U.S. Sen. Joe Manchin (D-W.Va.), as part of a bipartisan group of senators, are reintroducing legislation that would protect the ability of manufactured home customers to buy, sell and refinance homes, while maintaining important consumer protections.
On Tuesday, Manchin, along with U.S. Senators Joe Donnelly (D-IN), Pat Toomey (R-PA) and Tom Cotton (R-AR) reintroduced the Preserving Access to Manufactured Housing Act, which would help adjust Home Ownership and Equity Protection Act (HOEPA) thresholds so fewer manufactured home loans are classified as high-cost.
Under HOEPA guidelines, if a transaction is for less than $50,000 and the home is considered personal property, then the interest rate on a mortgage cannot exceed Average Prime Offer Rate by more than 8.5 percent or else it is considered ‘high-cost’ and subject to added liability and disclosure. The proposed bill would change the threshold to APOR +10 percent for transactions under $75,000.
“Homeownership is an important goal for so many West Virginians and Americans,” Manchin said. “This bipartisan bill will help keep the American dream of owning a home alive by improving guidelines that have negatively impacted consumers’ ability to purchase a home.”
In 2013 the Consumer Financial Protection Bureau (CFPB) issued guidelines under the Dodd-Frank Wall Street Reform and Consumer Protection Act, to expand the range of loan products that can be considered high-cost mortgages under the HOEPA. The guidelines, which went into effect in January 2014, failed to recognize the uniqueness of manufactured home loans as compared to the rest of the housing industry, classifying a large percentage of small-balance loans used for the purchase of affordable manufactured housing as high-cost loans. As a result there are lender increased lender liabilities associated with making and obtaining a HOEPA high-cost mortgage– which can lead to a loss of credit available to to those seeking to purchase manufactured housing.
“The manufactured housing industry is an important role in homeownership options, which have unfortunately been constrained by excessive regulations by the CFPB,” Cotton said. “As we’ve seen, unintended consequences of these regulations have limited the housing and mortgaging choices of hard-working Americans in many rural areas.”