Senators Introduce Bipartisan Bill to Preserve Access to Manufactured Housing
On March 10, 2015, U.S. Senators Joe Donnelly (D-IN), Pat Toomey (R-PA), Joe Manchin (D-WV), and Tom Cotton (R-AR) today introduced legislation to alleviate the regulatory burdens that have impeded consumers’ ability to purchase manufactured housing.
Named the Preserving Access to Manufactured Housing Act, the bill addresses recent federal regulations implementing the Dodd-Frank Act that do not reflect the unique nature of the manufactured home financing and sales process. The underlying consumer protections of the Dodd-Frank Act will remain in place under this legislation.
“Working families across the country, particularly in rural areas, depend on access to financing for affordable manufactured homes,” said Nathan Smith, Chairman of the Manufactured Housing Institute. “Manufactured homes are the largest form of unsubsidized affordable housing in the nation. We thank Senators Donnelly, Toomey, Manchin, and Cotton for working to correct the federal regulations that are reducing the availability of credit for the purchase of manufactured homes. I applaud them for coming together to protect consumers’ ability to access homeownership through this quality affordable housing option.”
In the 113th Congress, S. 1828 was cosponsored by 16 Senators. Companion legislation in the House, H.R. 1779, was cosponsored by 114 Representatives and was passed by the House Financial Services Committee by a voice vote on May 22, 2014.
“Despite having broad-based bipartisan support in the 113th Congress, the bill did not make it through the process prior to adjournment. We hope to keep the momentum building for quick passage during this session of Congress,” Smith said. “The lack of relief from these regulations has been having a devastating impact on low and moderate income consumers in need of access to affordable housing.”
The Preserving Access to Manufactured Housing Act amends the thresholds that have caused small balance manufactured home loans to be classified as high-cost. Due to the increased lender liabilities associated with making and obtaining high-cost mortgages, many lenders have exited the manufactured housing market, denying access to necessary credit for new and existing manufactured homes. While the cost of originating and servicing a $250,000 loan and a $25,000 loan are generally the same in terms of real dollars, the cost as a percentage of each loan’s size is significantly different. This difference causes the smaller-sized manufactured home loan to potentially exceed the new thresholds and be categorized as high-cost, even though there is nothing predatory about the features of the loan.
The bipartisan legislation also clarifies that manufactured home retailers and salespersons are not loan originators. The new CFPB definition of a loan originator is based on traditional mortgage market roles that do not equate with the business model of the manufactured housing industry, including lending and retail sales practices. While they are in the business of selling homes and do not originate loans, manufactured home retailers and sellers currently run the risk of being considered mortgage loan originators. This bill excludes manufactured housing retailers and sellers from the definition of a loan originator, so long as they are only receiving compensation for the sale of the home and not engaged in financing the loans.
“Folks on the Hill need to know how important access to credit is for our customers and that these federal rules are having a negative impact on their ability to become homeowners,” Smith said. “Congress has the opportunity to make this right for consumers before it is too late and we hope this bill is moved through the process quickly.”
Companion legislation, H.R. 650, was introduced in the U.S. House of Representatives on February 2, 2015 by Representatives Stephen Fincher (R-TN), Terri Sewell (D-AL), Andy Barr (R-KY), and Kyrsten Sinema (D-AZ). The bill is currently cosponsored by 16 additional Representatives.
You can read the Senators’ press release about the bill by clicking here.
If you have any questions, please contact MHI’s Senior Vice President, Government Affairs,