Manufactured housing, one of the most affordable types of housing available to low-income consumers, makes up 13 percent of the housing stock in small towns and rural America.

However, the lower cost of buying a manufactured home often comes with higher interest rates and limited opportunity to refinance, according to a report by the Consumer Financial Protection Bureau.

Consumers who don’t own the underlying land are more likely to see their homes depreciate and have fewer protections if they get behind on payments. These factors can make this affordable housing potentially risky for homeowners.

The CFPB’s report uses new information collected under the Home Mortgage Disclosure Act to look at manufactured home financing. Among its findings: 

• About 42 percent of manufactured home purchase loans are “chattel” loans, which are secured by the home but not the land. Chattel loans often have higher interest rates and fewer consumer protections than mortgages. Consumers may choose to get chattel loans to avoid putting the underlying land at risk if they default on the Loan.
• Most manufactured home loan applications are denied, and less than 4 percent of chattel applications were for refinances. Homeowners seeking a loan on a site-built home are approved more than 70 percent of the time, but less than 30 percent of manufactured home loan applications are approved. Even during 2019’s low interest rates, very few manufactured housing loans were refinance loans.
• The top five lenders make up more than 40 percent of manufactured housing purchase loans, and nearly 75 percent of chattel lending. The four largest lenders are specialty lenders that offer mostly chattel loans to manufactured housing owners. Nonbank lenders are playing an increasing role in the manufactured housing lending market, while banks have decreased their activity or left the market.
• Hispanic, African American, American Indian and Alaska Native, and elderly borrowers are more likely than other consumers to take out chattel loans.

“This report shows 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,” said Dave Uejio, CFPB acting director.

Uejio said work needs to be done to understand the options available to these families and how best to help ensure that manufactured housing homeownership can be a path to financial stability for the rural and lower-income families who depend on it.