CFPB Issues Report on Manufactured Housing Loans Using New HMDA Data

The CFPB issued a report on manufactured housing using new Home Mortgage Disclosure Act (HMDA) data to explore the financing available to manufactured housing borrowers and to offer insights on differences among racial and ethnic demographics.

The May 27, 2021, report, published by the CFPB’s Office of Research in collaboration with the Office of Mortgage Markets, is the first report on manufactured housing issued by the CFPB since 2014.  Manufactured housing is of interest to the CFPB “because of its status as an important source of low-income housing, because its consumers are often financially vulnerable, and because of the unique consumer protection concerns its financing market raises.”  In the press release accompanying the report, Acting Director Dave Uejio notes “the power of the expanded Home Mortgage Disclosure Act 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 lower-income families of all races and ethnicities.”

The new report uses two fields available in HMDA data beginning in 2018 to explore the differences among mortgage loans for site-built homes, mortgage loans for manufactured homes, and chattel loans for manufactured homes.  A manufactured housing loan is typically secured by both the manufactured home and the land on which it sits.  Chattel loans are loans for manufactured housing that are secured solely by the manufactured home, but not the land upon which it sits.  Primary findings in the report include that:

• Only 27% of applications for manufactured housing loans result in the loan being financed, as compared to 74% of applications for site-built homes.  Moreover, borrowers with chattel loans face higher denial rates when applying for financing than manufactured housing mortgage and site-built borrowers.

• Around 42% of manufactured housing loans are chattel loans, which are loans secured by the home but not the land.  For the majority of these loans (72%), the consumer does not own the land and is ineligible for a mortgage.

• Approximately 64% of manufactured housing borrowers own the land where their home sits, but 17% still take out a chattel loan. 

• 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.

• Land ownership and how the manufactured home is titled (whether as personal “chattel” property or real property) can substantially impact the cost of financing, and manufactured homeowners typically pay higher interest rates than site-built homeowners. 

The report concludes that the Bureau “has an interest in promoting racial equity” and calls for further research into how policymakers, consumer advocates, and others can promote racial equity and financial well-being for manufactured-home owners.