Saturday, March 6, 2010

Burkhart on Manufactured Housing and Real Estate Finance

Speaking of modular housing, as Jamie Roskie does below, Ann Burkhart (Minnesota) has posted Bringing Manufactured Housing into the Real Estate Finance System, forthcoming in the Pepperdine Law Review.  The abstract:

Eight percent of the United States population - more than 23 million people - live in manufactured homes (also called mobile homes). In some years, more than 30% of the new homes sold have been manufactured. Moreover, manufactured housing is the most important form of unsubsidized affordable housing in this country. Up to two-thirds of the new affordable homes built each year have been manufactured. However, the manufactured housing industry currently is struggling to survive a meltdown in its sales and finance markets. A tremendous obstacle to the industry’s recovery is that most manufactured homes are characterized as personal property, though they have evolved tremendously from their earliest ancestor, the travel trailer. Today, only 1% of manufactured homes are moved after being sited on a lot. Recharacterizing manufactured homes as real property would reflect modern reality and would provide purchasers and owners with access to the mortgage market, which would increase credit availability and affordability and would provide manufactured home owners the same legal protections that owners of site-built homes enjoy.

Matt Festa

Finance, Housing, Property Theory, Real Estate Transactions, Scholarship | Permalink

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First, kudos for 'getting so much' right in the facts posted above dated March 6, 2010,
Burkhart on Manufactured Housing and Real Estate Finance.

One of the historic advantages of Manufactured Homes is precisely the fact that they could be sold either as chattel (home only) or by surrendering title to the state/county it could be sold or turned into 'real estate' and get a real estate style mortgage.

Part of the road to recovery for the Manufactured Housing Industry include, but are not limited to:

1) Recovery of chattel financing. FHA Title 1 reform was passed and signed into law in 2008, but HUD has not finished its implementation. Lack of financing is a key factor hampering the industry.

2) Quite right, Image is a factor. Good public relations - good reporting internally and external to the industry are keys. Our trade publication - - is making strides at this on the internal side, and is putting steps into motion to help correct outdated information to the media and general public. Today's HUD Code Manufactured Home can look and perform completely 'residential' - in fact, insurance and gov't studies demonstrate it can be stronger, safer and more energy savings too. On the other end of the spectrum, more modest homes - highly affordable - can be built to the HUD Code that serves markets that conventional builders will never touch.

3) Examples: on the affordable side, you can find new 3 bedroom 2 bath homes around 1200 square feet in the 30's at retail. Here in Chicago, a client of ours sells upscale, residential 2 story 2400 square foot homes for $85 Per Square foot vs $150 per square foot for conventional construction. These are homes built by an Energy Star rated builder.

The point is that the MH Industry has come a long way! By addressing regulatory and finance issues, there can be a new renaissance for the industry. As American incomes tend to decline and populations age, the need and demand for this type of quality, affordable and appealing home has come.

Posted by: Tony Kovach | May 24, 2010 9:30:28 AM

I agree with your points. Owners of manufactured homes really should have the same legal protections. I hope this reaches some desired and amicable resolution soon.

Posted by: Granny Flats | May 17, 2012 6:05:01 PM