Most manufactured home loan applications are turned down and, despite low interest rates, very few manufactured home loans have been refinanced, according to a new report from the Consumer Financial Protection Bureau (CFPB).
The agency found that less than a third of prefabricated home loan (MHL) applications are approved, compared to the 70% approval rate among homeowners seeking a loan for a home built on site. Although prefabricated housing represents only a small segment of the overall supply, it is one of the most affordable housing types available to low-income consumers and accounts for 13% of the small-scale inventory. towns and rural areas of America.
However, the low costs of prefabricated home purchase loans often come with higher interest rates than conventional products and limited refinancing options. About 42% of MHLs are “movable” loans, which are guaranteed by the housing but not by the land. The CFPB also noted that these types of loans also have less protection and that homeowners are more likely to see their home’s value depreciate.
The top five lenders account for more than 40% of prefabricated home purchase loans and nearly 75% of household loans, according to the study. Hispanic, Black and African American, Native American and Alaskan Native, and elderly borrowers are more likely than other consumers to take out home equity loans. Black and African American borrowers are the only racial group that is underrepresented in prefabricated housing loans compared to those built on site. However, they are overrepresented in household loans compared to those built on site.
“This report shows the power of the Home Mortgage Disclosure Act’s expanded data collection to understand the homeownership path for some of our most vulnerable families, including Black, Indigenous and Hispanic families, as well as rural and low-income families of all races. and ethnicities, ”said Dave Uejio, Interim Director of CFPB. “Much remains to be done to understand the options available to these families and how best to help ensure that home ownership of prefabricated housing can be a path to financial stability for rural families. and low income who depend on it.