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This article is brought to you by MHI
Reflecting product improvements and growing consumer demand, today's buyer of both new and
existing manufactured homes may choose from a wide array of financing options. Financial
institutions offer an entire menu of lending programs. Homebuyers may select loans with
terms ranging up to 30 years. The house can be financed as personal property, on leased
land, in a manufactured home community or on a private site. Buyers who desire to acquire
land in conjunction with the home can finance their purchase with a traditional real
estate mortgage.
Most buyers arrange financing through the retailer from whom they buy their home. These
retailers maintain business relationships with a number of lending institutions —
large national lenders as well as local institutions — and can assist in the
preparation and submission of a credit application. Customers also may shop independently
for financing with a lender of their choice.
Manufactured homes are often financed as personal property. Even when the home and land
are financed together, the home is usually secured as personal property and the land as
real property. Since a growing number of buyers are opting to put their home on land they
are purchasing or already own, traditional manufactured home personal property lenders
have created land-and-home financing programs designed to accommodate this trend.
In some cases, buyers financing their home with land may find a mortgage lender that
offers traditional mortgage financing. Fannie Mae and Freddie Mac, the primary secondary
market sources for mortgage loans in the U.S., encourage this trend through their
guidelines for accepting real estate mortgage loans secured by manufactured homes.
There is an active secondary market for personal property manufactured home loans and
non-conforming real estate loans as well. Sold as asset-backed securities, these loan
pools are underwritten and marketed by large Wall Street investment bankers like CS First
Boston, Merrill Lynch, Lehman Brothers and Goldman Sachs. The Government National Mortgage
Association, or Ginnie Mae, makes a secondary market in personal property manufactured
home loans that are insured by the FHA or guaranteed by the VA.
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