The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, has posted to the Federal Register a request for input on a programmatic change in regard to the Enterprises’ Duty to Serve plan as well as a potential reconsideration of the overall legal definition of what constitutes a manufactured home.
In summary, the agency wants input on its desire to grade Freddie and Fannie on its Duty to Serve performance by its results in the marketplace rather than by research, discovery, and planning, as it has been. It also wants to test the industry and the public on the merits of including other forms of factory-built housing within the definition of a manufactured home.
From the Federal Register, the considerations run 26 dense pages. Below are direct excerpts from the agency’s language…
Executive Order 14394 — Removing Regulatory Barriers to Affordable Home Construction — was issued by the White House in March and “directs FHFA to reform programs that constrain residential development and impede housing affordability, including specifically ‘FHFA’s guidelines and regulations regarding chattel lending for manufactured housing.’ The strategic shift reflected in the proposed rule, away from prescribed Regulatory Activities and toward innovative and market-driven ‘eligible actions,’ is responsive to that direction. It would remove any perceived barriers to chattel lending in the existing regulation and present a new opportunity for the Enterprises to direct their attention to establishing appropriate underwriting standards, risk management protocols, and the securitization infrastructure necessary to expand their impact in the chattel lending market.
“Consistent with E.O. 14394, FHFA expects the Enterprises to develop and implement robust, responsible chattel financing initiatives and will assess them on their progress in expanding liquidity, supporting sustainable credit, and enhancing consumer choice in the manufactured housing market.”
The Federal Register’s language states that the proposed focus on ‘‘any eligible action’’ is intended both “to give the Enterprises greater flexibility to undertake actions that respond to market needs and to encourage innovation that supports meaningful outcomes. The transition to a more flexible approach does not signal a retreat from past, proven interventions that have stabilized or expanded liquidity in the underserved markets. Rather, the Agency anticipates that the Enterprises will leverage their accumulated institutional knowledge, proven strategies, and data-driven insights to iterate upon and scale high-impact activities from earlier Plan years.”
By grounding future innovation in the successes of the previous decade, FHFA stated, the Enterprises can ensure that novel strategies “are additive rather than duplicative.”
The language around a a potential revised definition a manufactured home is as follows:
“Under the existing regulation, the term manufactured home is defined to include only HUD Code homes. FHFA recognizes that other types of non-sitebuilt homes, including modular homes, serve as a source of new affordable supply and are often constructed in the same factories as traditional HUD manufactured homes. The Agency requests comment on whether the definition of manufactured home should be expanded to include a broader array of non-site-built homes such as modular homes, panelized homes, and other types of factory-built homes that are subject to state or local building codes. FHFA does not believe that appropriate methodologies exist for assuring the structural integrity of pre-HUD Code homes and is not reconsidering including those homes in the manufactured home definition at this time.”
The public and the industry have until July 24 to comment on any potential changes.
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