Manufactured Housing

By Doug Ryan, Senior Director of home in 2017 was $71,900 (excluding land Affordable Homeownership, Prosperity costs); much less compared to an average Now of $293,727 for a newly constructed single- family home and approximately $184, 647 anufactured homes are an often for an existing site-built home (see the U.S. overlooked and maligned component Census Bureau’s Manufactured Homes Survey and of our nation’s housing stock, but these Characteristics of New Housing, along with the Mhomes are an important source of housing for National Association of Realtors’ Median Sales millions of Americans, especially those with low Price of Existing Homes). Manufactured homes incomes and in rural areas. Although the physical cost about half of what site-built homes cost per quality of manufactured housing continues to square foot, though transportation and onsite progress, the basic delivery system of how these work slightly increase the final costs. Even homes are sold, financed, and managed is still in though the purchase price of manufactured need of improvement to ensure that they are a homes can be relatively affordable, financing viable and quality source of affordable housing. them may not. The majority of manufactured homes are still financed with personal property, ISSUE SUMMARY or Chattel loans (see the Consumer Financial There are approximately 6.7 million occupied Protection Bureau’s Manufactured Housing manufactured homes in the U.S., comprising Consumer-Finance in the United States). With about 6% of the nation’s housing stock. More shorter terms and higher interest rates, personal than half of all manufactured homes are property loans are generally less beneficial located in rural areas around the country. New for consumers than conventional mortgage manufactured housing accounts for about 9% of financing. Chattel loans do, however, typically all new single-family housing starts. Although have lower closing costs and can close faster the demographics of manufactured housing are than conventional mortgages. Approximately changing, lower-income households are still 64% of manufactured home loans in 2016 were the primary residents of manufactured homes. classified as high cost (having a substantially Modern manufactured homes have their origins high interest rate) which is more than nine in the automobile and recreational travel trailer times the level of high cost lending for all homes industry, but factory-built dwellings produced nationally according to the Housing Assistance today are more comparable in quality and safety Council Tabulations of 2016 “Home Mortgage to conventionally constructed single-family Disclosure Act” data. Some factors such as the homes. It is equally important to recognize the low-dollar nature of Chattel loans do factor into existing stock of older manufactured or mobile their higher costs. Manufactured homes are homes. An estimated one-fifth of currently typically sold at retail sales centers. In some occupied manufactured homes were built before cases, dealers resort to unscrupulous sales 1980. These older units are likely to be smaller, and financing tactics, trapping consumers into less safe, and have fewer amenities and less unaffordable loans (The Mobile Home Trap: How a investment potential than newer manufactured Warren Buffett Empire Preys on the Poor). homes. The adoption of the HUD Code (see A significant portion of manufactured and below) in 1976 and subsequent updates have mobile homes are located in community or park significantly improved this housing type. settings, though this is becoming less common. Affordability and convenience make According to the U.S. Census Bureau, in 2017, manufactured homes a popular housing option. approximately 32% of new manufactured homes The average sales price of a new manufactured were sited in such settings. Estimates suggest

