This story by Ariana Figueroa appeared on Colorado Newsline on April 10, 2022.
Mobile home parks provide affordable housing for millions of low-income residents — including seniors on fixed incomes — to own homes while renting the land underneath. The average cost of a manufactured home in 2019 was about $82,000, according to a report by Manufactured Housing Institute, a trade organization representing the industry.
But in an exploding housing market, that land is increasingly in demand for other projects, or park owners propose major rent hikes or changes in leases. Residents have few protections under a patchwork of state laws.
The most recent federal action came from Freddie Mac in September of last year, when the agency announced some tenant protections on all future Manufactured Housing Community sales “that go above and beyond current state and local requirements.” Some of those protections include a renewable year-lease term, 30-day notice of rental increases and a 60-day notice if the park will be sold or permanently closed.
“Manufactured housing communities often represent the most affordable multifamily housing option available in many areas, particularly rural areas,” Debby Jenkins, the executive vice president of Freddie Mac Multifamily, said in a statement. “We have been ramping up our tenant protections offering since 2018, and today we’re making these protections a requirement for all future transactions.”
U.S. Rep. Cindy Axne, D-Iowa, said she was hopeful of these protections the agency announced, but still believes congressional action must be taken.
“I am encouraged by actions like what Freddie Mac did last fall to finally make their tenant site lease protections universal for all of the MHCs they finance, but do believe more can be done,” Axne said.
But housing advocates like Cesiah Guadarrama Trejo have said the updates from Freddie Mac and Fannie Mae are toothless.
Guadarrama Trejo, who works as an associate state director for the working women’s advocacy group 9to5 Colorado, said that many of the tenant protections that Freddie Mac issued are less stringent than some standards in Colorado. She said the guidelines requiring a 60-day notice for a closure of a park is not a lot of time “for what can potentially put someone in displacement.”
“We’re talking about people who would lose everything,” she said.
Esther Sullivan, an assistant professor of sociology at the University of Colorado Denver, said that in the last 20 years, many private companies have realized how profitable manufactured housing communities can be and have started to acquire them from traditional mom-and-pop operations. She added that it’s such a popular investment that there is a Mobile Home University course where investors can learn how to purchase those communities.
“They’re a favorite investment item of those who are interested in passive income,” she said. “And that’s because many park owners are looking for investments that require minimal upkeep, maintenance, and capital investment.”
And for residents who want to purchase their communities, known as a resident-owned cooperative, it’s an uphill battle, said Nick Smithberg, the executive director at Iowa Legal Aid.
“There’s no present owners under any obligation to sell to any particular group of tenants,” he said, referring to Iowa’s laws.
If a park were to go up for sale, a handful of states offer what is known as a first refusal, which means it obligates the community owner to sell to the residents if they match the terms of the other offer. But only Florida, Minnesota and New Jersey have such first refusal laws.
Pressure on Freddie and Fannie
A coalition of about 20 affordable housing groups is pushing for Freddie Mac and Fannie Mae to do more to help residents of mobile home parks, such as assisting them in acquiring capital to purchase their communities.
“Amid a housing affordability crisis that requires bold and aggressive action, Fannie Mae and Freddie Mac have set forth plans that fail to effectively reach those not served or not served well by the conventional mortgage market,” the coalition wrote to FHFA Acting Director Sandra Thompson.
Jim Gray, a senior fellow at the nonprofit Lincoln Institute of Land Policy, said Freddie and Fannie have two mission requirements. The first is an affordable housing goal, which “requires them to purchase a certain percentage of mortgages that support low income communities,” and the second is the “duty to serve clause.”
“The duty to serve was something that Congress passed to complement the affordable housing goals, and what it does is it requires Fannie and Freddie to make greater efforts to reach three historically underserved markets,” he said. “And those markets are manufactured housing, rural housing, and affordable housing preservation.”
Paul Bradley, the president of ROC USA, said Freddie Mac and Fannie Mae could help low-income groups of neighbors purchase their communities by lowering the upfront capital requirement needed to obtain a loan to purchase a community.
But without approval to be flexible in their equity investments from FHFA, Freddie and Fannie Mac’s hands are tied.
“If you’re going to meet the needs in low-income neighborhoods, like mobile home parks, you got to have some flexibility,” Bradley said.
Bradley said that he’s hoping when Thompson, who has been nominated as FHFA’s director, is confirmed, she’ll allow those entities to be more flexible in their “duty to serve” clause.
He said that none of the 20,000 homeowners in the nearly 300 resident-owned communities where ROC USA has helped secure financing has gone into foreclosure, arguing that the resident-owned co-op model is a success.
“These groups of homeowners have proven themselves, these co-op borrowers have proven themselves, and it’s still not good enough,” he said. “And that’s what annoys everybody.”
Bradley added that an effective way to help residents of manufactured housing communities is to pass opportunity to purchase laws, which allow residents to match a third party’s offer to buy their community.
Bradley said that such options are “perhaps their once-in -a-lifetime chance to get control of the land under their homes.”
“And at the end of the day, we ought to have owners on land that they own and control and not on the land of a commercial investor,” he said. “That’s the bottom line.”