Trailer Park Mortgages Carry High Rates

MADELEINE BRAND, host:

Home mortgage rates are pretty attractive these days - that is if you can qualify to get one. The 30-year fixed rate for a conventional home loan is now below six percent. But if you live in a mobile home park, you'll pay more. Maybe a lot more. Anywhere from 8 to 15 percent interest. New Hampshire public radio's Dan Gorenstein reports.

DAN GORENSTEIN: Lilac Drive is a small 26-home housing park. Once couple scrapes peeling blue paint. Two girls walk a dog past well-tended yards. Nancy Holingrake (ph) remembers her first impression of the park 10 years ago.

Ms. NANCY HOLINGRAKE (Resident, Lilac Drive): We just loved the whole area. It was so well kept and nice looking.

GORENSTEIN: Back in 1998, Nancy's legs were acting up making stairs hard for the retired schoolteacher. So she and her husband downsized into a home on Lilac Drive. She never thought twice about financing.

Ms. HOWNRAKE: You go to the bank, you get the mortgage and soon you move in.

GORENSTEIN: But it didn't go like that.

Ms. HOLINGRAKE : The bank that I had dealt with for years, in fact my father had even been one of the founders, said to me we can't help you, Nancy. I said what do you mean, you can't help me? No, we don't deal with those kind of places. I said what do you mean, those kind of places? Oh no, no, we can't do that.

GORENSTEIN: Fast forward to today. One third of the Holingrake's fixed monthly income goes for housing costs. Nancy, who has diabetes and arthritis so severe that she relies on a wheelchair, could see a cut in her health benefits later this year. Her husband Wes (ph) says that could be a problem.

Mr. WES HOLINGRAKE (Resident, Lilac Drive): If it does run out, let's put it that way, then we're going to be in a tight situation. Very tight. In fact it could mean losing the home. But we can only take it day to day, one day at a time.

GORENSTEIN: The Holingrake's tight budget aggravated by above-market mortgage rates is a familiar predicament for people in mobile home parks. Traditional lenders have consistently offered more expensive mortgages for a few reasons. One, people usually own the actual home, but rent the land their place sits on. That means the park owner could give tenants 30 days notice, sell the place and leave the bank holding the mortgage. On a property, that, despite the name, isn't terribly mobile. Merrimack County Savings Bank President, Paul Rizzi, says the other problem is that many homes weren't built to last and are pretty shabby.

Mr. PAUL RIZZI (President, Merrimack County Savings Bank): A unit that might be 20 years old and is two by four construction, with a flat roof and sagging because its had snow on it for a number of years. And the risk obviously is that this thing's going to cave in.

GORENSTEIN: But things have changed. Today, what people are beginning to call manufactured homes are built to federal standards. And in New Hampshire, 20 percent of all parks are resident-owned cooperatives. Here the non-profit New Hampshire Community Loan Fund has provided residents with technical and financial help to buy the parks. Frequently, conversions have led to road and septic upgrades, more stable rents in higher home values. The changes have impressed Fannie Mae, the nation's largest source for financing home mortgages.

Mr. BOB SIMPSON (Spokesman, Fannie Mae): It represents an untapped market of over 3.5 million families. This is something that just makes sense for us.

GORENSTEIN: Fannie Mae's Bob Simpson is so convinced that the people who live in the co-ops are a good investment, the company has agreed to help offer conventional mortgages to residents in 36 New Hampshire co-ops. He expects ultimately that the New Hampshire model will be rolled out nationally. In the short-term, the project means a homeowner can refinance and save some money. The Holingrakes have been waiting for a level playing field for 10 years. They're looking to refinance their mortgage as soon as possible. That way, Wes says, Nancy can go on and join one of her favorite spots, the electric recliner underneath the skylight. For NPR News, I'm Dan Gorenstein, Concord, New Hampshire.

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