PESP comments on GSE 2025 – 2027 underserved market plans for manufactured housing

On June 11, 2024, the Federal Housing Finance Agency (FHFA) issued a request for input (RFI) on the proposed 2025-2027 Underserved Markets Plans (Plans) submitted by Fannie Mae and Freddie Mac (the Enterprises) under the Duty to Serve (DTS) program. The proposed Plans cover the period from January 1, 2025, to December 31, 2027.^[1]

Writing in support of the Plans as they pertain to manufactured housing communities, the Private Equity Stakeholder Project (PESP) responded to the RFI on August 12, 2024. PESP’s comment letter highlights the challenges residents of manufactured housing communities face due to the investment and property management practices of private equity and other corporate landlords.

Over the past 20 years, manufactured home communities increasingly have gone from “mom and pop” enterprises to ownership by private equity firms, hedge funds, and large, multi-state corporations that seek to capitalize on manufactured-home owners’ unique situation:

• In 2017, private equity firm Apollo Global Management bought Inspire Communities,^[2] a manufactured home park operator that currently has over 100 parks with almost 24,000 home sites.^[3]
• The Blackstone Group, the largest private equity firm in the world, spent almost $1 billion between 2018 and 2020 to acquire over 50 parks, with over 10,000 home sites, and operates them through its Treehouse Communities platform.^[4]
• In 2020, the Carlyle Group expanded its presence in manufactured home communities with a $230 million purchase of four manufactured home parks, with a total of 1,583 homes, in Arizona.^[5]
• In 2021, Horizon Land Management, which is backed by Federal Capital Partners, acquired a portfolio of 93 manufactured home parks with a total of 11,129 lots.^[6]
• Since 2020, the hedge fund Alden Global Capital has acquired at least 138 manufactured housing parks with over 10,000 homes.^[7]

In 2020 and 2021, institutional investors accounted for 23% of all manufactured home purchases, up from 13% between 2017-2019.^[8] Due to the problems associated with private equity investment in mobile home parks identified in PESP’s Manufactured Housing Tracker (e.g. massive lot rent increases, junk fees and inadequate maintenance), its increased share of the market is cause for concern.

Given this trend, PESP voiced strong support for the Plans, especially as they apply to manufactured housing. PESP specifically supported the following objectives by the respective Enterprises:

Fannie Mae

• Acquiring PMM loans secured by MHRP;
• Expanding adoption of conventional financing for manufactured homes by addressing risks of manufactured housing (MH) lending through product and process development;
• Promoting resident stability and improved loan performance through the development of a community of practice focused on secure tenancy in Manufactured Housing Communities (MHCs);
• Pursuing policy and industry engagement tactics that reduce the costs of MH homeownership and increase value to the consumer;
• Increasing purchases of loans on MHCs owned by government entities, nonprofit organizations, or residents;
• Financing MHCs incorporating Tenant Site Lease Protections (TSLPs); and
• Increasing the purchase of MHC loans with affordability created by rent restrictions.

Freddie Mac

• Purchasing single-family loans secured by manufactured housing titled as real property;
• Conducting outreach to support Resident-Owned, Non-Profit Owned and Government Instrumentality-Owned MHC loans;
• Purchasing loans that institute Duty to Serve Tenant Pad Lease Protections; and
• Preserving Manufactured Housing Community affordability through loan terms.

PESP also encouraged the Enterprises to further protect their mandate to serve underserved communities from predatory investors by requiring all purchasers to commit to the following as a condition for their financing:

1. Agree to preserve affordability with gradual rent increases and prohibit unfair lease terms like rent to own contracts and excessive fees;
2. Agree to maintain safety and habitability of properties with regular property maintenance and responsiveness to residents; and
3. Make it easier both for individual households to purchase a manufactured home and for residents to buy their park.

If you have any questions related to our comment letter or the GSE 2025 – 2027 Underserved Market Plans, please contact PESP’s Policy Director, Chris Noble, at chris.noble@pestakeholder.org.

^[1] “FHFA Seeks Public Input on Fannie Mae’s and Freddie Mac’s Proposed Duty to Serve Underserved Markets Plans for 2025-2027,” FHFA, June 11, 2024, https://www.fhfa.gov/news/news-release/fhfa-seeks-public-input-on-fannie-maes-and-freddie-macs-proposed-duty-to-serve-underserved-markets.

^[2] Obando, Sebastian. “‘Mom-and-Pop’ Manufactured Home Communities Might Be the Next Frontier for Investment in the Sector.” Wealth Management, 13 Mar. 2019, www.wealthmanagement.com/property-types/mom-and-pop-manufactured-home-communities-might-be-next-frontier-investment-sector.

^[3] Mobile Home Parks & Communities, Inspire Communities, www.inspirecommunities.com/our-communities/. Accessed 12 Aug. 2024.

^[4] Blackstone bought a portfolio of homes from Tricon Capital for $172 million in 2018. In 2020, Blackstone bought a portfolio of parks for $200 from Legacy Communities and a portfolio from Summit Communities for $550 million.

^[5] Burks, Steve. 2020. “Carlyle Group acquires 4 Mesa mobile home parks for $230M.” AZ Big Media, June 15, 2020.https://azbigmedia.com/real-estate/carlyle-group-acquires-4-mesa-mobile-home-parks-for-230m/.

^[6] Morosanu, Lucia. JPMorgan Chase Originates $489m Loan for MHC Portfolio Deal, Multi-Housing News, 6 Apr. 2021,www.multihousingnews.com/jpmorgan-chase-originates-489m-loan-for-mhc-portfolio-deal/.

^[7] Data from PESP Manufactured Housing Tracker, obtained through LexisNexis.

^[8] Kasakove, Sophie. Investors Are Buying Mobile Home Parks. Residents Are Paying a Price., The New York Times, 27 Mar. 2022, www.nytimes.com/2022/03/27/us/mobile-home-park-ownership-costs.html#:~:text=Real%20Capital%20Analytics%2C%20a%20market,among%20the%20country%27s%20largest%20landlords.