Bipartisan legislation introduced in the Senate making it easier for consumers to secure financing to purchase manufactured housing.
The Preserving Access to Manufactured Housing Act, introduced by Senators Donnelly, D-Ind., Toomey, R-Pa., Manchin, D-W.Va.
The bill amends federal regulations put in place by the CFPB following Dodd-Frank which resulted in most loans for manufactured housing being classified as “high cost”.
This is Donnelly's second attempt at passing the legislation.
He introduced a similar bill in 2013 that received co-sponsorship from 16 senators.
Previous companion legislation in the House in 2014 was co-sponsored by 114 representatives.
Neither bill made it through the full Congress before year end.
The CFPB released guidelines in 2013 that went into effect last year which expanded the range of loan products considered to be "high-cost" under the “Home Ownership and Equity Protection Act”.
As part of these guidelines, many small-balance loans, which consumers often use to purchase manufactured housing, were classified as high-cost loans.
This hurt the manufactured housing industry as it increased the liability lenders faced in making these loans, which reduced credit available to would-be homeowners in this space.
The Senate bill would amend the thresholds of what loans are considered to be high-cost.
Currently, a mortgage is classified as high-cost if the transaction is for less than $50,000 and the interest rate on the loan exceeds the average prime offer rate by more than 8.5%, according to the senators' statement.
The bill would revise these thresholds to APOR + 10% for transactions under $75,000.
Additionally, the legislation makes clear that manufactured home retailers and salespersons are not loan originators, since current CFPB definitions are based on traditional mortgage market roles and do not apply as well to the manufactured housing industry.
If you have any questions regarding these or other loans, I can refer you to industry experts.