MReport July 2019

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62 | TH E M R EP O RT SECONDARY MARKET THE LATEST O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T The CHOICE of Valuation Freddie Mac recently partnered with the Appraisal Institute to help real estate appraisers value manufactured homes. F reddie Mac and the Ap- praisal Institute recently announced a partner- ship to help real estate appraisers to value manufactured homes. The training through this partnership aims to provide practical appraisal training to all appraisers, as well as specifically- targeted training and case studies to address manufactured housing valuation assignments for Freddie Mac's CHOICEHome program. Scott Reuter, Chief Appraiser and Director of Single-Family Valu- ation at Freddie Mac spoke to MReport about why this training was needed and what it entails. M // What was the reason behind providing training to appraisers on manufactured homes? REUTER // This program fits under our Duty to Serve initia- tive, which was mandated by Congress through our regulator the Federal Housing Finance Agency (FHFA). The Duty to Serve statute requires both government-sponsored enterprises (GSEs) to provide leadership in three underserved areas. One is rural housing, second is affordable housing preservation, and third is manufactured housing. Under this initiative, we started with the CHOICEHome Program, where manufactured homes are built to certain specifications that are in addition to what a normal manufactured home might have. The ultimate aim of this program is to increase the standardization between site-built and manufac- tured homes as well as increase the volume of manufactured homes. The pillar of the CHOICEHome products is the minimum specifi- cations that go above and beyond the normal manufactured home. They include interior drywall throughout a 512 roof pitch and energy-efficient packages. The specifications under this program also include these homes being placed on a permanent foundation as well as other site-built-type fea- tures such as a garage and carport. Through the CHOICEHome Program, we're focusing on introducing high-quality afford- able housing options into the marketplace. And that's where the appraisal training for manufactured homes comes into the picture. From a practical standpoint, we thought that one of the key ele- ments of setting this program up for success was to understand how this may be met by appraisers when they're valuing these homes. M // What are some of the challenges that appraisers face while valuing these homes, and how will the training help them? REUTER // The CHOICEHome Program is currently in its pilot stage, and we're envisioning that these homes are most likely going to be introduced primarily in the rural market. A practicing appraiser faces challenges on a good day with site-built homes in rural settings, let alone the kind of a specialized manufactured home that's built to all these higher specifications. So from a policy perspective, we're allowing flexibility so the appraiser can cascade their valuations into that we would like for them to compare these to other choice built homes. However, since this is a brand new product being introduced to the market, the likelihood that they're going to find another CHOICE-built home that sold recently close by to use for comparison will be remote. So, the collateral policy flexibility will be to use other similar manufactured housing or use a site-built home as a comparable sale when it's appropriately adjusted. The training will help appraisers to make these comparisons, which in many cases are not apples to apples since many of the existing manufactured housing stock is below the standards of the CHOICEHome Program in terms of construction and design elements. On the other hand, site-built homes are more likely to be superior in these areas, thereby creating an issue for the appraiser to reconcile and adjust to appropriately value these homes. M // What led Freddie Mac to partner with the Appraisal Institute for this training? REUTER // The theory behind this training program is to work towards being mindful about the expectations set for the apprais- ers when they're in the field. And that led us to the partnership with the Appraisal Institute. Our

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