time,” the report explained.
As of the report’s publication, 8.4 million Americans live in a manufactured home. This reality should be embraced by the government, Gooch said.
“Many refer to us as naturally occurring affordable housing, and the administration should be looking at these housing providers and saying, ‘Thank you for your efforts,’” she said.
Prior efforts, tone of announcement
Congressional leaders, including former Rep. David Price of North Carolina, explained at a hearing in 2022 that there could be a government role for manufactured housing financing. Price argued that eligibility should be broad, especially to allow for investment in the underlying infrastructure and robust participation by investors in the manufactured housing space.
“When HUD came out with the announcement for the Preservation and Reinvestment Initiative for Community Enhancement (PRICE) program, the eligibility was again limited, even though Congressman Price was known to say you cannot make this work if you only limit it to nonprofits,” Gooch said.
“So, HUD is not listening. […] The best thing to do is look at the Low-Income Housing Tax Credit Program and say to for-profits, ‘We are going to support you in keeping this up to date and keeping your housing modernized, but you are going to agree to affordability characteristics as part of that.’”
It was particularly striking, Gooch said, to observe this rhetoric from HUD officials while they stood in front of a number of MHI-backed homes.
“This administration talks a lot about the importance of manufactured housing, but for this announcement to be made in front of our houses on the National Mall, when those houses are all going to land-lease communities, was really disappointing to us,” she said. “They weren’t a good partner for us in that.”
