Mobile Home Parks
Standard & Poor’s Ratings Services views mobile
home parks (MHPs) as a subset of bond ratings on
unenhanced affordable housing (AHPs). However,
there are unique issues with regard to MHPs that
deserve special attention.
Transaction structures
Rating bond-financed MHPs is substantially differ-
ent from rating bond-financed unenhanced multi-
family projects in that, in virtually all MHPs rated
by Standard & Poor’s, the collateral for the bond-
holders is land only and not real estate improve-
ments. Typically, the tenants in mobile home parks
own their mobile homes and lease the land on
which the mobile homes sit from the park owner.
The tenants typically obtain a loan to buy the
mobile home, and the mobile home is pledged tothe lender that provides the acquisition loan.
Therefore, the collateral for bondholders in rated
MHP transactions is land and a pledge of the
ground rent from the tenants for the mobile home
park spaces. The bondholders do not have any col-
lateral interest in the mobile homes themselves.
Standard & Poor’s analysis of MHP bond transac-
tions, therefore, depends to a great extent on the
asset quality of the MHP over the long term and its
ability to generate a strong revenue stream.
Asset quality
One factor unique to MHPs that will be given care-
ful attention is the size of individual mobile home
spaces. Mobile home spaces should be of adequate
size to accommodate larger mobile home units (i.e.,
at least 24 feet in width). The trend has been and
will continue to be the placement of larger units (atHousing268 Standard & Poor’s Public Finance Criteria 2007
In conducting its review of an affordable housing project, Standard & Poor’s relies on a site visit to each property, a complete
applicationincluding owner, property management, and oversight provider questionnaires, a review of legal documents including
any loan guarantees, subsidy contracts, real estate and bond documents, investment contracts, loan information and review of
specific third-party reports prepared by independent third-party professionals. The site visit will include:
■Internal and external inspection of the project, including several apartments, amenities, basement, roofs, maintenance areas,
elevators and stairwells, storage spaces, garbage collections and recycling facilities, security systems, recreational facilities
and grounds.
■Interviews with the prospective owner, property manager, construction planners and supervisors, and
■A tour of the surrounding neighborhood with visits to comparable properties.The following reports should be prepared by qualified, independent third-party professionals and should be no older than six months:
■Structural engineering report prepared by a licensed engineer or architect in accordance with Standard & Poor’s guidelines.
■Environmental report in accordance with Standard & Poor’s guidelines, and
■A complete self-contained appraisal performed in accordance with USPAP guidelines by a MAI certified appraiser.
This report should include a market and demand study prepared in accordance with Standard & Poor’s guidelines.Standard & Poor’s will review the following financial, legal, and loan documentation:
■Trust indenture
■Investment agreements
■Loan agreements
■Mortgage and mortgage note
■Assignment of leases and rents
■Relevant insurance policies
■Ground lease if applicable
■Management contract
■Construction contract if applicable
■Legal opinions
■Subsidy contracts, if applicable
■Standard & Poor’s owner profile and questionnaire
■Standard & Poor’s property management profile and questionnaire, and
■Any other relevant transaction document.Site Visit and Documentation