Tony Petosa and Nick Bertino - Wells Fargo Multifamily Capital
From both a global and national perspective, we are in the midst of witnessing major change unfold as President Trump takes over the reins from the Obama administration. It is undeniable that material shifts in policy are in the works, social and economic alike. Some of these will likely have an effect on the commercial real estate lending environment, including financing for manufactured home communities (MHCs). The Trump administration is already taking a new approach to banking regulations, which may at some point include working with Congress on the future of the government-sponsored entities (GSEs), Fannie Mae (FNMA) and Freddie Mac, both of which are active lenders to the MHC sector. More immediately, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd- Frank) is under review by the new administration in an effort to scale back regulations enacted during Obama's presidency. And, as if we didn't have enough change going on, many economists are predicting higher interest rates this year.
In 2016, FNMA and Freddie Mac continued to be reliable lending sources for multifamily and MHC properties while having remained in conservatorship since 2008. MHCs in 2016 were again excluded from the annual lending cap placed on the GSEs by their regulator, the Federal Housing Finance Agency (FHFA), and consequently MHC loans were generally priced with interest rate spreads well inside of those for conventional apartment properties. In December 2016, the FHFA announced that MHCs would continue to be excluded from the lending caps in 2017, which came as welcomed news to MHC property owners and lenders alike. Since Freddie Mac and FNMA will not have a limit on the volume of MHC loans they can originate this year, we anticipate they will continue to price MHC loans aggressively.
While we appear to be in a state of business as usual" with the GSEs in the near term
