|Poised to maintain liquidity in a troubled housing sector, Fannie Mae announced it will swerve from the manufactured housing loan-to-value (LTV) requirement it previously imposed on 30-year mortgages.
Fannie’s communications senior vice-president, Chuck Greener, recently disclosed that Fannie would continue buying 30-year, 95% loan-to-value mortgages secured by manufactured homes. However, Fannie will only purchase these loans from certain lenders who illustrate expertise in managing the unique issues associated with the purchase and financing of manufactured homes.
The decision represents a loosening of the guidelines, which Fannie had tightened last summer, to restore some balance to the troubled manufactured housing sector — which Fannie said had an all-time high number of foreclosed and repossessed loans. One change included in the guidelines was that Fannie would only purchase 30-year manufactured home mortgages with a 90% LTV, instead of 95%.
Fannie spokesman Alfred King stressed the 90% LTV still applies and that the secondary lender has decided to continue buying the risky 95% LTV loans to provide more affordable manufactured housing options for borrowers.
In his disclosure, Greener said the government sponsored enterprise was also working with lenders to develop best practice measures to ensure that manufactured home loan borrowers do not pay more for a home than it is worth. Doing so, will lower the chances of a borrower obtaining a mortgage that exceeds the value of their property.
According to King, the different ways manufactured home loans are underwritten and financed can cause the value of a property to be overestimated.
King would not disclose the names of lenders that Fannie considers qualified to purchase these loans from. According to the Wall Street Journal, a Fannie spokesman said one lender it had entered in agreement with was Washington Mutual Inc.
Fannie, which held a $7 billion interest in a Conseco manufactured housing loan portfolio as of last winter, drew fire from industry watch dogs when it placed a $70 billion bid on the portfolio as a precautionary measure to stimulate activity in Conseco’s bankruptcy proceedings.
Coco Salazar is an assistant editor and staff writer for MortgageDaily.com.