The Dodd-Frank Act that was supposed to protect people of modest means has had the opposite effect, hindering buyers, sellers and lenders in the affordable housing market.
Director of the Consumer Financial Protection Bureau (CFPB) Richard Cordray explained to a Senate committee why, percentage-wise, it is more expensive to originate and service conventional housing and manufactured home loans under $100,000, its just business math. He also said “there never was much high-cost lending” on MH, thus refuting news stories that accuse the industry of predatory lending.
During a hearing last spring Sen. Bob Corker (R-TN) tells Director Cordray that some of the regulations prevent homeownership, and in some cases it costs more to rent than to buy a home. Cordray responds, “this isn’t optimal for anyone.” Sen. Joe Donnelly (D-IN) spoke extensively about CFPB’s regulations that hamper MH sales.
A separate video linked in the MHLivingNews story documents how Don Glisson Jr., an MH lender who is chairman and CEO of Triad Financial Services, sheding light on this same topic. Glisson explains on camera that without federal subsidies and with no taxpayer risk, chattel loans are made at the lender’s risk—without a secondary market, the lender has to hold the loan. If other lenders could charge less and still make a profit, they would quickly move in. That they don’t indicates MH lending is some fat profit and is clearly not predatory.
So both industry professionals and Cordray agree that MH lending isn’t predatory. Then why has some in the mainstream media tried to paint a different picture?
A report from a 2014 Government Accountability Office (GAO) reveals that even with two-thirds of manufactured home loans at slightly higher rates, the payments on MH are often significantly lower than rent or other housing options.
Kovach says: “With the affordable housing crisis growing, there is an urgent need for fresh, accurate reporting that shines a light on the unfortunate consequences of federal rules that were well intended, but instead hurt the very people they were meant to help.”
Despite these barriers to affordable housing, MHProNews understands the sale of new manufactured homes is up 20 percent over last year’s total. Imagine how production might be if the barriers came down.
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(Photo credit: MHLivingNews Inside MH video, still from CSPAN2, graphic text, credit – MHLivingNews.)
