A Consumer Financial Protection Bureau (CFPB) white paper, Manufactured-housing consumer financing in the United States released on September 30, intends to expand knowledge about manufactured housing and its financing. In many rural communities, manufactured housing serves as a viable source of affordable housing for elderly and low income individuals. The report shows that due to the legal treatment of manufactured housing, residents are more likely to receive higher interest rate loans and have fewer consumer protections than those buying site-built homes.
The report compiles data from the American Community Survey (ACS), the American Housing Survey (AHS), Home Mortgage Disclosure Act (HMDA) data, the Manufactured Home Survey (MH Census), the Survey of Consumer Finances (SCF), and outreach to various agencies.
Manufactured homes are structures constructed in factories and then transported to a site that is either land owned by the manufactured home resident, or a lot in a manufactured home community. Commonly found in non-metropolitan areas, manufactured housing composes 6% of occupied housing nationwide, but makes up 14% of the housing stock in areas outside of metropolitan areas. In 112 counties, located primarily in southern and western states, more than one-third of all homes are manufactured housing. CFPB found that 32% of these homes are headed by retirees, compared to 24% of residents of site-built homes. On average, residents of manufactured homes have lower levels of education, lower median incomes, and lower net worth, assets, and debt than site-built residents. Finally, households in manufactured housing are more likely to be white (81%) than those in site-built homes (74%).
Manufactured homes can be built at a much lower cost than site-built homes, with the average cost per square foot less than half of the $94 estimated cost per square foot for new site-built housing in 2013. The average sales price of a new single-section manufactured home in the first six months of 2014 was $43,000, and some of the most basic homes can sell for $20,000 or less.
Despite the low cost of manufactured homes, residents often pay higher interest rates than site-built residents because state and local laws can treat manufactured homes as either real estate or as personal property (chattel), while state and local laws only treat site-built homes as real estate property. Chattel loans have higher interest rates and provide less security than real estate loans. It is estimated that 65% of borrowers who owned their land used chattel loans to finance their manufactured homes from 2001 to 2010. The manufactured housing market collapsed in the early 2000s and defaults soared. In 2000 alone, more than 75,000 consumers had their manufactured homes repossessed due to poor loan quality. This was about 3.5 times the typical number of repossessions during the 1990s. Since that time, the market for manufactured housing has remained depressed.
The CFPB intends to continue to analyze the growing available data, and monitor any issues that might warrant consumer protections for manufactured housing residents.
Manufactured-housing consumer finance in the United States is at http://files.consumerfinance.gov/f/201409_cfpb_report_manufactured-housing.pdf