Manufactured housing, a small but important segment of the nation’s housing stock, tends to carry higher-priced loans than site-built housing, according to a recent report from the Consumer Financial Protection Bureau (CFPB).
Commonly known as “mobile homes,” manufactured homes are factory-built housing units that can be permanently or temporarily sited on a plot of land. Depending on whether the land is rented or owned by the home’s owner, manufactured homes may be titled as either real estate property, in which case they are financed with mortgage loans, or personal property. When titled as personal property, manufactured homes are financed with personal property loans, also known as “chattel” loans, which tend to have low origination costs and quick closing time frames. However, chattel loans also tend to carry higher interest rates and fewer consumer protections than mortgage loans.
For its report, Manufactured-Housing Consumer Finance in the United States, the CFPB analyzed multiple data sources, including the U.S. Census Bureau’s American Community Survey, Home Mortgage Disclosure Act reporting, and the Survey of Consumer Finances, to assess the state of manufactured housing loans across the country. The CFPB found that as of 2012, 68 percent of all mortgage and chattel loans on manufactured housing met the definition of a “higher-priced mortgage loan,” or HPML, versus only 3 percent of the loans on site-built homes. An HPML, as defined under some consumer protection laws, is a loan with an annual percentage rate that is higher than a benchmark rate based on the average rates, fees, and other mortgage terms offered to a highly qualified buyer. In addition, 65 percent of manufactured home owners who own the land their homes are sited on and are thus eligible for mortgages have taken out chattel loans instead. The CFPB notes that the extent to which consumers are knowledgeable about and weigh the trade-offs of mortgage loans versus chattel loans is unknown.
According to the report, manufactured housing accounts for 6 percent of all occupied housing in the U.S. as a whole, but the share rises to roughly 14 percent outside of metropolitan areas. In the Ninth Federal Reserve District, the share of manufactured housing units ranges from a low of 3 percent in Minnesota and Wisconsin to a high of 11 percent in Montana.
To access the report, visit the “Reports” section of the “Inside the CFPB” tab at www.consumerfinance.org.