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Manufactured Housing Communities (MHC)

Financing and Incentives

Manufactured Housing Financing and Incentives | January 24, 2019 2

Manufactured Housing Community (MHC) Financing and Incentives

1. Fannie Mae and MHC Financing• What do we finance?

2. Non-Traditional Ownership Incentive3. Site Lease Protections Incentive4. Third-Party Report Reimbursement Overview5. Frequently Asked Questions


MHC and Fannie Mae

Important mission business excluded from the Cap

Multifamily lends on the income generated from the pad rents

Tenants typically own their manufactured homes

Total real estate development consisting of manufactured housing sites, related amenities, utility service, landscaping, roads, and other infrastructure

Fannie Mae has a 18-year history of financing MHC


What Types of Communities Are Financed?

Flood Risk

Occupancy

RV Rentals

Manufactured Homes vs. Park Model Homes

Level 2 Level 3

Level 4 Level 5

Property Characteristics


Duty to Serve

Every day. Every market.


Incentives for Manufactured Housing Communities

Site Lease Protections

Non-Traditional Ownership

Pricing discount and third-party report cost reimbursement if the Borrower is a non-profit entity

Pricing discount and potential third-party report cost reimbursement if the Borrower implements specific

tenant site lease protections

To incentivize non-traditional ownership of manufactured housing

communities

Non-profit owner entities who meet minimum Borrower eligibility

requirements

Guaranty fee discount:

7.5 basis points

Servicing fee discount:

7.5 basis points

Eligible for third-party report reimbursement

(up to $10,000)

Why? Who? How Much?


Manufactured Housing Communities: Non-Traditional Ownership

For Non-Profit Owned: Select “Non-Profit” in MHC Ownership Type in C&D

How do I get the discount?


Manufactured Housing Communities: Site Lease Protections

One-year renewable term for the site lease

Borrowers who implement all of the following protections at the MHC for tenant site leases will be eligible for a pricing incentive:

Rights of the tenant of a site lease to:o Subleaseo Sell home without relocating firsto Post “for sale” signs on the homeo Sell the home in place within 45 days after evictiono Receive at least 60 days notice of any planned sale or closure of the MHC

30-day written notice of rent increases

5-day grace period for rent payments



50% of site leases incorporate lease

protections:

Guaranty fee discount: 7.5 basis points

Servicing fee discount: 7.5 basis points

Guaranty fee discount: 5 basis points

Servicing fee discount: 5 basis points

25% of site leases incorporate lease

protections:

Eligible for third-party report reimbursement (up to $10,000)



How to receive the Site Lease Protection pricing incentive:

Signed Loan Commitment from

Borrower

Rate Lock Include in the Loan Documents:• Actual percentage of protected site leases in

the MHC • Borrower covenant that the specified

percentage of site leases (25% or 50%) will include all required tenant protections over the entire mortgage loan term

• Borrower requirement to submit actual percentage of protected site leases with the annual reporting

• Guaranty (Form 6020) from the Key Principal

Include in the Mortgage Loan Delivery Package:• Complete Transaction

Approval Memo and underwriting with details on how the rate lock amount for the mortgage loan was calculated

Lender enters the number of units with site lease

protections in C&D.



Site Lease Protections and Asset Management

Site leases are protected:

25% of these protected site leases are audited

• One-year renewable lease term

• 30-day notice of rent increase

• 5-day grace period• Right to sublease, sell,

60-day notice of MHC sale or closure


Reimbursement of Third-Party Report Costs

Fannie Mae offers a generous

reimbursement of up to $10,000 towards required third-party

reports

Required MHC mortgage loan reports

can includeAppraisal,

Environmental Phase 1

$10,000 reimbursement for

non-profit borrowers or borrowers with at

least 50% of site leases protected

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To receive reimbursement for the cost of a third party report, the Lender must:

All reimbursement requests must be submitted within one month of the Mortgage Loan’s Acquisition Date. If the reimbursement request is not submitted within one month of the Acquisition Date, the third party

report will not be eligible for reimbursement!

Sign or e-sign the form and submit the form to Fannie Mae at [email protected]

Request an invoice from the vendor with the report cost listed as a separate line item from any ancillary report cost

Complete Form 4829 within one month of the mortgage loan origination date, which must include: I. Lender informationII. Either the Fannie Mae

commitment number or Fannie Mae loan number

III. Property information, IV. wiring instructions,V. indicate the third party cost as

“Other” (Note that any fields related to servicing may be left blank)

1 3

Reimbursement of Third-Party Report Costs


Deal Example

Property:• Property built in 1983• 100% occupied• 4+ Star manufactured housing

community• Amenities:

▪ Community building with kitchen and laundry facilities

▪ Pool and picnic area

Ownership:• Owned and managed by municipal

housing authority• Incorporated as a non-profit and

eligible under Guide requirements


Frequently Asked Questions

Before origination the lender must notify the Fannie Mae deal team, adjust the rate lock and

loan amount (if applicable), submit a

data change request in C&D, and update the Gross Note Rate to exclude the pricing

incentive.

What if the MHC doesn’t

meet the percentage of protected site leases prior to

delivery?

What if the borrower doesn’t

maintain the percentages of

site leases protected, or

removes some required

protections?

Lender repays pricing incentives,

rebates, and fees (not to exceed 10% of mortgage loan), outlined in Form

6020 submitted in loan documents.

If there is an acquisition,

could we allow an escrow

hold-back that gets released once certain

thresholds are met?

Not at this time. We will continue

to review the product on how it is working, hear your feedback,

and make refinements as

needed.


Financing and Incentives for Manufactured Housing Communities

Contact Us:Duty to Serve:

Jose Villarreal

Email: [email protected]: (312) 368-6219

Manufactured Housing Community Financing:

Greg Ehrhardt


Emilio Allen
