Wednesday, April 22, 2015

house republicans strip protections for people living in mobile homes


thinkprogress |  The House will vote Tuesday to repeal consumer protections for low-income borrowers in rural America who have seen the promise of affordable housing turned into a financial sinkhole by a mobile home industry that makes pre-manufactured houses far more expensive to buy than they need to be.

The bill is part of the GOP majority’s campaign to chisel away at specific pieces of the Dodd-Frank financial regulatory overhaul that became law in 2010 but which left many details to be filled in later by regulators. In this case, it was the Consumer Financial Protection Bureau (CFPB) that did that filling. After long study of both publicly-available data and proprietary information from the industry itself, the CFPB began enforcing new consumer protections for people who borrow money for a manufactured home.

When Rep. Stephen Fincher’s bill to roll back those regulations passes on Tuesday, the rules will have been in force for barely 15 months.

The mobile home financing market is an esoteric landscape for a battle between consumer advocates, regulators, and politicians. Compared to the American Dream trappings that come with traditional homeownership, families in mobile homes don’t have much cultural cache.

“Lots of people deride these homes for their quality, which is unfair these days, or deride the people who live in them as white trash, which is horrifying,” said Doug Ryan, director of the Corporation for Enterprise Development’s Affordable Homeownership Initiatives. That stigma makes it easy to sell Fincher’s deregulatory package for mobile home financing, Ryan said. The public and many lawmakers “say, ‘Who cares how they get financed? They’re bad stuff anyway, and if that’s all you can afford you probably deserve this.’”

Just 6 percent of Americans who live in a house live in one of these pre-fab ones, but they are a vital low-cost housing option in rural communities, where they make up 14 percent of occupied housing. The all-in cost of living for the average manufactured home dweller is a full third below the average for traditional “site-built” homes. There are twelve states where the units make up over a tenth of the market, mostly in the South and West. In South Carolina, 17 percent of all occupied housing is manufactured.

The manufactured home population is whiter, poorer, less educated, and older than the traditional homeowner. The median income of a pre-fab household is just half that of the median family in a site-built house. Many mobile home families are still paying a larger share of their income for housing despite the significant savings in raw dollar terms. That’s a perverse outcome for what should, on paper, be one of the most affordable ways to put a dignified roof overhead. And it’s being driven by the extremely high price that the industry charges for credit.

Fincher’s bill will strip important borrower protections for thousands of families living in pre-fab homes, including prohibitions on predatory loan features and legal recourse for borrowers who get behind on very expensive loans.