Mr. FINCHER. Mr. Speaker, in the aftermath of the recent housing crisis, the manufactured housing industry is facing significant challenges: an 80 percent decline in new home production, the closure of more than 160 plants, and the loss of more than 200,000 jobs. That's why I am introducing the Preserving Access to Manufactured Housing Act with my colleague Congressman BENNIE THOMPSON. This legislation would provide clarity and certainty to consumers and preserve the manufactured housing industry without deterioration of important consumer protections.
Earlier this year, the Consumer Financial Protection Bureau (CFPB) issued guidelines as required under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) that expand the range of loan products that can be considered high-cost mortgages under the Home Ownership and Equity Protection Act (HOEPA) without recognizing the uniqueness of manufactured home loans compared to the rest of the housing industry. The new HOEPA guidelines are effective January 2014 and would include many manufactured home mortgages.
Simply put the cost of originating and servicing a $250,000 loan and a $25,000 loan are the same in terms of real dollars, but 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 HOEPA thresholds set by Dodd-Frank and be categorized as a high-cost mortgage and stigmatized as predatory, even though there is nothing predatory about the features of the loan. The liabilities associated with making and obtaining a HOEPA high-cost mortgage will likely prevent lenders from offering loans to low and moderate-income homebuyers, denying families access to necessary credit for new and existing manufactured homes. In addition, millions of families could see the equity they have built up in their manufactured homes wiped out because lenders would not want to provide the financing needed for resale.
The Preserving Access to Manufactured Housing Act would adjust the new HOEPA thresholds so fewer small balance manufactured home loans are classified as high-cost, while maintaining the consumer protections from predatory lending practices in Dodd-Frank. This legislation not only protects consumers, but preserves a viable secondary market for manufactured home loans.
This bipartisan legislation would also clarify that manufactured home retailers and salespersons would not be considered loan originators unless they receive compensation from a lender, mortgage broker, or loan originator. The new CFPB definition of a loan originator, also effective in January 2014, is based on traditional mortgage market roles that differ from than the business model of the manufactured housing industry. Without this clarification, housing finance options may be eliminated for families seeking to purchase affordable manufactured homes.
We must make sure that we don't restrict housing options. The Preserving Access to Manufactured Housing Act protects the availability of financing for manufactured homes that many families across the country rely on for affordable housing.