Freddie Mac Financing for Resident-Owned Manufactured Housing Communities

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. 

To learn more, check out Freddie Mac’s official Manufactured Housing Resident Owned Community Loan (MHROC) Product Sheet or keep reading below for an in-depth explanation of the Freddie Mac Manufactured Housing Resident Owned Community Loan (MHROC) program.

Sample Freddie Mac Terms for Manufactured Housing Resident-Owned Community Loans in 2023

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)