Manufactured Homes: Sage Financial Advice
When the New York Times speaks writes, people listen read. After the Consumer Financial Protection Bureau (CFPB) released their report in early September, which focused a myopic spotlight on lending practices within the manufactured housing industry, the NYT decided it was time to do a little digging? What they found was that some manufactured home buyers need some sage financial advice.
Manufactured Homes: Sage Financial Advice
“The Consumer Financial Protection Bureau estimated the typical interest rate for a manufactured home loan in 2012 at 6.79 percent. By contrast, the average 30-year fixed rate on a conventional mortgage that year was 3.6 to 4.2 percent.”
Manufactured Homes (MFH) – unlike site-built conventional homes – are single-family residential units that have been constructed in a controlled environment. Henry Ford would’ve loved it! Think of an assembly line setting where high quality homes are built from standard construction materials, one after the other. These environmentally friendly units have long been appreciated and valued as a realistic option for hard-working Americans. Helping those looking to obtain the seemingly impossible dream of homeownership, particularly for many of today’s cash-strapped homebuyers.
Manufactured homes: the assembly-line process
Pointing to the critical housing gap that manufactured homes fill, the New York Times cited the CFPB’s report stating; “manufactured homes have become a crucial source of affordable housing, especially in the South, the West and Northern New England.”
Customarily, manufactured homes cost significantly less than their more traditional cousin; the stick built, site constructed home. Despite the fact that MFH cost nearly half as much as the projected national average – $94-per-square-foot for site-constructed homes – some lenders are still charging exorbitant rates for MFH loans.
Are Chattel loans cash cows?
Taking the biggest hit to their wallet are Chattel borrowers with damaged FICO scores. According to Doug Ryan, the Director of Affordable Housing Initiatives for the Corporation for Enterprise Development, those homebuyers with “dinged credit” and looking to obtain a Chattel mortgage can anticipate paying a minimum of 10% interest.
[‘Chattel’ chat·tel ˈCHadl mortgage Defined: a lending term utilized to give definition to a loan arrangement wherein an item of movable personal property is utilized as security for the mortgage/loan. Thus, a chattel mortgage is a lending product that is secured by Chattel – an item of property other than real estate.]
Are Chattel loans cash cows?
The Times They Are a-Changin‘ …
Typically, manufactured home buyers have found it challenging to qualify for a conventional mortgage, particularly if the land beneath their proposed home site is not owned by the proposed borrower – leading some to argue that improving the loan climate for manufactured housing is “a fundamental economic rights issue that has to be addressed.” Pointing out that New Hampshire is the only state that titles every manufactured home as real estate, Doug Ryan said his organization is working to get other states to change their title rules so more buyers qualify for manufactured home mortgages.
