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Affordable Housing Trends Report Spring 2024

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What Is Driving Lifestyle Renter Demand?

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Build-to-Rent Well-Positioned to Fill Housing Market Gap

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General: 800.ARBOR.10

Home | Freddie Mac | Manufactured Housing Resident Owned Community Loan (MHROC)
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FREDDIE MAC

Manufactured Housing Resident Owned Community Loan (MHROC)

  • Designed specifically for MHROCs (also known as MH Cooperatives)
  • Expands affordable housing options for underserved populations, particularly in rural and non-metro areas where MHROCs are prevalent

Eligible Property Types Existing, stabilized, high-quality, professionally managed MHROCs, with or without age restrictions
Eligible Transaction Types
  • Acquisition/Conversion: An Acquisition Mortgage on a Manufactured Housing
    Community which is in the process of converting from a rental property to an
    MHROC. The MHROC Borrower must be formed prior to rate lock.
  • Seasoned Refinance: A Refinance Mortgage on an existing MHROC with most shares already sold to resident shareholders
Eligible Borrowers Not-for-profit cooperative corporation or association (“Co-op”) in which shares in
the Co-op are sold to shareholders and such shares entitle the shareholder to
occupy a specific pad
Requirements for Resident Shareholders At rate lock:

  • 100% of pads must be owned by the MHROC Borrower.
  • At least 90% of shares must be owned by resident-shareholders.

Seasoned Refinances offer flexibility on this point with alternate sizing.

Debt Service Reserve May be required
Terms 5- to 30-year terms
Minimum UPB Amount $500,000
Maximum Amortization 30 years
Interest Rate Fixed-rate only, floating rate not permitted (Refer to the Fixed-Rate Loan term sheet for additional information.)
Interest Only Amortizing only – Interest only not permitted
Prepayment Provisions Refer to the Fixed-Rate Loan term sheet for additional information.
Recourse Requirements Non-recourse, guarantor not required
Supplemental Financing Available, subject to the Supplemental Loan offering and Loan Agreement requirements
Home Rentals The percentage of homes owned by the borrower, borrower-affiliate, or third-party investor cannot exceed 5% in aggregate.
Tax and Insurance Escrows Required
Replacement Reserve Escrows Minimum $50/site/year and $250/borrower-owned manufactured home/year (if included in the collateral)
Application Fee Greater of $2,000 or 0.1% of loan amount
Early Rate and Spread Lock Options Standard Delivery
Refinance Test Refinance Test is necessary on all MHROC loans
Additional Considerations
  • Private facilities (e.g., wells and septic systems) are allowed with considerations.
  • Rental leases cannot contain option to purchase pad sites or borrower-owned manufactured homes.
  • Retail sales or financing by borrowing entity of any manufactured homes or shares in the MHROC Borrower is not allowed.
  • RV campgrounds and broken condominiums are excluded.
  • Wrap financing, seller financing, mezzanine financing, and preferred equity are not permitted.
  • Freddie Mac will not purchase end loans or loans to individual shareholders.

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ARBOR.COM | 800.ARBOR.10
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