Protections for Owners of Manufactured Homes Are Uncertain, Especially During PandemicSeptember 12, 2020
Manufactured homes, commonly known as mobile homes, are the largest source of unsubsidized affordable housing in the United States. Twenty-two million people live in these units, and in some counties, largely in the South and West, manufactured homes make up more than a third of the housing stock. And although they are particularly prevalent in rural communities, nearly half of all manufactured homes are found in suburban areas, and almost 1 in 10 are in center cities. However, despite the importance of manufactured homes as a source of housing, especially for low- and moderate-income families, most people who finance the purchase of these homes do not enjoy the same legal safeguards—such as robust protections against foreclosure and eviction in the event of default—that cover mortgage borrowers. These regulatory gaps place millions of already financially vulnerable Americans at risk.
Manufactured homes are built on a trailer or chassis, constructed in a factory, and moved whole on a truck to the property site. Originally designed to be relatively mobile, this type of housing has been produced for nearly 100 years, but the homes were often of low quality and quickly became dilapidated. Then in 1976, the Housing and Urban Development Manufactured Home Construction and Safety Standards set higher, more consistent building and quality requirements for the industry and officially changed the name of this class of home from “mobile” to “manufactured.”
In the four decades since, manufactured homes have evolved to look and function more like single-family homes than trailers, and today they are rarely relocated after initial placement. However, state laws and consumer protections have not kept pace and generally continue to treat manufactured housing as movable personal property or automobiles, rather than as real estate, or “real property.” As a result, manufactured homes in the U.S. typically are:
- Titled as personal property separate from the land on which they sit, even though in most cases, the same person owns the home and the land.
- Financed using personal property loans, often called “home-only” or “chattel” loans, which use only the structure, and not the land under it, as collateral and tend to have higher interest rates and shorter repayment terms than mortgages. Personal property loans can sometimes be a form of seller-financing.
- Subject to fewer and weaker consumer protections than homes financed with mortgages because personal property loans are not covered by the Real Estate Settlement Procedures Act, which compels “pertinent and timely disclosures regarding the nature and costs” of the loan; generally are exempt from the legal foreclosure process; and typically do not require appraisals. As a result, buyers may overpay, and the homes can usually be quickly repossessed.
Most states’ laws make it difficult or impossible to change the titling of…