That’s because mobile and manufactured homes aren’t
considered real estate, so traditional mortgage products
are not available for the majority of these homes. Most
are secured using a chattel loan, where personal property
is used as security for the loan. Ryan adds that interest
rates for chattel loans tend to be higher than those for a
Also, security of tenure is a problem. The truth is mobile
homes aren’t mobile. To move one of these homes is costly.
“Plus,” says Dickens, “while the home itself is affordable,
there’s no guarantee that the rent will stay affordable. A
homeowner may pay off his or her loan, but, in most
states, there is no rent control. In fact, in places like Colorado, rent can go up every 60 days. There’s no long-term
security of tenure in a land-leased community,”
Of course, not all markets are like that. In California,
there are rent-controlled ordinances. And, in New Jersey
and Massachusetts, there are local rent-control boards,
to name a few.
As part of the security issue, “A lot of community owners purchase the land on the spec market with the hopes
that, in the future, the land will be more valuable for land
development than it will be for the manufactured housing parks,” says Dickens. “When that happens, the land
gets sold and the homes become valueless.”
She adds that most people can’t afford to move the home
and even if they did, they don’t always have a place to
move it. In addition, if the landowner plans to resell there
isn’t a strong motivation to keep up the property.
“There’s a real disincentive to invest in the property and
maintain the infrastructure because that takes away from
your cap rate,” says Ryan. “It will be redeveloped anyway,
so they want to extract as much as they can from current
rent rolls and sell.”
Ryan says he would like to see a secondary market “to
allow these homes to be titled as real estate so they would
Mobile homes have to overcome hurdles to be
a meaningful part of the affordable housing puzzle.
have access to mortgages and eligible for Fannie Mae and
Freddie Mac financing. But, that would have to be done
on a state-by-state basis.”
Efforts to Save the Parks
The good news is that there are efforts to try to save these
trailer parks. Ryan explains that the CFED has partnered
with ROC USA to transform many of these parks into
resident-owned communities. ROC USA started in 1984
as a one-off project, but grew into the New Hampshire
community loan fund’s largest program.
“Of the 450 communities in New Hampshire, 119 or
27 percent are resident-owned today,” says Paul Bradley, president of ROC USA. “As the program grew in
New Hampshire, homeowners and others would ask for
help in other states. In 2008, we launched ROC USA to
make resident ownership a viable opportunity elsewhere.
A secondary market should be established to allow mobile homes to
be titled as real estate so they would have access to mortgages.
Photo by Liralen Li