shared equity: overview » introduction » resident owned communities

Photo Courtesy of Potterhill Homes
As of 2005, eight percent of all Americans lived in manufactured homes. [1] Often misperceived as "mobile homes," most manufactured homes are stationary and resemble stick-built homes in terms of quality and attractiveness. Updated building codes and construction techniques over the last few decades have enabled the development of affordable homes at a significantly reduced cost over conventional building practices,creating opportunities for low-income families to afford safe and secure homes. Unfortunately, many manufactured homes are sited on land rented from manufactured homes parks where residents lack long-term security and are less likely to build assets through home price appreciation.To address these problems, a growing set of policies have been developed to help owners of manufactured homes to cooperatively purchase the land within home parks to ensure they receive the same consumer protections that conventional homeowners receive.

Insufficient Legal Protections for Owners of Manufactured Homes

According to ROCUSA, a non-profit group that promotes resident owned manufactured home communities, 35 percent of all residents own their manufactured homes but rent the land their home sits on. Despite owning the home they live in, the lack of secure land tenure limits homeowners' stability in a manufactured home park. In most states, there are few protections against rapid rent increases or land fees, park closures that might lead to displacement, or non-renewed leases (without just cause). Because few mobile or manufactured homes are actually mobile, it can be very expensive or physically impossible for owners of manufactured homes to relocate their home if a park closes or a family is forced to move.

Even in cases where the land is owned by the homeowner, in many states, manufactured homes are not legally recognized as real estate, but as personal property. This has two major disadvantages. First, homes are taxed and titled as personal property (and in some cases as vehicles), and in many cases are ineligible for purchase through conventional home mortgages. Instead, most manufactured homes are financed through personal property loans, which typically have higher interest rates (by three to five points) than conventional home loans. [2] Second, when considered personal property, manufactured homeowners are less likely to appreciate in value, preventing owners of manufactured homes from building wealth that they could use to fund post-secondary education, their retirement, or other needs.

Resident-Owned Communities (ROC)

A number of manufactured home communities, also known as "mobile home parks", are transitioning from investor/landlord- owned to resident-owned, where homeowners form a non-profit cooperative or corporation to own and operate the community. The cooperative borrows money from a home loan fund or local bank to purchase the property, eliminating the need for each family to apply for money to purchase their portion of the land.

While different from other shared equity models, ROCs qualify as shared equity homeownership because they help preserve long-term affordability, while also helping residents to building wealth. ROCs help to preserve the affordability of manufactured home parks by reducing the risk of rapid rent increases for -- or even the eviction of -- owners that currently pay rent to lease the land their home sits on and help to ensure that manufactured homes are recognized as real estate, with access to competitive financing tools to purchase a home. Each household shares ownership of the cooperative and can vote on decisions related to the governance and operation of the park.

New Hampshire was the first state to adopt policies that support the ROC model of manufactured home communities. State lawmakers passed a 60-day Notice law in 1988 ensuring that residents of manufactured home communities have advanced notification of possible park closure, along with the rights to acquire the park at a fair market value if the property goes up for sale. Legislators also passed a law to legally define manufactured homes as real estate once the home is installed on the land. Treated as real estate, homes in ROCs can appreciate in value. A study conducted by the Carsey Institute at the University of New Hampshire using home sales data found that between 2004-2005,manufactured homes in Resident-Owned Communities sold for more than $7,200 more and spent 23 fewer days on average on the market than manufactured homes in investor-owned parks. [3]

Click here to leave this site and read the case study, "Promoting Economic Security for Manufactured Homeowners in Parks: New Hampshire's Pioneering Cooperative Model." [PDF]

Following the lead of New Hampshire, an early innovator profiled in the adjacent text box, other states have passed legislation to provide protections and benefits to residents of manufactured homes. In Texas, for example, manufactured homes are titled as real estate once permanently affixed to a foundation and utilities. Washington State provides technical assistance for households and associations organized to create a ROC, while other states provide rental protections to homeowners that lease their land to avoid unjust rent increases or help with the relocation process in the event of a park closure.

Click here to learn more about the regulatory barriers associated with manufactured homes.

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Resident acquisition of manufactured home parks

By facilitating the cooperative purchase by residents of manufactured home parks, communities can preserve affordable housing opportunities and help residents gain stability and build assets.

Also in this section:

Harold Washington Unity CoopShared appreciation loans
Homebuyersthat receive these "silent" second mortgages make no payments untilsale of the home, at which time the full loan is repaid plus a share ofthe home price appreciation.

Orchard at Cold SpringSubsidy retention strategies
Subsidy retention programs subsidize the unit, rather than the buyer, ensuring a specific home remains affordable over the long term.

27 Elm StreetImplementing shared equity approaches
Key issues related to designing a shared equity policy.

Click here to view resources on Resident Acquisition of Manufactured Home Parks

[1] Mobile Homes No More: Policy Innovations in Manufactured Housing. [PDF] 2005. By David Buchholz. Housing Facts and Findings 7(4). Washington, DC: Fannie Mae Foundation.

[2] Manufactured Housing: Trends and Issues in the 'Wheel Estate' Industry. 2004. By Jerry Weitz. Chicago, IL: American Planning Association.

[3] Wealth Through Homeownership: Resident-Owned Manufactured Housing Communities in New Hampshire. April 2008. By Charlie French, Kelly Giraud and Sally Ward. Durham, New Hampshire: Journal of Extension.