For Americans who cannot afford a standard home mortgage, one alternative to renting an apartment is to buy a mobile home. Also known as manufactured housing, mobile homes are built in a factory and then transported by tractor-trailer to the site where they will be occupied. They provide permanent housing at prices that are less than half the cost per square foot of regular “site-built” houses
But although manufactured homes offer an affordable way to own a house, they also come with some special challenges. First, because many manufactured home residents rent the land on which the dwelling is sited, and because it is expensive to move a manufactured home, residents may be in trouble if the land owner raises the rent, fails to maintain the property, or chooses to sell the land.
Second, financing products for manufactured homes are modeled on car loans, resulting in higher interest rates and shorter loan terms relative to those available to owners of site-built houses. This method of financing puts additional pressures on manufactured home owners.
The non-profit New Hampshire Community Loan Fund, established in 1983, has worked on addressing these problems. During the 1980s a mobile home park in Meredith, New Hampshire, was trying to find a way to avert the sale of the land under their homes to a condominium developer. The Loan Fund helped the residents to form a non-profit cooperative and then lent the co-op the money to buy the land. In the ensuing years, the Loan Fund supported the purchase and conversion to resident ownership of 94 manufactured housing communities.
The Loan Fund also worked on the problem of mobile home financing. In 2001 it began offering financing for buyers of mobile homes in co-op communities, and soon after it persuaded state and federal housing programs to begin including mobile homes in their loan programs on a trial basis.
In 2010 the Loan Fund was hoping to expand its successes, especially in the area of financing. Although mobile homes were more and more resembling site-built houses in quality of construction, financial institutions were still skeptical about viewing loans for manufactured homes as comparable to mortgages for site-built houses. The Community Loan Fund wondered what might be done to persuade banks to view these loans differently and to create a larger secondary market for manufactured home loans, similar to the secondary market for mortgages.
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Sharon Oster, Rachel Crocker Ford, Joshua Earn, Jeffrey Daffron, and Andrea Nagy Smith, “New Hampshire Community Loan Fund,” Yale SOM Case 10-024, November 15, 2010
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