Will New York’s Manufactured Housing Law Reshape Home Financing?

New York Gov. Kathy Hochul signed a long-awaited state law designating manufactured housing as real estate in December. In the 11 months ahead, the question is whether the newly enacted measure can deliver on its promised mortgage-style financing or stalls amid legislative rulemaking.

Regulators, lenders, and manufactured housing advocates will spend this year working out how to turn homes long treated effectively as vehicles into assets that look, behave and get financed like any residential property.

The stakes for New York’s new manufactured-housing law are high in the backdrop of a severe – and worsening – housing affordability crisis. New York has long wrestled with affordability, and New York City elected a new mayor in part because of it.

Until last year, New York had been one of the few states without a codified law treating manufactured housing as real estate.

“It was a 15-year political battle,” James Bopp, vice president at Planet Home Lending and founding president of New York Mortgage Bankers Association, said in an interview with The Builder’s Daily.

Against this backdrop, manufactured housing is one of the few segments that still offer relatively low-cost homes. Congress recently highlighted its role by passing the Affordable HOMES Act, which aims to reduce duplicative regulations and lower per-unit costs.

What the law does

Hochul signed the Land-Home Property Act into law in December with little fanfare.

However, it fits with her multi-year effort to boost affordable housing in the state. In her recent State of the State address, Hochul reiterated that communities cannot reach their full potential without an ample supply of affordable housing.

“For too long, overburdensome regulations have made it too hard, not just to build homes, but the places people work and the infrastructure our future depends upon,” she said. “And that’s why four years ago, I made a commitment to challenge the status quo, to cut the red tape, and to clear the way to build, build, and build some more.”

The state passed what she calls the most significant pro-housing legislation in 50 years.

Part of that package includes $50 million for a program named Move-In NY to put CrossMods, built by Clayton, on vacant residential lots.

The initial three homes are in Schenectady, Syracuse and the Town of Newcomb, and the program is designed to scale statewide, to upwards of 200 additional homes.

Built to resemble conventional single-family homes, Clayton’s CrossMods comply with the U.S. Department of Housing and Urban Development Manufactured Home Construction and Safety Standards. They also meet Fannie Mae and Freddie Mac design criteria, enabling homebuyers to access GSE-backed mortgage financing.

The new manufactured-housing law addresses homes with wheels (i.e. mobile homes). The challenge with traditional mortgage financing lies in its definition and design: it is mobile.

Adding homes with wheels to the mix

Under the new law, a manufactured home acquires real property status only after the owner complies with a checklist of requirements. The home must be permanently affixed to a foundation, connected to utilities, and either sit on land owned by the homeowner or on leased land with a recordable lease and written consent from the landowner.

Owners must then file an affidavit of affixation with the county records and complete a New York State Department of Motor Vehicles process to surrender or confirm the old title. Once converted, the home can be sold, mortgaged and foreclosed like a site-built house, and the DMV is barred from issuing a new title for that unit.

State agencies will draft rules defining technical standards for foundations and utility connections. They will create official forms for affidavits of affixation. Agencies will coordinate with the DMV, county clerks and local assessors on home conversion procedures. They will organize training for title companies, lenders and local officials. The training will teach local officials to treat converted homes uniformly in loan files, tax rolls and court records.

For lenders, this new regimen for manufactured homes could be a welcome procedural change.

“I worked at a bank where we had a fireproof cabinet with all these manufactured home titles in it, and you’d have to marry it up with the title policy on the real property,” Bopp recounts.

He says that once the new law’s mechanics are finalized, it will unlock access to 30-year fixed-rate agency financing statewide. That means banks and credit unions that now keep such loans in their portfolios would be able to offer them through agency programs such as the Federal Housing Administration, Fannie Mae or Freddie Mac.

Independent mortgage bankers will also be able to compete in a market previously limited to banks and credit unions.

Regulators have time to set the rules

The law won’t take effect until Dec. 12. Housing and industry groups are expected to press the state to write rules that are simple enough for individual owners to use while giving lenders and investors confidence that converted homes meet secondary-market standards.

By then, New York will know whether it has built a genuine on-ramp to mortgage credit for manufactured-home owners, or merely introduced a new set of forms layered on top of an old system.

New York’s move to reclassify certain manufactured homes as real property aligns with a national push. If the state policy change makes it easier for these homes to qualify for standard mortgage financing rather than higher-cost chattel loans, it could transform a marginalized product into a mainstream affordability solution.