Manufactured Housing Finance: New Insights from the Home Mortgage Disclosure Act Data

Abstract

Manufactured housing is the largest source of unsubsidized affordable housing in the United States, but financing a manufactured home can be costly, especially for borrowers who do not own the underlying land. Whether the homeowner owns the underlying land plays a key role in whether the manufactured home is titled as personal (chattel) property or real property, a distinction which in turn affects many aspects of the home financing and can have major implications for the homeowner in terms of cost and security of tenure.

This report uses new information collected under the Home Mortgage Disclosure Act (HMDA) to explore the differences between mortgage loans for site-built homes, mortgage loans for manufactured homes (referred to as “MH mortgages”), and chattel loans for manufactured homes. Comparison of these three financing types finds that borrowers with chattel loans face higher denial rates when applying for financing than manufactured housing mortgage and site-built borrowers. When they do get a loan, these borrowers pay higher interest rates than their MH mortgage and site-built counterparts and are also less likely to refinance. Analysis shows that Black, Hispanic, and American Indian and Alaska Native borrowers are more likely to get chattel loans than their non-Hispanic white counterparts, even when controlling for land ownership. Additionally, the market for MH lending—and chattel in particular—is more concentrated among relatively few lenders than the market for mortgages on site-built homes. This research also compares HMDA data with results from commonly used manufactured housing datasets to illustrate how HMDA fits into the MH research space.