Freddie Mac Financing for Resident-Owned Manufactured Housing Communities

Freddie Mac Insured Multifamily Loans for Manufactured Housing Communities Owned by Residents

For many Americans living outside urban areas, manufactured housing communities (MHCs) may be the only source of affordable housing within reach. While affordable MHCs are a great way to increase the supply for low-cost housing on the market, it's even better when residents can own a part of the property itself. To encourage that, Freddie Mac's Manufactured Housing Resident-Owned Community (MHROC) Loan provides flexible 5-30 year fixed-rate loan terms with amortizations of up to 30 years, and LTV allowances of up to 70%. Plus, MHROC Loans are non-recourse, allow for both acquisitions/conversions and seasoned refinances, and permit supplemental financing, making them adaptable enough to meet the needs of many kinds of resident-owned manufactured housing communities. 



Sample Freddie Mac Terms For Manufactured Housing Resident Owned Community Loans

Minimum UBP Amount:  $500,000 

Terms:  5-30 year terms, fixed-rate loans only 

Amortization: Up to 30 years 

Maximum LTV/Minimum DSCR:  

  • Market-Rate Rental:

    • Acquisition/Conversion: 70%/1.40x
    • Seasoned Refinance: 70%/1.40x
  • As Cooperative:

    • Acquisition/Conversion: N/A/1.15x
    • Seasoned Refinance: N/A/1.10x

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. 

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

Eligible Borrowers:  

  • Borrower must be a cooperative or association in which owning shares allows shareholders to occupy a certain pad site
  • At rate lock, 100% of pads must be owned by the borrower (as a cooperative or association), and resident shareholders must own at least 90% of shares

Eligible Properties:  Existing, professionally managed MHCs (age restrictions allowed)

Transaction Types: 

  • Acquisition/Conversions: These are designed for MHC properties in the process of transitioning from a rental property to a resident-owned manufactured housing community. 
  • Seasoned Refinance: This is a refinance on a resident-owned manufactured housing community, typically after the majority of the shares have already been sold. 

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 

Other Requirements/Information:

  • Private wells/septic systems allowed in some circumstances. 
  • No seller financing,  preferred equity, wrap financing, or mezzanine financing is allowed. 
  • Leases must not have the option to purchase either the pad site or a borrower owned manufactured home.
  • No RV resorts or broken condominiums allowed. 

Refinancing Test:  Required for all refinancing loans 

Advantages:

  • Very competitive interest rates 
  • Loans are non-recourse 
  • Standard rate locks available 

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)