When the New Hampshire Community Loan Fund celebrated the mortgage closing of the Freedom Hill manufactured-housing cooperative in Loudon earlier this year, it marked an important milestone for an innovative program to protect affordable housing throughout the state.

Before cooperatives became widespread in New Hampshire, the owners of manufactured homes rented land in mobile-home parks. When the parks were sold, residents often had to pay higher rents or were forced out of the park when the new owner decided to develop condominiums.

Since 1984, the Loan Fund has been the driving force behind the conversion of the mobile-home parks to cooperatives. A provider of loans and technical assistance to economic-development initiatives for low- and moderate-income people, the Loan Fund has helped tenants organize cooperatives and purchase mobile-home parks from their owners. The Loan Fund also played a critical role in lobbying for 1988 legislation that gives residents 60 days to buy a park before it goes on the market.

The Loan Fund's epic work with cooperatives began in 1983, when the residents of a mobile home park in Meredith, New Hampshire, sought help in purchasing the park from its owner. The owner wanted to work out a deal in which the tenants would purchase the park and allow her to remain there free of charge.

With the help of a loan from the Sisters of Mercy religious order, the newly founded Loan Fund helped the tenants form the Meredith Center cooperative and purchase the park. Since then, the nonprofit Loan Fund has been directly involved with more than 40 of the state's 53 cooperative conversions and has provided training and technical assistance to all of them.

A Collaborative Effort
Although the Loan Fund has been a driving force behind the development of manufactured-housing cooperatives, the conversions wouldn't have been possible without the participation of the Federal Home Loan Bank of Boston and its member banks. Creating a co-op is a collaborative process that involves park residents, nonprofit organizations, and financial institutions.

"What's unique is the cooperation between the Loan Fund, the Bank of New Hampshire, and the Federal Home Loan Bank of Boston to get these deals done," says Tom Potter, vice president at the Bank of New Hampshire (BankNorth), which financed the Freedom Hill purchase.

To celebrate the closing of the Freedom Hill co-op earlier this year, the Loan Fund invited many of the key players in the development of manufactured-housing co-ops to an event at the Concord Community Music School in Concord. Honored at the event were the New Hampshire Office of State Planning, the New Hampshire Housing Finance Authority, and the Federal Home Loan Bank of Boston — three key partners in the conversion of manufactured-housing parks to cooperatives in New Hampshire.

The Bank received an award for providing New Hampshire members with long-term, fixed-rate advances to ensure stable financing for the state's manufactured-housing parks and their low- and moderate-income tenants.

Freedom Hill was the fifteenth — and largest — manufactured-housing park financed by the Federal Home Loan Bank of Boston's Community Development advances. Since the early 1990s, more than $10 million in Community Development advances (once called "Community Investment Program" advances) have been used in New Hampshire to convert manufactured-housing parks to cooperatives. Community Development advances provide discounted financing for small businesses, affordable housing, local public works, and other initiatives benefiting low- to moderate-income families and neighborhoods.

Paul Bradley, manager of the Loan Fund's park-cooperative program, says a sea change occurred in the financing of co-ops in the early 1990s when the Federal Home Loan Bank of Boston began offering an Amortizing advance, which became a critical component of the financing structure. Today, says Mr. Bradley, Community Development advances are the "key resource for financing co-ops."

For tenants, the conversion of parks to cooperatives offers a welcome sigh of relief and marks the start of a new era for their communities. "Life at the park has changed since we've become a co-op," says Peter Bartlett, a Freedom Hill resident and its co-op director. "People just seem to be a lot friendlier. Before, you'd see somebody down at the mail house and it was, 'Hi'; but now it's 'How's it going? Are we still doing all right?' The people are really bending over backwards to make this thing work."

The Root of the Problem
The crisis confronting residents of manufactured-housing parks is rooted in the changing uses the parks have undergone since their earliest years. "The mobile home park really grew out of the travel-trailer park of the 1940s and '50s," says Mr. Bradley. "That's why, when you look at the manufactured housing industry, much of it probably reminds you of the car business."

While renting space in a mobile-home park made sense for travelers interested in camping out by the ocean for a week, it wasn't a good model for permanent housing. "Those travel-trailer parks morphed into permanent housing, with home owners living first in trailers, then in mobile homes, and now in manufactured homes," says Mr. Bradley. "It's really become permanent housing, but the ownership structure — with an investor owning the land and home owners owning the home — is still old-style, travel-trailer-park ownership structure."

A similar obsolescence affects the way manufactured homes are sold. "The problem with manufactured-home lending is that it grew up around nonresidential real-estate practices," says Mr. Bradley. "But there are some people who want to change that and have a more residential, real-estate approach."

"We have gone a long way toward stabilizing manufactured-housing parks by helping residents buy their parks, stabilizing the rents, and stabilizing the infrastructure. But we continue to let sub-prime lenders, with a sub-prime mentality, finance homes in those parks at rates well in excess of their cost of doing business," adds Mr. Bradley.

The Loan Fund is now developing a program to help consumers find reasonably priced mortgages to finance the purchase of manufactured homes. "Our goal is to develop a secondary-mortgage market that delivers rates that meet the security needs of lenders, but also produces a good home-financing product for our home owners," says Mr. Bradley.