Manufactured Home Loan Program Could Expand Access to Affordable Financing—but Needs Updates

On Sept. 26, The Pew Charitable Trusts sent a letter to the Federal Housing Administration (FHA) and Ginnie Mae about possible updates to the Title I Manufactured Housing Program. Title I aims to increase access to affordable financing by providing federal insurance to lenders that offer personal property loans, also known as “chattel” loans, for the purchase of manufactured housing. However, Title I has not been revised since 2008, and its maximum loan limits, terms, and lender requirements are so uncompetitive that just three loans (less than 1%) were issued using the program in 2021.

More than 40% of manufactured home buyers who use financing use personal property loans, which differ from mortgages in that they finance the purchase of the structure separately from the land beneath. But in the absence of a robust federal program to insure personal property loans, relatively few lenders are willing to offer such financing, consumers face extremely high denial rates, and borrowers who are approved pay interest rates that are, at the median, double those for mortgages.

In contrast to Title I, FHA’s more current Title II program, which insures mortgages for the purchase of a manufactured home and the land it sits on, covered more than a third of such mortgages in 2021. Pew’s letter outlined how FHA and Ginnie Mae could improve Title I’s usefulness and make safe, affordable personal property loans more available by identifying misalignments between Title I and Title II, barriers to Title I loan origination, and ways to better coordinate across federal manufactured housing programs.