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Biden-Harris Administration to Expand Access to Affordable Housing: Foreclosures, Manufactured Homes, 2-4 Unit Properties

Biden-Harris Administration to Expand Access to Affordable Housing: Foreclosures, Manufactured Homes, 2-4 Unit Properties
Tim Lucas - Home.com
VP of Content, Home.com

The nation’s housing supply is painfully low.

According to the National Association of Realtors (NAR), there is just a 2.6 months’ supply of homes on the market – which is favorable to sellers. Six months is considered balanced.

With ever-falling home inventory, the Biden-Harris administration is stepping in to make it easier for the common homebuyer.

On September 1, the administration released its plan to increase housing supply and some of the ideas could have a big impact on those who are looking for homes in 2021 and 2022.

Better access to government foreclosure homes

Perhaps the most immediate help could come from a change in how the government re-sells its foreclosure homes.

Occasionally, the government is forced to foreclose on homes financed by FHA, Fannie Mae, or Freddie Mac due to non-payment. These homes are then re-sold.

The problem is that big, institutional investors with cash swoop in and purchase these homes at a discount. They then flip them for a profit or rent them out.

According to the plan, homebuyers who will live in the homes will have exclusive access to make offers for 30 days. Only after that time period may investors bid. Currently, the “first look” period is only 10-20 days.

This could give regular homebuyers a better chance to get homes at a discount without going up against well-funded investors.

Expanded manufactured home loan options

Before 2020, a manufactured home had to be a “double-wide” or larger to obtain conventional financing provided by Fannie Mae or Freddie Mac.

But recently, these organizations started accepting single-wide manufactured homes as well.

These tend to be one of the most affordable types of housing available, allowing lower income buyers to afford their first home.

Part of the Biden-Harris plan is to perform industry-wide outreach and education on manufactured home financing. Many lenders don’t offer loans on manufactured homes at all, let alone single-wides. Apparently, the administration would like to change that.

The ability to easily find a lender who offers manufactured home loans would streamline the process for first-time homebuyers.

Allowing multi-unit homeowners benefit from rental income

Freddie Mac will revisit rules imposed in 2020 that made it harder to get a loan for 2–4-unit properties.

These properties are important for affordable housing for two reasons.

First, the homeowner can better afford the home, since part of the mortgage is paid by renters of the other units. And, they promote wealth creation, since the owner can live in one unit and rent out the rest, gaining income and equity.

Second, these properties provide affordable rental housing within communities.

Expanding credit access will allow regular homebuyers to more easily acquire multi-unit properties and all the benefits that come with them.

When will these changes take effect?

According to the plan, the administration plans to make nearly 100,000 affordable homes available to homeowners and renters over the next 3 years.

Each part of the plan will take time, but rule and process changes can come very quickly to Fannie Mae, Freddie Mac, FHA, and other government-affiliated agencies.

It could get a little easier for first-time homebuyers during the rest of 2021 and into 2022 compared to a very tough 2020 and first part of this year.

Further Reading

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