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Multifamily Viewpoints

An Affordable Housing Solution — for Renters and Homeowners

By Kelly Brady
Published on June 17, 2016
Kelly Brady

Rising housing costs. Stagnant incomes. News headlines abound with the affordability crisis in the United States. The majority of new multifamily development is Class A with rents well above the national median rent of approximately $1,200 and continue to rise. So what happens to families who can’t afford to rent a suitable apartment, people who need to spend 40-50 percent of their household income on housing?

A practical solution is manufactured housing communities (MHCs), an often misunderstood, esoteric industry. A couple of years ago, Freddie Mac dedicated underwriters and producers in each region to better understand this market, letting us dig deeper into each unique situation and then custom the financing accordingly. When we entered the MHC market with this business model, we saw immediate success. In our first 12 months, we purchased more than $1 billion of MHC loans. To date, we have purchased $1.6 billion, more than 160 MHC loans across 26 states, which equates to almost 42,000 affordable manufactured home sites.

Open to New Ideas

Every deal we work on requires a unique solution. Because we’ve committed a staff to become intimate with this market, we can provide flexible financing more typical of a boutique lender rather than a large GSE.

Here’s a great example: In May we funded through Grandbridge Real Estate Capital a $3.6 million permanent, fixed-rate refinance loan secured by Apache Mobile Home Park, a 17-acre community in Yucca Valley, California. The community is a Cooperative MHC that is resident owned, which is a much different ownership arrangement compared to the traditional land-lease community.

We took the time to understand this type of proprietorship for MHCs, created a flexible solution and ultimately preserved the existence and affordability of this community. The financing helped protect the residents who take great pride in their community.

Working Side by Side with the Seller/Servicer

WeatherStone Village in Michigan City, Indiana and Rosebud in Bridgeview, Illinois are two more examples. We purchased these manufactured housing community loans through Berkadia Commercial Mortgage, our approved Seller/Servicer. The communities are owned and operated by Zeman Homes. Both communities are all-age, family communities with access to employment centers in Chicago MSA. WeatherStone Village is located in a rural location 60 miles from Chicago and Rosebud is located in a dense, infill suburb of Chicago. They present an ideal arrangement for workforce housing.

"It is neither easy nor inexpensive to maintain and continuously upgrade high quality MHCs. The agreement with Freddie Mac has helped us maintain our [Rosebud and WeatherStone Village] communities to our high Zeman standard while keeping rent levels affordable to our valued residents," stated Ed Zeman, Chairman of Zeman Homes.

Looking Ahead

We will continue to focus on new geographic markets where MHCs are an important source, sometimes the only source, of affordable housing. Our program’s terms allow for rentals of up to 25 percent of the homes and our purchases are predominantly all-age or family communities—the segment with the most critical need for liquidity. Our goal is to be in all 50 states in five years. To do that, we’re working on ways to grow our presence in this very significant affordable-housing-crisis solution. For additional information, contact your Freddie Mac representative.

Kelly Brady left Freddie Mac in August 2016. She was vice president of underwriting and credit.
Have a question or comment? Contact Kelly

Manufactured Housing Communities Supported by Freddie Mac

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