NATIONAL LOW INCOME HOUSING COALITION 6–17 that approximately 40% of all manufactured and initiatives are utilizing manufactured homes are in an estimated 45,000 to 50,000 land homes to provide and maintain affordable lease communities. Though about three quarters housing. These efforts avoid the pitfalls of of manufactured homes are owner-occupied, the traditional dealer-based manufactured housing sector has a history of being placed on rented purchase and finance, and investor ownership of land and therefore manufactured homes have communities. a pattern of land tenure status that is unique The HUD Code to this form of housing. In manufactured home communities, many residents own their homes An important factor in the designation of and rent the land, which can devalue the asset. a manufactured home is whether the unit Ownership of land is an important component was built before or after June 15, 1976. This to nearly every aspect of manufactured housing, date marked the implementation of the ranging from quality to assets and wealth “Manufactured Home Construction and Safety accumulation. Residents who do not have control Standards Act” (42 U.S.C. Sections 5401-5426) over the land on which their home is placed regulating the construction of manufactured often have reduced legal protections than other homes and commonly referred to as the “HUD homeowners. Other common concerns faced code.” HUD developed and administers the by tenants of manufactured home communities code that implements the statute. These federal include excessive rent increases, poor park standards regulate manufactured housing management and maintenance, restrictive rules, design and construction, strength and durability, and restricted access to municipal services. transportability, fire resistance, and energy For these and other reasons, alternative park efficiency. The HUD code evolves over time and ownership models, such as resident, nonprofit, has undergone several major modifications and government ownership are gaining traction. since 1976. In 2018, HUD launched an effort to revise various regulations and other guidance WHAT ADVOCATES SHOULD governing the HUD Code. KNOW LEGISLATIVE AND REGULATORY Federal Resources for Affordable Manufactured ACTIONS Housing Duty to Serve Manufactured housing is largely financed in the private marketplace. However, there are The “Housing and Economic Recovery Act of several existing federal resources that support 2008” mandates that Fannie Mae and Freddie the development, financing, and rehabilitation Mac (the government sponsored enterprises, or of affordable manufactured housing, such GSEs) have a duty to serve underserved markets. as HUD-HOME, USDA Rural Development, Manufactured housing was identified in the act Veterans Affairs, and Weatherization funds. as one of three underserved markets along with Fannie Mae and Freddie Mac are increasing their rural areas and housing preservation. Under the manufactured home loan offerings. act, the GSEs will increase mortgage investments and improve the distribution of capital available High-Quality Manufactured Housing for mortgage financing in these markets. In Once shunned by nonprofit housing developers, 2016, the Federal Housing Finance Agency manufactured homes are now seen as options (FHFA) issued a final rule on theduty to serve for infill, new developments, and other settings. requirements. In a change from the initial and Much of this progress is attributable to a proposed rule, FHFA will now consider personal growing and innovative group of advocates property or Chattel loans for duty to serve credit who challenged assumptions and convention on a pilot basis. 2018 was the first year of Fannie about developing and preserving manufactured Mae and Freddie Mac’s three- year underserved housing. Across the nation, several organizations markets plans, which include serving both the

6–18 2019 ADVOCATES’ GUIDE single-family and the community manufactured increases. Residents should be properly housing markets. notified and given first right of refusal on the sale of their community. The “Economic Growth, Regulatory Relief, and Consumer Protection Act” • Improved data collection for manufactured homes should be incorporated into publicly In 2018, the president signed into law S. 2155, available data resources such as the “Home which includes a provision on manufactured Mortgage Disclosure Act,” The American home loans. The statute amends the “Truth in Community Survey, and the American Lending Act” (TILA) to specify that a retailer Housing Survey. Manufactured home data of manufactured housing is generally not should indicate property status (personal considered a mortgage originator. The provision property or real property) and location was not supported by affordable housing information indicating whether the unit is advocates on the grounds that it lessens already located in a manufactured home community weak consumer protections in the manufactured or on a scattered site lot. The inclusion of housing market. these updated and enhanced manufactured The “Dodd-Frank Wall Street Reform and home data would provide a much more Consumer Protection Act” (PL 111-203) complete assessment of manufactured Enacted in 2010, Dodd-Frank revised TILA to housing. establish specific protections for mortgage loans, origination activities, and high-cost lending. FOR MORE INFORMATION These provisions enhance consumer protections Prosperity Now’s I’M HOME Network: for purchasers of manufactured homes. Dodd- 202-409-9788, https://prosperitynow.org/get- Frank also directs the newly created Bureau of involved/im-home. Consumer Financial Protection to supervise The Housing Assistance Council: 202-824-8600, manufactured housing finance activities. S. 2155 http://www.ruralhome.org/. (above) modifies one provision of Dodd-Frank. Rural Data Portal: WHAT TO SAY TO LEGISLATORS http://www.ruraldataportal.org/. Advocates should speak to lawmakers with the Manufactured Homes by County (Interactive message that: Map): http://bit.ly/1KDssyX. • Manufactured homeowners should be High Cost Manufactured Home Loans by County provided opportunities to obtain standard (Interactive Map): http://bit.ly/14QHVLk mortgage lending instead of personal Next Step: https://nextstepus.org/. property loans often used to finance this type of housing. ROC USA: 603-856-0246 http://www.rocusa.org. • Borrowers with personal property loans National Consumer Law Center: 202-452-6352 should be afforded consumer protections http://www.nclc.org/issues/manufactured- consistent with real property or standard housing.html. mortgage loans. National Manufactured Home Owners • Legislation should be enacted that limits Association: http://www.nmhoa.org/. predatory lending practices involving manufactured homes. • Policies and programs should be enacted to facilitate manufactured housing community preservation, such as protection from community sales, closures, and rent

NATIONAL LOW INCOME HOUSING COALITION 6–19