Fannie Mae saw a need in the industry and took the necessary steps to accommodate those needs. By launching the MH Advantage program, Fannie Mae is hoping to give future homeowners another option. Rick Walker, Collateral Policy & Strategy Risk Manager with Fannie Mae sat down with us to give us a closer insight into the new program.
Buzz: Fannie Mae recently announced their new program, MH Advantage. Can you tell us a bit about this?
Rick: Affordable starter homes have become scarcer, smaller, older, and more likely in need of major renovations. They have also seen a significant increase in prices. Fannie Mae believes today’s modern, high-quality manufactured homes can help ease the nation’s affordable housing shortage, address borrowers’ evolving needs, and provide a growing business opportunity for lenders and the industry.
MH Advantage™ is an innovative new homeownership option that pairs affordable financing with specially designated manufactured housing designed with characteristics typical of site-built homes, including: distinctive roof treatments, lower profile foundations, garage, carports, porches, or dormers, and upgraded interior/exterior features and materials. The intention is for MH Advantage to have style, design, and appeal similar to site-built housing. Manufacturers with at least 80% of the market have entered into agreements with Fannie Mae to produce MH Advantage homes.
Participating manufacturers are contractually accountable to ensure the design, specifications, construction, and installation instructions meet MH Advantage physical characteristics (central features), and will install an MH Advantage Sticker at the factory to confirm this.
Retailers oversee the installation and setup, and are responsible for setting up the home in compliance with the manufacturer’s specifications, as well as HUD, and local building codes. For the loan to be eligible for MH Advantage, they will also need to ensure the installation of a driveway and a sidewalk leading from the driveway to the home entrance. By relying on the MH Advantage sticker and appraisal photos, the underwriting process is simple and certain for lenders.
Buzz: What requirements and/or responsibilities will the appraiser have regarding MH Advantage properties?
Rick: Appraisers (and lenders) are not responsible for verifying all of the MH Advantage central features. However, in addition to our standard appraisal or final completion certification photo requirements, appraisers must provide photos of the MH Advantage sticker, which verifies the home was designed and built with the required central features. They will also need to provide photos of the Data Plate, HUD Certification Labels, and the driveway and sidewalks on the property.
The comparable sale requirements give appraisers flexibility with MH Advantage since these properties occupy the space between traditional manufactured and site-built homes. If fewer than three MH Advantage sales are available, the appraiser is to choose the best and most appropriate sales available, which may include site-built homes, standard manufactured homes, or modular homes. Sales should have similar physical and legal characteristics when compared to the subject property (e.g., site, room count, gross living area, style, and condition), and appeal to the same buyers who would consider purchasing the subject property.
This is a different comparable selection requirement than appraisals of standard manufactured housing, which require a minimum of two manufactured home sales. With the exception of comparable sales requirements, all other manufactured home appraisal guidelines apply to MH Advantage. View the MH Advantage Appraisal Requirements document on our website (with links to more detailed information).
Buzz: What can homeowners, appraisers, and real estate agents expect with this type of mortgage financing?
Rick: With MH Advantage, Fannie Mae allows lenders to enable homebuyers can get the design features in their new home they want on terms not available to standard manufactured housing. Loans secured by MH Advantage properties feature these favorable terms:
- Higher loan-to-value (LTV) ratios, up to 97%.
- Waived 0.50% LLPA
- Can be combined with HomeReady®, HFA Preferred™, and other Fannie Mae financing options (see Eligibility Matrix for specific requirements).
When MH Advantage borrowers refinance or sell their home in the future, the home will remain eligible for MH Advantage financing (as long as the sticker remains in place).
Buzz: Why did Fannie Mae feel this was a necessary change for the industry?
Rick: MH Advantage was developed in consultation with manufacturers in support of our Duty to Serve objectives, but we believe it may have much larger impact beyond the borrowers covered by our Duty to Serve plans. There is a critical shortage of new affordable housing stock in America, and we view manufactured housing and MH Advantage as one solution to address this challenge.
Buzz: Before we conclude this Q&A, is there anything you would like to add?
Rick: We are providing training to appraisers and lenders. Check out our Manufactured Housing web page for training information and other resources.
For more information, check out our Factory Built Housing, Special Considerations Factory Built Housing, and MH Advantage. Also view our Manufactured Housing page located on our website.
Buzz: Thank you for talking with us.
Rick: Thank you.
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