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The affordable housing future must include manufactured housing

NHC invites its members, partners, and other recognized housing experts to write guest blog entries on important topics. The views expressed by guest writers do not necessarily reflect those of NHC or its members or funders.

In the debate on the future of housing, one thing is clear: it’s on the nation’s agenda. In some circles, manufactured housing is, too. On January 28, Richard Cordray, the Director of the Consumer Financial Protection Bureau, appeared before the House Financial Services Committee. Manufactured home lending received a surprising amount of attention, including critical comments on the Bureau’s new rules. If nothing else, the interest of lawmakers recognizes that it is an important part of the affordable housing landscape. 

Doug Ryan

Manufactured housing is the largest source of unsubsidized housing in the county, housing 20 million Americans in eight million homes. And, in an era of reduced federal support for affordable housing, we need to look at how to provide affordable housing in new and sustainable ways.

While the committee’s interest is appreciated, much of the criticisms are misguided. The rules, which took effect this month, need a chance to work. Furthermore, the manufactured housing industry has something of a reputation for high-cost loans, questionable underwriting and resistance to competition. Standardization of lending products, with additional flexibility that already applies to most loans, could help the sector enter the mainstream. The quality of the home is vastly superior to those built twenty or thirty years ago; we think the policies and lending products can be, too.

A manufactured home community. Photo courtesy CFED.

Any discussion of manufactured home lending must include the GSEs’ duty to serve home buyers. Last year in this space, Ethan Handelman wrote why this requirement is so important. Largely due to how homes are financed, manufactured homeowners are often unable to benefit from the appreciation, consumer protections and financial stability that most homeowners take for granted. A true secondary market would likely lead to improved financial products for owners by attracting lenders who know manufactured housing is vital to their communities but do not want to (or cannot) hold the loans in portfolio.

Furthermore, lenders and advocates need to help change the laws that make manufactured homes fundamentally, and unnecessarily, different than site-built homes. Only about 15% of new manufactured homes are titled as real estate, even though 70% are on private land. States need to adopt titling reform, such as the Uniform Manufactured Housing Act, as it would no doubt lure lenders to the market and help deliver better loan products to consumers.

As we debate how to address housing finance, we need to be sure not to exclude how manufactured housing fits into the equation. Failure to do so closes the door on potential financial safety and security for millions.

Guest author Doug Ryan is the Director of Affordable Homeownership at CFED. CFED launched the I’M HOME (Innovations in Manufactured Homes) initiative in 2005 to promote policy, product and lending changes to transform the manufactured housing market.

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