Changing the Financing Rules for Mobile Homes and Other Manufactured Housing (H.R. 650)

What is H.R. 650?

(Updated October 2, 2017)

This bill would amend the Truth in Lending Act to exempt manufactured home retailers (better known as mobile homes) from being covered by laws that apply to mortgage originators — unless they receive compensation that is greater than they would receive in a comparable cash transaction.

It would also change the disclosure thresholds for high cost mortgages from 8.5 percentage points on a less than $50,000 transaction, to 10 percentage points on a transaction less than $75,000. This amount would be changed to reflect changes in the Consumer Price Index — which measures inflation — since this portion of the Truth in Lending Act was last updated.

Argument in favor

Manufactured housing is typically used by people of low and moderate incomes, and modifying these regulations will save those consumers money and help them into affordable housing situations.

Argument opposed

The change in disclosure thresholds serves special interests and will undermine consumer protections, which could lead to predatory loans and home buyers who are over-extended.

Impact

People who want access to low-cost, manufactured housing, mortgage originators, and the Truth in Lending Act.

Cost of H.R. 650

The CBO estimates that enacting this bill would increase direct spending by less than $500,000, but acknowledges that all spending has to be authorized through money that comes to the CFPB from the Federal Reserve System.

Additional Info

Of Note:

The lower loan values that are associated with manufactured homes have triggered the high cost provisions of the Truth in Lending Act because — as Reuters explains: 

“While the cost of originating a $250,000 and $25,000 loan are generally the same in terms of real dollars, the cost as a percentage of loan size is significantly different.”

The Consumer Financial Protection Bureau found that 68 percent of all manufactured housing loans in 2012 fell into the category of “higher-priced mortgage loans” compared to only three percent of site-built homes.

In-Depth:

Similar versions of this legislation were introduced during the 113th Congress, with the House version being introduced in April 2013 and the Senate version coming up in December 2013. Neither version made it out of its respective committee before the 113th Congress ended, despite bipartisan support in both chambers.

Media:

Sponsoring Rep. Stephen Fincher (R-TN) Press Release

Reuters

Consumers for Enterprise Development (Opposed)

National Mortgage Professional Magazine (Opposed)

Manufactured Housing Institute (In Favor)