Freddie Mac: New Tenant Protections For MHCs

As part of its efforts to protect affordable housing, Freddie Mac announced new tenant protections for Manufactured Housing Communities (MHC).

The protections include renewable lease terms, written notice of rent increases, grace periods for late rental payments, and rights governing the sale of manufactured homes at MHCs. They are intended to protect people who own manufactured homes but pay rent on the property beneath them.

“Manufactured housing communities often represent the most affordable multifamily housing option available in many areas, particularly rural areas,” said Debby Jenkins, executive vice president of Freddie Mac Multifamily. 

“We have been ramping up our tenant protections offering since 2018, and today we’re making these protections a requirement for all future transactions.”

Restrictive zoning ordinances and financing problems have hindered their production, but the Biden administration included MHCs in its recent plan to bolster affordable housing. 

Fannie Mae has even created a conventional loan just for manufactured homes that offer elements of traditional housing, such as foundations, garages, and interior drywall. It’s intended to help combat “trailer trash” stereotypes that negatively portray MHs and their owners.

Like traditional houses, manufactured homes have been subject to price hikes in the past year, but they still offer a more affordable alternative that is attracting attention.

“We’re growing. We actually can’t keep up with the demand for new home production right now. I have member plants in Minnesota that have the ability to do an expansion,” said Mark Brunner, president of the Manufactured and Modular Home Association of Minnesota.

Freddie Mac is requiring the following tenant protections in future MHC transactions:

  • One-year renewable lease term, unless there is good cause for non-renewal
  • 30-day written notice of rent increases
  • Five-day grace period for rent payments and the right to cure defaults on rent payments
  • Right to sell the manufactured home to a buyer that qualifies as a new tenant in the community, without having to first relocate it out of the community
  • Right to sell the manufactured home in place within 30 days after eviction by the community owner
  • Right to sublease, or assign the pad site lease, for the unexpired term to the new buyer of the tenant’s manufactured home without any unreasonable restraint, so long as the new buyer or sublessee qualifies as a new tenant within the community
  • Right to post “For Sale” signs that comply with community rules and regulations
  • Right to receive at least 60-days’ notice of planned sale or closure of the community