Congress should maintain protections for low-wage homebuyers

Earlier this week, Rep. Stephen Fincher (R-Tenn.) promoted on this blog his view that his legislation, the Preserving Access to Manufactured Housing Act, is needed to remove some home lending protections put in place last year by the Consumer Finance Protection Bureau (CFPB). The congressman focused on the needs of rural Americans, arguing that their access to credit to purchase homes has been unfairly restricted. While promoting rural homeownership opportunity is a worthy goal, a wide range of organizations representing low-income owners of manufactured homes in rural and urban areas across the country disagree with Rep. Fincher—they see this legislation as an attack on essential consumer protections.

The CFPB rules under attack simply encourage responsible lending to manufactured home buyers. This protects borrowers from lenders that would charge credit card-level interest rates for manufactured home loans. The rules also defines retailers, who often direct families to lenders, as loan originators if they perform certain functions. These are common-sense rules aimed at preventing another industry-caused mortgage meltdown like the one at the end of the last century.

And indeed, the facts on the ground do not support the need for legislation. Let’s start with access to credit. Marcus & Millichap, a firm that researches the industry, recently wrote “(c)hattel financing for manufactured homes has also become more readily available from a wider range of sources.” While the firm added that new rules “may limit their usage by some institutions,” the report made clear that loans are available.

During the House Financial Services Committee markup called out the “regulations as a cause for major reductions” in chattel financing. But a new in-depth investigation by the Seattle Times and the Center for Public Integrity revealed that this claim is untrue, and that the regulations have not negatively impacted lending. One case lender has actually increased its manufactured home loan volume since the rules took hold.

Finally, industry has cited the largest lender’s decision to stop making loans for less than $20,000, a price range that includes many older homes, particularly those in communities, or “parks.” There are no public data to support this claim. If this price point is truly an issue, it’s odd that the Fincher’s bill, rather than target that portion of the market, extends to every chattel loan up to $75,000. This alone undercuts industry’s argument that the bill is a targeted solution for a measurable problem.

In reality, the last year has revealed no documentable problem with the CFPB protections. When Fincher’s legislation was considered in 2014, more than 60 organizations and individual manufactured home owners from more than 20 states (including Tennessee, which Fincher represents in Congress) banded together in opposing the bill. This year, more than a dozen national consumer advocacy organizations joined the opposition as well . In short, they all say the same thing: Congress should let the CFPB continue protecting new homebuyers from predatory lenders.

Ryan is the director of Affordable Homeownership at the Corporation for Enterprise Development, a national nonprofit focused on helping low- and moderate-income Americans save, invest, and build wealth.