The CFPB has issued a white paper on the manufactured housing market, including how manufactured housing is financed and the types of consumers who purchase or rent such housing.  In the paper’s introduction, the CFPB explains that although manufactured housing only accounts for six percent of all occupied housing and a much smaller fraction of U.S. home loan originations, such housing is of interest to the CFPB because it is a source of affordable housing particularly for rural and low income consumers and may raise consumer protection concerns due to the nature of the retail and financing markets for such housing.  The report relies on publicly available data, including HMDA data, proprietary data voluntarily provided to the CFPB and information obtained through outreach to industry groups, consumer groups, government agencies and “a variety of market participants and observers.”

The paper’s key findings include:

  • Compared with residents of site-built homes, a greater proportion of households living in manufactured housing live in rural areas and are headed by a retiree.  In addition, such households have median incomes and net worths that are, respectively, half and one-quarter of the income and net worth of other households.
  • About three-fifths of manufactured housing residents who own their own home also own the land it is sited on, with the result that such consumers generally have the option to title their home as real property and obtain financing through a mortgage loan or to title the property as personal property and obtain chattel financing.
  • An estimated 65 percent of borrowers who own their own land and obtained a loan to buy a manufactured home between 2001 and 2010 financed the purchase with a chattel loan, which often have lower origination costs and close more quickly than mortgage loans but may be priced between 50 to 500 basis points higher.  In addition, mortgage loans generally have more consumer protections under RESPA and various state foreclosure and repossession laws.  The CFPB notes that it is an “open question” whether consumers are aware of these tradeoffs.
  • Manufactured home owners typically pay higher interest rates for their loans than site-built borrowers.

The report also discusses the potential impact of certain provisions of the CFPB’s new mortgage rules on manufactured housing.  More specifically, the CFPB discusses how manufactured housing might be impacted by the changes in the HOEPA thresholds and the rules on qualified mortgages/ability to repay, loan originator compensation, appraisals for certain higher-priced mortgage loans, and escrow requirements for first lien higher-priced mortgage loans.

The CFPB notes that data on manufactured housing is scarce relative to the data available on site-built housing.  To help close that gap, the CFPB is considering adding a field to the HMDA data that would indicate whether a manufactured housing loan is secured by real or personal property.  And, perhaps signaling the nature of its future initiatives relating to manufactured housing, the CFPB states that its findings “underscore the importance of the manufactured housing sector as a source of affordable housing for some consumers, including those outside of metropolitan areas, older households, and lower-income households.  At the same time, these same groups include consumers that may be considered financially vulnerable and, thus, may particularly stand to benefit from stronger consumer protections.”