Real and Personal: The Effect of Land in Manufactured Housing Loan Default Risk

Abstract

Ownership of manufactured housing is complicated by the distinction between homeownership and landownership. Roughly two-out-of-five manufactured homeowners do not own the underlying land. Traditional mortgage financing is only available for manufactured homes owned with land as real estate. Personal loans are available for manufactured homes without land or owned as personal property but are often more expensive.

The Federal Housing Administration (FHA) provides loan insurance for purchase or refinance of manufactured homes owned as either real or personal property. This paper provides an overview of the Title I loan insurance program and compares the default risk of FHA-insured personal property loans for purchase of manufactured homes to similar mortgages for manufactured homes. Land ownership, even when the home is titled as personal property, makes an important difference in risk.

Keywords: Manufactured housing, FHA, land, mortgage, default

JEL Classification: R3, R31, R38, G2, G22, G28, G5