Freddie Mac Financing for Manufactured Housing Communities

Customized Freddie Mac Insured Loans for Manufactured Housing Communities 

In many areas of the U.S., manufactured housing communities (MHCs) are often the only reliable source of affordable housing-- which is why Freddie Mac is eager to help maintain the supply of high-qualify manufactured housing around the country. If you're an investor or developer looking to purchase or refinance an MHC, Freddie Mac's Manufactured Housing Community Loan could be a great option. Manufactured Housing Community Loans offer flexible 5, 7, and 10-year terms and amortizations as long as 30 years. Plus, these loans are non-recourse and have LTV allowances as high as 80% for eligible properties.



Sample Freddie Mac Terms For Manufactured Housing Community Loans

Size:  $1 million minimum 

Terms:  Up to 7, 5, and 10-year terms (longer loans may be approved on an individual basis), both fixed and variable-rate loans avaialble, partial and full term interest-only loans also available 

Amortization: Up to 30 years 

Maximum LTV/Minimum DSCR:  

  • 5-7 Year Loans: 
    • Amortizing:  75%/1.30x 
    • Partial Term Interest-Only:  75%/1.30x
    • Full Term Interest-Only:  65%/1.40x 
  • 7 Year Loans: 
    • Amortizing: 80%/1.25x 
    • Partial Term Interest-Only: 80%/1.25x 
    • Full Term Interest-Only: 70%/1.30x 
  • 7+ Year Loans: 
    • Amortizing: 80%/1.25x 
    • Partial Term Interest-Only: 80%/1.25x 
    • Full Term Interest-Only: 70%1.35x 

Recourse: Most loans are non-recourse with standard “bad boy” carve-out

Prepayment Options: Yield maintenance until securitization, 2-year lock-out period following securitization, defeasance allowed after securitization. Yield maintenance for securitized loans is permitted for an additional fee. No pre-payment premiums required in the last 90 days of the loan, or if the loan is refinanced with another Freddie Mac loan. 

Eligible Borrowers:  

  • Should have 2+ years experience owning manufactured housing communities, and should currently own at least one other manufactured housing community. 
  • Can be a corporation, limited partnership, tenancy in common with no more than 10 members, or a limited liability company. REITs, general partnerships, some trusts, and limited liability partnerships are sometimes allowed, depending on the circumstances. 
  • For loans less than $5 million, borrowers can be a Single Asset Entity or a Single Purpose Entity. For loans more than $5 million, they must be a Single Purpose Entity, or SPE, (except for tenants in common, which each member must be an SPE, regardless off size). 

Eligible Properties:  

  • Stabilized manufactured housing communities with professional management. Age restrictions allowed, but Seniors Housing Loans are not. 
  • Must have at least five pad sites. 
  • No more than 25% of homes can be rented out. 
  • Manufactured homes must follow HUD safety standards, and must be compliant. with the Federal Manufactured Home Construction and Safety Standards Act of 1974. 
  • Leases must not have the option to purchase either the pad site or a borrower owned manufactured home. 
  • Private wells/septic systems are permitted under certain circumstances. 
  • No RV resorts or broken condominimus allowed. 

Sellers/Servicers:  Freddie Mac Multifamily Approved Seller/Servicers can originate/service these loans, but in general, Freddie Mac prefers seller/servicers with specific experience financing manufactured housing communities. 

Supplemental Financing:  Available 

Assumability:  Loans are assumable with lender approval, but require a 1% assumption fee paid to Freddie Mac and a $5,000 underwriting fee paid to the lender 

Timing:  Borrower will typically receive a commitment 45 to 60 days after initial application; third-party report timing and borrower due diligence submission may speed up or slow down the process

Advantages:

  • Very competitive interest rates 
  • Loans are non-recourse 
  • 60-120 day rate locks available, with early-rate lock, spread-lock, and index-lock options available 
  • Loans fully assumable (with approval and fees)

Disadvantages:

  • Typically requires third-party reports, including appraisal, Phase I Environmental Assessment, and physical condition assessment 
  • Application fees required: $2,000 or 0.1% of loan amount (whichever is larger)
  • Replacement reserves required ($50/pad site per year, or $250/rented manufactured home per year, if owned by the borrower and included in the loan's collateral) 
  • Typically requires a loan origination fee 
  • Typically requires between $8,000 and $12,000 in legal fees 
  • Lender application fees also required (avg. of $15,000, including third-party reports, but may vary based on specific lender) 
  • 2% rate lock fee usually required (refunded after Freddie Mac purchases loan, usually around 30 days post-closing)