Manufactured housing, or mobile homes, is often the most attractive housing option for many low- and moderate-income Americans. Reinforcing the concept that it is expensive to be poor, the financing of manufactured housing is often much more expensive than it needs to be. This article reviews how the current financing for manufactured homes functions, explores why it is so expensive, and suggests an important strategy to reduce its costs by pursuing a secondary market for manufactured home mortgages.
The benefits to low- and moderate-income home owners of a more efficient manufactured home mortgage market would be substantial, for as many as 10 million families live in manufactured homes. Many are low-income families, the group for whom home ownership is one of the only sources of wealth and financial stability. Indeed, manufactured housing is a key resource when it comes to providing home-ownership opportunities for low- and moderateincome families, accounting for two-thirds of this country’s new affordable housing production in recent years.
There are many obstacles to creating this more efficient mortgage market, but that was also once true for site-built homes when credit was expensive and home-ownership rates were low. Over the past fifty years, however, the U.S. mortgage market has created ample capital flows and continued product innovation that have contributed to a home-ownership rate over 70 percent and a climate—unique in the international context—in which an 80 percent loan-to-value, thirty-year mortgage is considered “plain vanilla.” The following explores how that same vibrancy can spread to the manufactured housing market.