CFPB examines risks, barriers to manufactured housing loans

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Consumer Financial Protection Bureau (CFPB) officials have issued a report examining manufactured housing financing, noting low acquisition costs present higher interest rates and limited opportunity to refinance.

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“This report shows the power of the expanded Home Mortgage Disclosure Act data collection to understand the path to homeownership for some of our most vulnerable families, including Black, Indigenous, and Hispanic families, as well as rural and lower-income families of all races and ethnicities,” Acting Director Dave Uejio said. “Much more work needs to be done to understand the options available to these families and how best to help ensure that manufactured housing homeownership can be a path to financial stability for the rural and lower-income families who depend on it.”

According to the CFPB, manufactured housing represents a small segment of the overall housing supply. Still, it is one of the most affordable housing types available to low-income consumers, making up 13 percent of the housing stock in small towns and rural America.

Officials indicated 42 percent of manufactured home purchase loans are categorized as chattel loans, secured by the home but not the land. Additionally, officials said chattel loans have higher interest rates and fewer consumer protections than mortgages.

Chattel loans are often selected by consumers to avoid putting the underlying land at risk if there is a loan default. Most manufactured home loan applications are denied, and less than 4 percent of chattel originations were for refinances.

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