Manufactured Housing News

Adopted in the wake of the 2007-2008 financial crisis, the Dodd-Frank Act has subjected financial institutions to more stringent regulations and supervision, with a significant impact on the residential mortgage sector. One of the hardest hit areas was the financing market for manufactured housing, a critical segment of affordable housing across the country.

Recently, the manufactured housing industry has notched a major legislative victory, which consists of several important changes to the Dodd-Frank Act.

Assessing the Changes

Partially reversing the Dodd-Frank financial regulations has a significant ripple effect on the entire banking sector, including manufactured home financing. Here are some key takeaways.

• Manufactured home retailers and sellers relief from the Dodd-Frank Act.
  Also referred to as the bill S.2155, the changes to the Dodd-Frank Act include a provision specifying that manufactured home retailers and sellers cannot be considered loan originators. Although these professionals often provide general financing information, they aren’t engaged in financing any types of loans. The changes included in the bill ensure that manufactured home retailers and sellers can continue to help their customers, without being subjected to certain rules and regulations applicable to financial institutions.

• The bill changes the regulation pertaining to lenders.
  An important change refers to the small financial institutions with under $10 billion in assets. Because these institutions are tremendously vital to the U.S. economy, the Dodd-Frank Act reform lowers the asset threshold. This basically means that the lenders that have less than $10 million in trading assets are exempt from the Volcker Rule. Besides improving the national financial regulatory framework and promoting economic growth, the new bill allows lenders to better respond to the increasing demand for affordable manufactured home financing options.  

• The bill lowers the costs of consumer credit. 
  Because the new bill includes lower liquidity requirements and fewer regulatory burdens, the total cost of issuing manufactured home loans will be lower than before. This will significantly reduce the cost of granting loans to consumers. One example is the local financial markets in Illinois. Because the bill reduces the regulatory costs of credit unions, approximately $20.3 million of capital is expected to be injected into those markets. The new bill will have the same positive effect in every state across the country.

• The new Dodd-Frank Act provisions stipulate a licensing grace period for loan officers.

The bill S. 2155 allows loan officers to move between states and/or institutions without having to wait for state approval before they can originate new loans.

As it can be seen, the bill S. 2155 includes a series of common-sense changes that provide long-awaited regulatory relief to both large and small financial institutions.

Besides allowing banks, credit unions, and independent lenders to better serve their customers and communities, these changes will lower the cost of borrowing, which is excellent news for hard-working, low and moderate income Americans who traditionally had restricted access to affordable manufactured home financing.

The passage of the bill is the result of MHI’s ongoing efforts to ease the regulatory burdens that impede the ability of banks, credit unions, and independent lenders to provide adequate financing solutions to their customers. To learn more about the manufactured housing sector and stay tuned for the latest industry news, please sign up to receive our newsletter or get in touch with our professionals at (800) 522-2013.