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Millions of Americans live in mobile home parks because they're the most affordable way for them to keep a roof over their heads. But some investors are buying up mobile home parks. They raise fees and rents for the land under these homes and then evict people who can't pay. And the government is helping them do it.
NPR's Chris Arnold reports for our Planet Money team.
CHRIS ARNOLD, BYLINE: Mary Hunt lives in a mobile home park in Swartz Creek, Mich. A few years ago, it was bought up by one of these big companies. There are something like 120 mobile or manufactured homes here. Some look like little suburban houses. Others, like Mary's, are more like trailers up on foundations.
MARY HUNT: It's a double-wide, so there is a lot of room. I've lived here almost 35 years.
ARNOLD: Hunt's 51. She makes just $10 an hour driving people to doctor's visits. And the thing about mobile home parks is that even if you own your house outright, which Mary does, you still have to pay rent on the little plot of land that it sits on. It's called lot rent. And when money was tight, the couple that managed the park lived right here...
HUNT: Stan and Nancy were the ones before. I would call up and say, hey, look, I've got half the rent. I'll bring the rest, you know, next week or whatever. OK. I take it down, no problem.
ARNOLD: But then the park was bought up by a real estate investment firm called Havenpark Communities. And it's been buying up mobile home parks across a bunch of different states. She says a few years ago her lot rent was less than $350 a month. And Havenpark raised that to more than $400 and then tacked on new monthly fees.
HUNT: Water's about 35, something like that.
ARNOLD: Then there's the sewer fee, the trash fee, the administration fee. When Mary had trouble paying...
HUNT: I went in and said OK, well, you know, I've got this money right now. And I'll have - oh, we can't do that. You have to have the full thing. We can't take a partial payment.
ARNOLD: Mary couldn't just move her home. It costs $5,000 to $10,000 to move a mobile home. And then earlier this year, Mary got sick with COVID and fell behind on the rent. And the company filed an eviction case against her. When we spoke with Mary earlier this summer, she was running out of options.
HUNT: What's going to happen is I'm going to go with (crying) what I have on my back pretty much, and everything will go to the road. And there won't be anything I can do about it. I could be out next week without a place to live.
ARNOLD: Havenpark wouldn't do an interview but said in a statement that, starting last year, they don't raise monthly lot rent more than $50 in a year and they charge the fair market rent for an area. In Mary's case, it looks like she's going to be OK for now. She applied for pandemic rental assistance money. And when NPR pressed Havenpark, the company said it wouldn't evict her or other residents waiting for that help.
But Mary Hunt's story is happening all over the country. A lot of mom and pops who've been running mobile home parks for decades, they're retiring, looking to sell. Big investors are swooping in to buy them up. And charging hundreds or thousands of people like Mary more money can add up to bigger profits.
GEORGE MCCARTHY: When private investors come to buy parks, very often they raise the cash flow by increasing rents sometimes 20-, sometimes 50-, sometimes 70%.
ARNOLD: George McCarthy is president of the nonprofit Lincoln Institute of Land Policy. And he says what's really troubling to him is that the government is basically turbocharging this trend. OK, here's how this works. A company raises rates and fees in a park. That makes the park more valuable. So they can now borrow more money against it, kind of like when you refi your house and get cash out of the deal.
They pull out, say, $3 million, and they use that to go buy another mobile home park. And then they do that again and again. It's a cascade of borrowed money. And often, these loans are backed by the U.S. government.
MCCARTHY: They provide very, very low-cost debt for these investors to get enough cash out to go buy additional parks.
ARNOLD: The loans have supercheap interest rates because they're guaranteed by Fannie Mae and Freddie Mac, the government-backed entities at the heart of the U.S. mortgage market.
MCCARTHY: And what's ironic about it is that one of the missions of Fannie Mae and Freddie Mac is to help preserve affordable housing. And they're doing exactly the opposite by helping investors come in and make the most affordable housing in the United States less affordable all the time.
ARNOLD: Havenpark and companies like it have gotten a bunch of these loans. Havenpark says sometimes when they buy a park, it does prevent it from being turned into, say, a shopping mall. But there is another way.
ELISABETH VOIGT: Stop providing the low-cost loans to the investors. Instead, figure out a path that preserves communities and protects residents.
ARNOLD: Elisabeth Voigt is with MHAction. It's a nonprofit that pushes for policies to keep mobile homes affordable. She says, these days more residents are trying to buy up their own parks to form a co-op so that they determine the rents and fees. But residents forming a co-op almost never qualify for these superlow interest rate loans from Fannie and Freddie. So the big companies are getting a lot of help from these government-backed loans. Well, the people on modest incomes who actually live there don't get that kind of help.
George McCarthy says, though, the Biden administration can fix that situation and without an act of Congress.
MCCARTHY: The U.S. government could tell Fannie and Freddie what to do and how to do it. And they could actually make them honor their original mission and find ways to use innovative financing to preserve this really, really critical affordable housing stock.
ARNOLD: We reached out to Fannie and Freddie. And Freddie Mac said in a statement that more recently, they'd been requiring more protections for tenants in mobile home parks.
But McCarthy thinks Fannie and Freddie should do more, like trying out a new program to help residents to buy their own parks. He says, even a modest program for Fannie and Freddie could protect hundreds of thousands of affordable homes over a few years. And that would better be a way for the government to support residents as much as it's been helping big companies.
Chris Arnold, NPR News.
(SOUNDBITE OF PSALM TREES' "JOEY'S GONE") Transcript provided by NPR, Copyright NPR.
