MBA Urges FHFA Caution on Manufactured Home Definition

The Mortgage Bankers Association (MBA) has submitted a comment letter to the Federal Housing Finance Agency (FHFA) urging caution as the agency finalizes revisions to its Duty to Serve (DTS) rule. While the MBA supports the proposed shift towards more adaptable "eligible actions," it has raised concerns about potential adverse effects on the manufactured housing sector and lender operations. The FHFA's proposed rule, outlined in June, aims to implement an outcome-based framework that would alter how Fannie Mae and Freddie Mac provide support for manufactured housing, the preservation of affordable housing, and rural housing initiatives. This framework intends to place greater emphasis on chattel loans, expand the scope of Low-Income Housing Tax Credit (LIHTC) activities, and broaden the definition of "high-needs" housing.

A central point of contention for the MBA is the FHFA's inquiry into potentially redefining "manufactured home" to encompass factory-built housing that extends beyond units currently regulated under the U.S. Department of Housing and Urban Development (HUD) code, including modular homes. The MBA argues that as factory-built housing technology advances, financing and collateral policies must similarly evolve to keep pace with product innovation. They emphasize that maximizing the DTS program's efficacy necessitates ongoing attention to valuation methodologies, secondary market execution, and operational factors that influence lender engagement. The trade group highlighted that certain novel factory-built housing products employ ownership or titling structures that do not align with the existing purchase standards set by government-sponsored enterprises (GSEs). Furthermore, they pointed to the complexities introduced by diverse state titling laws and affixation rules, which create significant operational challenges for lenders.

The MBA also strongly recommended that the FHFA ensure any updated definition of manufactured housing is coordinated with other federal efforts aimed at increasing the availability of factory-built housing. This includes aligning with initiatives from Congress, HUD, and the GSEs themselves. The association's letter, sent on a Friday to FHFA Director Bill Pulte, underscores the critical need for a synchronized approach across federal agencies to foster innovation and accessibility in the housing market. The FHFA's draft rule seeks to reform performance evaluation metrics, and the MBA's feedback indicates a desire for a thorough and collaborative process to avoid disrupting established lending practices or hindering market access for manufactured homes. The MBA's stance reflects a broader industry concern that regulatory changes, while intended to improve housing access, must be carefully implemented to prevent unintended negative consequences for lenders and consumers alike. The association's engagement signifies its commitment to shaping policies that support a robust and inclusive housing finance system, particularly for the manufactured housing segment.