HMDA data leads to new report on manufactured housing

(May 28, 2021) Consumers borrowing to buy manufactured homes face higher interest rates, and ultimately barriers to credit through limited refinancing options, CFPB contends in a report released Thursday, which it said is based on new information collected beginning in 2018 under the Home Mortgage Disclosure Act (HMDA).

The bureau claimed that manufactured housing is “one of the one of the most affordable types of housing available to low-income consumers” and makes up 13% of the housing stock in small towns and rural areas. However, the bureau said, the loans are often coupled with higher interest rates and limited opportunity to refinance.

For example, the bureau said less than 30% of manufactured home loan applications are approved, compared to more than 70% of loan approvals for “site-built” homes. The agency noted that around 42% of manufactured home purchase loans are “chattel” loans, which are secured by the home but not the land. In general, the bureau asserted, chattel loans have higher interest rates and fewer consumer protections than mortgages.

Less than 4% of chattel loan originations were for refinancing, the bureau said.

Hispanic, Black and African American, American Indian and Alaska Native, and elderly borrowers are more likely than other consumers to take out chattel loans, even after controlling for land ownership, CFPB said. Black and African American borrowers are the only racial group that are underrepresented in manufactured housing lending overall compared to site-built, the bureau said, but overrepresented in chattel lending compared to site-built.

Manufactured Housing Loan Borrowers Face Higher Interest Rates, Risks, and Barriers to Credit, New CFPB Report Finds