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Manufactured home built and ready for shipment to site. Photo: Riverview Homes Inc.
Manufactured homes built and ready for shipment to site. Photo: Riverview Homes Inc.

In 2018, Freddie Mac collaborated with the Center for Community Capital at The University of North Carolina at Chapel Hill to conduct a survey of homeowners in Texas who recently financed the purchase of their manufactured homes.*

The new research, based off the survey, examines the loan shopping experiences of manufactured homeowners – and how they choose between mortgage financing and personal property financing. The report also captures information regarding consumer characteristics, loan and land ownership preferences, financing decisions and consumer satisfaction.

The manufactured housing market is complex. Manufactured homes can be purchased with cash, titled as personal property and financed with a personal property loan (much like an automobile), or titled as real estate and financed with a mortgage. Further complicating manufactured housing finance is that owned manufactured homes can be sited on owned or rented land. Differences in state laws affecting manufactured housing’s purchase or ownership, as well as local laws affecting zoning and siting, can also complicate the manufactured housing landscape.

“We were thrilled to be a part of this research which tested, for the first time, some common hypotheses about why personal property loans dominate the manufactured housing market,” said Roberto Quercia, director of the UNC Center for Community Capital (CCC) and professor of city and regional planning at UNC-Chapel Hill. Quercia’s team at CCC includes Managing Director Jess Dorrance, Senior Research Associate Allison Freeman, Senior Research Economist Sarah Riley and Research Fellow Michael Stegman.

The 1,356 survey responses collected through the Manufactured Home Owners Survey represent nearly 27,000 owner-occupied manufactured housing units in Texas that were purchased and financed during the period of 2015-2018. The survey excludes owner-occupied manufactured housing units purchased with cash, which represent 46% of such units purchased during this time frame.

One central goal was to understand why the overwhelming majority of consumers who finance their home purchases choose personal property loans (73%) instead of traditional mortgages, even when they own the land beneath their homes (61%).

Roberto Quercia, director of the UNC Center for Community Capital
Roberto Quercia, director of the UNC Center for Community Capital

“The assumption has long been that homeowners may not want to encumber their land,” noted Quercia. “In addition, they may lack awareness of available mortgage financing options and may want a quicker settlement process and lower closing costs than is traditionally associated with mortgages.”

The survey found that the reality of the homeowner’s decision process is more complex and nuanced than the researchers expected. “We did find strong support for the idea that personal property loan choice is associated with a desire not to encumber land,” said Quercia. “However, the relationship between loan process knowledge and loan type choice appears to vary with the information sources and lending channels that borrowers select when shopping for their loans.”

In addition, the study found preferences for various loan features, such as speed of settlement or the amount of upfront closing costs, vary across borrowers in their associations with loan type choice. Thus, the authors caution against formulating policies or business strategies based simply on the central tendencies in the data, which can mask the underlying consumer diversity that is present in the market for manufactured housing. As a result, the analysis contained in the report provides a good starting point for developing a more nuanced understanding of manufactured homeowner behavior.

*Manufactured homes are distinct from mobile homes, trailers and tiny homes in that they are constructed to meet codes and standards established under the National Manufactured Housing Construction and Safety Standards Act of 1974.

Freddie Mac is a government-owned corporation that buys mortgages and packages them into mortgage-backed securities. Its official title is the Federal Home Loan Mortgage Corporation or FHLMC.

The UNC Center for Community Capital is a non-partisan, multi-disciplinary research center housed within The University of North Carolina at Chapel Hill and is a leading center for research and policy analysis on the power of capital to transform households and communities in the United States. It is part of The University of North Carolina at Chapel Hill’s College of Arts and Sciences and an affiliate of UNC’s Center for Urban and Regional Studies.


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