CFPB Report: Manufactured-Home Owners Pay Higher Interest Rates
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October 01, 2014

A report released by the Consumer Financial Protection Bureau (CFPB) found that owners of manufactured-homes typically play higher interest rates and that they are more likely to be older, live in a rural area or have a lower net worth.

According to the report, in 2012 68 percent of all manufactured-housing loans were considered higher-priced mortgage loans, compared with only 3 percent of site-built home loans. Mortgages are considered higher-priced under certain consumer protection laws if they have an annual percentage rate higher than a benchmark rate that is based on average interest rates, fees, and other terms on mortgages offered to highly qualified borrowers.

Manufactured homes, known as mobile homes or trailers, are built in a factory and then transported to a retail center or other site. One of the main differences between a manufactured home and a home built onsite is that manufactured homes may be titled as either real estate property or personal property. A home built onsite is almost always titled as real estate property. For a manufactured home to be titled as real estate property, the home generally must be set on a permanent foundation on land that is owned by the home's owner. If a manufactured home is titled as personal property, it generally must be financed through a personal property loan, also known as a chattel loan.

Many of the higher-priced mortgages were chattel loans.

Manufactured-home owners that also own the property are eligible to take out mortgages to finance the purchase of their manufactured homes. Chattel loans are more likely to have higher interest rates than mortgages, but about two-thirds of these homeowners continue to finance through chattel loans instead. These chattel loans also have fewer customer protections than traditional mortgages.

The report also examined the demographics of manufactured-home owners. About one in five families that live in this type of housing do not have children and are 55 or older. They also tend to have a lower net worth than other families.

Manufactured homes are most common in the southeastern and western US, with South Carolina having the highest prevalence of this type of housing. Outside metro areas, one out of every seven homes is a manufactured home, but they only account for about 6 percent of occupied U.S. housing.

The full report on manufactured housing can be found here.

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