As published in Scotsman Guide's Residential Edition, August 2006.
Lending in the manufactured-housing industry has tightened significantly since the late 1990s, when industry sales and parts shipments peaked. For many, the new millennium brought fewer deals. Traditional personal-property loans, or chattel loans, have diminished in the lending landscape.
Many consider this scarcity of manufactured-housing funding to be a major contributor to the industry's slow recovery. But there is light at the end of the tunnel.
Several enterprising mortgage lenders and brokers, nationally and locally, are seizing opportunities in this often-overlooked housing industry -- which focuses on units partially assembled in factories and shipped to the site where they're assembled. With new technologies in manufactured housing, these professionals are discovering that it can be a profitable source of new mortgage loans.
An affordable option
According to the Manufactured Housing Institute, shipments of U.S. Department of Housing and Urban Development-code (HUD) homes in 2005 comprised about 131,000 complete units (adjusted for hurricane-related demand). In addition, according to U.S. Census housing estimates, there were about 1.9 million new multisection manufactured homes installed in the country from 1992 to 2004. Annual resale volume for homes that will qualify for some type of financing is estimated at 8 percent, or about 155,000 mortgage-loan opportunities per year.
As interest rates climb and the price of site-built housing rises, manufactured housing is becoming an increasingly affordable option for homeownership. Manufacturers of factory-built housing have attempted to close funding gaps with site-built housing. They also are investing heavily to improve the homes' exterior aesthetics to enhance the homebuying experience.
As recently as 2000, about 80 percent of manufactured homes were financed by home-only chattel loans. Since then, this percentage has dropped dramatically to an estimated 20 percent to 30 percent. Real-property mortgage loans are fast replacing the chattel-loan standard. The availability of lower-interest-rate and lower-down-payment land/home mortgage loans for factory-built housing continues to grow.
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