Fannie Mae and Freddie Mac Have a New Plan

Fannie Mae and Freddie Mac Have a New Plan

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Fannie Mae and Freddie Mac Have a New PlanFannie Mae and Freddie Mac have a new plan. A recent story said Iowan cities are most affordable. Housing affordability is important information to arm yourself with during the beginning stages of your home buying search.

The expenses incurred after the purchase of your home don’t end when you move in, you’ll be responsible for utilities, taxes, and the upkeep of your home.

Omaha, is one of the cities with the best housing affordability, according to a U.S. News and World Report. Des Moines is also in the top 10. Others on that list were Huntsville, Alabama; Fort Wayne, Indiana; Grand Rapids, Michigan; Indianapolis; Salt Lake City; Buffalo, New York; Fayetteville, Arkansas; and the Twin Cities in Minnesota. Generally, when we look at housing affordability, we are looking at what the average family earns and how much they can afford. But, what happens to those folks that can’t afford a $200,000 house. They want to come here to Ft Wayne for the jobs, but they can only afford a $50,000 or $60,000 house. A manufactured house or a mobile home would be ideal, but there is little financing for those homes.

Manufactured housing or mobile homes could provide the low priced housing for new Iowan workers. However there are some barriers in place,

Problem one: Land prices. The farmland is so valuable for farming that farmers near cities don’t want to divert farmland for housing.

The Second Problem: The hidden costs of higher standards. Regulations, such as the requirement for foundations, so the house doesn’t blow away are expensive and don’t fit another mobile home.

Problem three: Financing. Many people who would consider a mobile home have lower incomes that don’t allow them to qualify for bank loans.

Fannie Mae and Freddie Mac Have a New Plan

Now, Fannie Mae and Freddie Mac may change that, with a plan to purchase tens of thousands of manufactured-home mortgages, and perhaps even chattel loans, over the coming years. Mobile homes may be considered chattel loans because they rent the underlying property and like a car depreciate over time. The goal of the new plan is to entice more lenders into the market and help fulfill the companies’ mandate to provide affordable housing, rural housing and manufactured housing.

Pushing the perceived stigma aside, more than 17 million Americans live in manufactured homes, according to Census data.

And the median household incomes of those living in manufactured homes, typically trailers made in a factory, are about $30,000 a year, according to the Manufactured Housing Institute. That’s about half of the 2016 national median of $59,039, according to the U.S. Census Bureau.

Manufactured homes are significantly cheaper than stick-built homes, which construction workers put up on lots outside. For example, they cost a median $73,800—about a quarter of the $269,500 median cost of new homes nationally, according to the latest U.S. Census Bureau and® data available.

Freddie Mac calls them “a critical source of affordable housing.” Indeed, they make up a good portion of the occupied homes in some of the poorest parts of the country, accounting for more than 20% in middle Appalachia and 17% in the Lower Mississippi Delta.

That may help to explain why sales are on the rise. Shipments of newly manufactured homes rose from 64,000 in 2014 to 93,000 in 2017, according to Census data.

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