Prefabricated Home Loan Borrowers Face Higher Interest Rates, Risks, and Credit Barriers, New CFPB Report Says – YubaNet


WASHINGTON, DC – Today the Consumer Financial Protection Bureau (CFPB) released a report that provides new information on manufactured home financing, a vital source of loan for millions of manufactured home owners. Prefabricated housing is a small segment of the overall housing supply, but it is one of the most affordable types of housing available to low-income consumers and accounts for 13% of the housing stock in small towns. and rural America. However, these low acquisition costs are often accompanied by higher interest rates and limited refinancing possibilities. Consumers who don’t own the underlying land are more likely to see their homes depreciate and have less protection if they fall behind on their payments. These factors combined can make this affordable housing a potentially risky avenue for homeownership. The CFPB report uses new information gathered under the Home Mortgage Disclosure Act to shed light on the experiences of these often overlooked families.

“This report shows the power of the Home Mortgage Disclosure Act’s expanded 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 low-income families of all races. and ethnicities, ”said Acting Director Dave Uejio. “Much more work needs to be done to understand the options available to these families and how best to ensure that home ownership of manufactured homes can be a path to financial stability for rural and low-income families who do so. depend. ”

The CFPB report is based on new information on manufactured homes that was added in 2018 to the list of HMDA data collected. This new HMDA data is the only nationwide dataset that directly tracks the different types of financing options for prefabricated housing. Among the conclusions of this report:

  • Globally, about 42% of the loans for the purchase of prefabricated houses are “movable” loans, which are secured by the housing but not by the land. In general, home equity loans have higher interest rates and less consumer protection than mortgages. Consumers can choose to get home equity loans to avoid putting the underlying land in jeopardy if they don’t repay the loan.
  • Most prefabricated house loan applications are refused and less than 4% of movable property assemblies were for refinancing. Homeowners looking for a built-in-place loan are approved more than 70% of the time, but less than 30% of manufactured home loan applications are approved. At the same time, even during the low interest rates of 2019, very few manufactured home loans were refinanced.
  • The top five lenders account for more than 40% of loans for the purchase of prefabricated housing and almost 75% of personal loans. The four largest originators are specialized lenders who mainly offer movable loans to owners of prefabricated housing. Over time, non-bank lenders have played an increasing role in the manufactured home loan market, while banks have reduced their activity or exited the market altogether.
  • Hispanic, Black and African American, Native American, and Alaska Native borrowers, and senior borrowers, are more likely than other consumers to take out household loans, even after controlling land ownership. Black and African American borrowers are the only racial group that is under-represented in overall pre-fabricated housing loans versus on-site-built housing, but over-represented in personal property loans versus on-site built housing.

Manufactured homes are an issue of major importance to rural Americans and an important option for affordable housing. The two new manufactured home data points available in the HMDA data have helped fill important gaps in understanding the financing of manufactured homes that the Bureau faced in its process. 2014 report on prefabricated houses. Today’s CFPB report illustrates the importance of expanded HMDA data in answering critical research questions regarding consumer credit for all Americans, although there is still work to be done to understand consumer lending. prefabricated housing and options available to owners of prefabricated housing.

Read the report.

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