MHProNews has learned from the Wall Street Journal there is rare bipartisan support in Congress to roll back a provision in the Dodd-Frank Act that could produce a decline in manufactured home lending, thereby hurting builders, lenders, and owners. A part of Dodd-Frank sets a threshold for interest rates beyond which loans are considered “high cost” by the Consumer Financial Protection Bureau (CFPB) and do not offer legal protections. Many of the loans for manufactured homes fall into this category because they carry interest rates above ten percent, and since purchasers of manufactured homes generally have lower incomes, they are more likely to default. In addition, manufactured homes may lose value over time in some scenarios, and if the home goes into foreclosure the lender will recover less money. Tim Williams, CEO of 21st Mortgage, the largest lender to MH buyers, says a third of his loans from 2010 to 2011 would have landed beyond the CFPB’s threshold. He says the bureau’s restrictions will harm those of modest means in rural areas and will also make it more difficult for individuals to sell their homes. House and Senate lawmakers are working on legislation to make fewer loans “high cost.” Sen. Sherrod Brown (D-OH), noting manufactured homes represent a different consumer base than buyers of traditional homes, says the measure he will introduce would “bring regulations for manufactured housing in line with their place in the market.” Joe Stegmeyer, CEO of Cavco Homes, Inc., the second largest producer of manufactured and modular homes, noting companies are already having tough time, says, “If we see that financing dwindle…it certainly will mean closure of a number of plants.”
