Essay on Manufactured Homes
"I am purchasing a top-of-the-line manufactured house, but I am being offered bottom-of-the-line financing, even though my credit is pretty good. They want 8-9% when other mortgages are going for 5-6%. How come?"
Most purchasers of manufactured housing, including you, are shut out of the mainstream mortgage market. They must find loans in a parallel market, which is much like the unsecured personal loan market. Lenders in this parallel market assume that loss rates on manufactured house loans will be high, as they are on personal loans, and they price them accordingly. They view manufactured houses as poor collateral that provides them …show more content…
Many manufactured houses are not anchored securely to their foundations, making them extremely vulnerable to natural disasters. Hurricane Andrew in 1992 destroyed almost all of the manufactured houses in its path, compared to about one-third of houses built on-site.
Getting defects in a manufactured house fixed can be a hassle because responsibility is divided and finger pointing is common. The factory owner says the mover did it, the mover says the installer did it, and the installer says it happened at the factory.
According to Consumers Union, about 12% of all manufactured home loans end up in default. This is about four times as high as defaults on mortgages secured by homes built on-site. In 2002, the largest lender on manufactured houses, Conseco, was forced into bankruptcy after losing about $4 billion in two years.
Better News About Manufactured Housing
Despite these numerous problems, manufactured housing provides an important source of affordable housing, especially in the south and in rural areas. Because of efficiencies in factory production, manufactured houses cost