A Home You Can’t Mortgage? No Longer. Victory for Manufactured Housing

More than seventeen million Americans live in 6.9 million manufactured homes.  The vast majority of these homeowners are low and very low income (median income was $34,700 in 2008).  For most of these homeowners, the only type of financing they can access are “chattel” or personal property loans (i.e. auto loans), largely because they don't own the land under their homes. Chattel loans have higher interest rates and shorter terms than mortgages, constricting income for these unsubsidized homeowners, and making it harder for them to sell as well. But finally that can change.

In July 2012 the Uniform Law Commission passed the Uniform Manufactured Housing Act, which recommends to all states to classify manufactured housing as either real property (eligible for a mortgage) or personal property (eligible for a chattel loan), with the choice left to the homebuyer, even if the home is on leased land.  “Classification of manufactured homes as real property should allow qualified buyers to obtain financing on more favorable terms. Retailers would be required to notify buyers of the classification option at the time of sale,” says the ULC.

The chattel loan industry was not pleased and worked hard against this effort, but many affordable housing finance advocates supported it, including Corporation for Enterprise Development (CFED); Manufactured Home Owners Association of America (MHOAA); National Consumer Law Center (NCLC);  Self-Help Credit Union; Fair Mortgage Center (FMC) and others.

Next steps will be to identify and work with state legislatures to enact the Uniform Law and work with lenders to offer more affordable real  estate (mortgage) loans to qualified homebuyers. Advocates are working to organize which states should be supported to consider the ULC Titling Law option. Working with lenders that are willing to provide both MH home purchase finance options will help define which states go first.

[Editor's Note: The world of manufactured housing is rapidly changing thanks to the efforts of organizations like  ROC USA, NextStep, CFED, and MHOAA. More on this in an upcoming issue of Shelterforce.]

Howard Banker
Howard is the Executive Director of the Fair Mortgage Collaborative and has over 35 years’ experience in affordable lending and community development. He has managed and directed single and multi-family loan: origination, insurance, aggregation and securitization programs for affordable loans and directed loan counseling programs for single family homebuyers and owner throughout the US. He has been a consultant to Ford Foundation; the US Department of Energy; the Enterprise Foundation and other national nonprofit intermediaries. He began his working life as a community organizer with the North West Bronx Community and Clergy Coalition. He has a BA in Medieval Studies from Fordham University and an MS in Urban and Regional Planning from Pratt Institute.

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