Vote This Week Could Exempt Manufactured-Homeowners
from Protections that Apply to Other Mortgage Borrowers
The U.S. Senate is poised to pass legislation that will harm some of the most vulnerable of Florida’s homebuyer population by exempting employees of manufactured housing retailers from having to comply with consumer protection laws for home loans.
The Economic Growth, Regulatory Relief and Consumer Protection Act (S. 2155), expected to come up for a vote in the U.S. Senate this week, contains a harmful provision – Section 107, “Protecting Access to Manufactured Homes” — that jeopardizes the financial security of manufactured homeowners, who are often low-income, elderly, and people with disabilities. More than 800,000 Florida families, more than in any other state, and approximately 18 million people nationwide, live in manufactured homes. These residents live in the most persistently poor communities in the country, where manufactured homes provide the main source of affordable housing. The bill is touted as help for small banks, but it promotes abuses by large corporations that own both manufactured housing dealers and lenders.
“In the name of promoting ‘economic growth,’ this bill would undo important steps taken by the Consumer Financial Protection Bureau to give manufactured homeowners the same basic loan safeguards as other homeowners,” said Alice Vickers, director of the Florida Alliance for Consumer Protection. “As a result, more Florida families will be pushed into dangerously expensive mortgages at double-digit interest rates.”
The manufactured housing market is dominated by a handful of national manufacturers and lenders and it is rife with conflicts of interest. It is common for lenders and sellers of manufactured homes to be owned by the same entity or closely affiliated with one another. This creates an incentive for sellers to promote affiliated high-cost loan products rather than marketing a competitor’s more affordable product.
For example, two of the biggest lenders, 21st Mortgage and Vanderbilt, are tied to Berkshire Hathaway, which owns Clayton Homes, the nation’s largest manufactured-home builder and retailer. Such hidden connections encourage sellers to steer buyers toward high-cost loan products from allied companies–and away from more affordable loans offered by competitors. Affiliations like these have led to reports of systematic predatory loan steering throughout the industry.
“This bill will help manufactured home sellers to steer people away from affordable loans and into expensive ones,” said Alys Cohen, staff attorney at the National Consumer Law Center’s Washington office.
The bill would perpetuate the conflicts of interest and steering of consumers to more expensive loans that plague this industry and allow lenders to pass additional costs on to homebuyers. Section 107 would also discourage new lenders from entering the market and undo important steps taken by the Consumer Financial Protection Bureau to give manufactured homeowners the same basic loan protections as other homeowners. This bill would allow sellers of manufactured homes to steer buyers to overpriced loans with onerous terms. While homeowners also would receive other referrals and written disclosures about corporate relationships, those measures can be sidelined by savvy marketing.
“If passed, this bill will do a terrible disservice to the low-and- moderate-income and elderly Americans and people with disabilities who make up a disproportionate share of the manufactured-home population. It would make homeownership more costly for those who can least afford it,” added Cohen.
“Senators Nelson and Rubio should reject this bill and continue to work to find better solutions to address affordability and competition in the manufactured housing market,” said Vickers.