Today, Senators Joe Donnelly (D-IN) and Tom Coburn (R-OK) introduced the Preserving Access to Manufactured Housing Act, legislation that would maintain important consumer protections while also protecting the ability of manufactured home customers to buy, sell, and refinance homes.
Donnelly said, "For many Hoosier families, the decision to purchase a home is one of the most significant investments they will make. We should be doing all we can to preserve access to affordable housing, especially when it comes to manufactured housing, which can be the best option for many families. I thank Senator Coburn for joining me in this effort."
Dr. Coburn said, "This bill will ease onerous federal regulations for consumers and retailers which slow economic growth in the industry."
Earlier this year, the Consumer Financial Protection Bureau (CFPB) issued guidelines, as required under the Dodd-Frank Wall Street Reform and Consumer Protection Act, to expand the range of loan products that can be considered high-cost mortgages under the Home Ownership and Equity Protection Act (HOEPA). Unfortunately, the CFPB failed to recognize the uniqueness of manufactured home loans compared to the rest of the housing industry. Set to go into effect in January 2014, these guidelines will likely classify a large percentage of small-balance loans used for the purchase of affordable manufactured housing as high-cost loans. As a result, there would be increased lender liabilities associated with making and obtaining a HOEPA high-cost mortgage, which could lead to a loss of credit available to those seeking to purchase manufactured housing.
The primary purpose of the Preserving Access to Manufactured Housing Act is to adjust new HOEPA thresholds so fewer manufactured home loans are classified as high-cost. Under the new guidelines, if a transaction is for less than $50,000 and the home is considered personal property, then the interest rate on a mortgage cannot exceed Average Prime Offer Rate (APOR) by more than 8.5% or else it is considered "high-cost' and subject to added liability and disclosure. The bill would change that threshold to APOR + 10% for transactions under $75,000.
Earlier this year, Senator Donnelly discussed this issue with CFPB Director Richard Cordray and recently joined other Senators in sending a letter to Director Cordray requesting a delay of the new rules for manufactured housing until CFPB has had a chance to fully study the issue.