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Housing industry's practices, Fannie Mae's costlier loans are damaging one-two punch for home buyers on the bubble. Date published: 9/22/2003
Manufactured homes become less affordable IF YOUR INCOME and savings are just below the threshold that would allow you to buy a home, it must be hard to hear all the praise heaped on the housing industry--that it has brought reality to the dreams of so many Americans, that it has remained a stalwart pillar of the U.S. economy throughout the recession. The housing market and industry have become unfriendly to poor families, and to young people just starting out. That has become abundantly clear in the Fredericksburg region over the past decade as the prices of new and resold housing--propelled by rising land costs--have skyrocketed. "Affordable housing" has become the oxymoron of the 21st century. The manufactured-home industry has long been the answer for many such families. But in the past decade its decision to provide excessively flexible loan terms to put lesser-qualified buyers into their homes has resulted in unprecedented levels of loan delinquencies and repossessions. While the manufactured-housing industry might have persuaded itself that it was doing the right thing by helping more people buy homes, it has seen its new-home sales plummet in a marketplace flooded with cheaper, nearly new, repossessed homes. That practice, in turn, has also caused Fannie Mae, the nation's largest supplier of mortgage funding, to require 10 percent down, plus a half-point fee, for a 30-year mortgage on such homes. Those new rules, imposed last month, are a dose of sticker shock to buyers who used to find fee-free loans with as little as zero to 3 percent down. Fannie Mae's predictable view is that business is business, and that despite the trillion dollars in ongoing business it does, it must make up for all those loans gone bad. Those who suffer, however, are the prospective buyers who were just achieving the financial goals necessary to buy a home--only to see fees, down payments and, of course, interest rates rise to the point that they are once again priced out of the market. Once again, those who strive to live within their means are hurt by those who blithely overextend themselves. The result is a wider gap between the haves and the have-nots in this country, and a growing population of fellow Americans who live in the shadows of mountains of wealth. Fannie Mae and the manufactured-housing industry should understand the damage their business practices can do. Certainly a bit more cooperation and foresight would serve everyone's interests better than more expensive loans and fees.
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