I'M HOME Fights Back against Regulations that Hurt Owners of Manufactured Homes
As seen in the June 2015 edition of Prosperity Now's newsletter...
This spring, there has been a flood of media coverage of the manufactured housing industry, particularly the risky, high-cost chattel loans that most buyers of manufactured homes receive (see these stories from the Seattle Times, Huffington Post and the Guardian for some of the best). At the same time, Congress has been moving swiftly to make chattel loans even more expensive and reduce the Consumer Financial Protection Bureau's authority to regulate them. The CFPB's reforms are starting to make the chattel lending market safer for the 17 million Americans who live in manufactured homes, but industry lobbyists want to roll back key consumer protections—and some members of Congress are listening.
The "Preserving Access to Manufactured Housing" Act (H.R. 650 and S. 682) would exempt many industry employees from being considered mortgage originators, even when they provide some assistance to potential homebuyers applying for loans, meaning they would not be subject to the same rules and regulations that protect homebuyers. The legislation would also narrow the definition of a high-cost loan—and thus weaken assurances that borrowers who do receive costly loans also have adequate consumer protections. For example, under the bill, a chattel loan of $65,000 with an interest rate of 13% APR would not be considered high-cost, despite having an interest rate comparable to a credit card rather than a mortgage. Although industry lobbyists argue that the bill will only impact a small number of loans, the bill would reduce the consumer protections available to well over 50% of chattel borrowers.
Prosperity Now has opposed this legislation since it was first introduced in 2012. So far in 2015, our Innovations in Manufactured Homes (I'M HOME) team has provided materials on the bill to every House and Senate office, discussed the legislation with more than 50 offices and numerous committee staffers, and hosted a standing-room-only staff briefing on the impact of the bill. We have worked with the National Manufactured Home Owners Association and a coalition of the leading national civil rights and consumer advocacy organizations to ensure that this harmful bill does not become law.
In March, the House Financial Services Committee approved the bill, sending it to the House floor for a vote. In April, despite a veto threat from the White House, the House of Representatives passed the bill in a highly partisan vote (241 Republicans and 22 Democrats supported it, while 1 Republican and 161 Democrats opposed it). In May, Senate Banking Committee Chair Richard Shelby (R-AL) included the legislation in a package of bills aimed at easing financial regulations and weakening the Dodd-Frank Act. That package cleared the Banking Committee with the support of every Republican member and no Democratic members. Even Senator Joe Donnelly (D-IN), the lead sponsor of S. 682, voted against the combined legislation. And, fortunately, the Senate declined to consider the bill on its own, meaning that has been successfully defeated, at least for now.
So, what now? First, the I'M HOME team and our partners are celebrating a successful defense against this toxic bill. The dozens of I'M HOME Network members, national advocates and owners of manufactured homes themselves mobilized in force to educate legislators about the bill's harmful consequences, and many legislators got the message. Neither the House nor the Senate has enough support to overcome the President's veto threat. At least for now, the legislation has stalled.
The extraordinary media coverage has generated interest from federal and state policymakers alike. Moving forward, Prosperity Now will continue to monitor the Preserving Access to Manufactured Housing Act, and we will also work with those newly interested policymakers to advance alternative policies to expand access to safe and affordable manufactured housing loans.