For lower-income families that want to own a home, manufactured housing is the single most affordable option, particularly for families in rural areas. The average price of a new manufactured home is $64,000 — compared to an average home price of $374,100 for new site-built homes and a median price of $296,900 for such new homes.
Housing policy should be opening doors and facilitating access to mortgage credit for families priced out of the site-built and rental markets. The demand is there. The Manufactured Housing Institute believes this can be accomplished while fully protecting consumer rights.
Despite its affordability, manufactured home loan volume for loans under $75,000 decreased by 5% in 2014 even though the housing market as a whole improved (Home Mortgage Disclosure Act data).
Additionally, just 12.8% of the 440,000 new single-family home sales in 2014 were manufactured homes. In the same year, manufactured housing shipments represented 9.1% of new single-family housing starts and 6% of all new home starts, according to data from the U.S. Census Bureau.
Seven years ago, Congress identified manufactured housing as one of three underserved markets that the government-sponsored enterprises, Fannie Mae and Freddie Mac, should have a duty to serve.
The GSEs' regulator, the Federal Housing Finance Agency, proposed in December a new DTS rule, which MHI believes must include a substantive commitment from Fannie and Freddie to purchase chattel loans, which can be safely and profitably done.
The proposed rule would require the GSEs to adopt plans to improve the distribution and availability of mortgage financing in a safe and sound manner for manufactured housing, an identified underserved market. The proposal would provide DTS credit for eligible GSE activities that facilitate a secondary market for mortgages on residential properties.
Quite simply, manufactured housing, particularly for chattel loans, does not enjoy the same level of federal support that site-built housing does. There is no secondary market to promote access to credit for chattel lending, and there is no meaningful Federal Housing Administration insurance for chattel lending (only $24 million in endorsements in 2014). As a result, although manufactured housing presents an affordable option, it is at a pricing disadvantage to site-built housing.
Chattel loans can pose certain challenges. Because land does not serve as collateral for the loan, some argue that consumers lack full consumer protections.
MHI believes these well-meaning criticisms represent, at heart, generic opposition to chattel loans — a position MHI does not believe is in the interest of consumers, since these homes represent a critical source of affordable housing at a time when potential buyers are being priced out of other options.
Including chattel loans in duty-to-serve would help by providing a secondary market for those loans and help provide more access to credit to many moderate- and lower-income consumers. A robust secondary market for chattel loans is critical to ensure sustainable access to affordable housing.
Manufactured home borrowers and buyers have a broad degree of protections under the Dodd-Frank Act, including ability-to-repay, anti-steering, and the prohibition against mandatory arbitration. These all apply to manufactured homes, including chattel loans. And MHI also supports reasonable standards for land leases in conjunction with such homes.
The echoes of the housing crisis still ring loudly. The national homeownership rate is down to a 22-year low of 63.7%, home prices in key markets are skyrocketing beyond buyer reach, and multifamily rental rates are rising faster than home prices.
Rising home prices and rental rates are squeezing American buyers, and manufactured housing provides a key alternative. To restore the American dream of homeownership for these creditworthy families, housing policy must be fixed to ensure this underserved market receives the same.
Lesli McCollum Gooch is the senior vice president for government affairs for the Manufactured Housing Institute.