Why is it so hard to get a loan for a manufactured home?

This is a question that I receive often so today when a client emailed me asking me this very same question it was no surprise to me. This post is based largely in part to that persons email and my response. The email began; 

I am pleased to inform you that due to your lack investors due to my single family home which just happens to be manufactured and my low [balance]  mortgage, I cannot be considered for the “new low rates”.  Seems as though all you are interested in is condos/townhouses/stick-built homes in a more affluent community. – Unhappy Consumer

Thank you for your email and for expressing your concerns regarding the loan products that we are able to offer. Judging from the tone of your email, it appears as if my loan officers response to your request for a mortgage is not unique.  As you know, the economy, particularly the housing sector, continues to be a drag on the US economy. As a result, investors who once gladly would make a loan secured against a manufactured home, now won’t even consider it. When they do, they scrutinize the loan file so much that only a small percentage of those loans actually close.

…there are more manufactured homes around the area, leaving the foreclosure rate high because the bulk of the homes are manufactured.- Unhappy Consumer

Having personally spent the greater portion of my career in a rural setting, I am intimately aware of the value of the role that manufactured housing plays  in rural America. Like you, I believe that something needs to be done to expand access to credit for these types of homes. However, in response to the bursting of the real estate bubble in 2008, the  mortgage industry has undergone significant changes. Most of these changes are focused around increased accountability to Washington and this has had a significant impact on not only how we deliver loans but what type of loans that are available to choose from.

Instead I owe $68,000, have a fixed rate of 9.97%, have a manufactured home and am not good enough for you to deal with.  If that isn’t discrimination, I don’t know what is! – Unhappy Consumer

It is Washington who is making access to credit more difficult for people like yourself. It’s specifically the  848 pages of legislation called Dodd-Frank Wall Street Reform and Consumer Protection Act that is the source of the pain that you are experiencing. Although the mortgage industry warned Congress that this sweeping piece of legislation which impacts everything from swipe fees on debit cards all the way to the types of mortgages that can be offered, Congress passed it without regard for the unintended consequences.

It is our goal as mortgage lenders  to write as many loans that we can, provided of course they offer a net tangible benefit to our customers and can help them achieve financial security through responsible home-ownership. However, we too must  abide by the laws.

The best advice that I can offer you at this time is to write your US Representative and let them know just how unhappy you are with their job performance as it relates to this awful piece of legislation called Dodd-Frank Wall Street Reform and Consumer Protection Act and ask them to repeal it.