Why Manufactured Home Loans Make Sense For Your Lending Portfolio Strategy

Tuesday, 28 May 2019

Lending Strategy


For any bank or credit union looking to improve their investment portfolio over the next few years, manufactured home loans pose a unique opportunity. Manufactured home loans offer more flexibility and higher yields than traditional mortgages, and despite some myths about manufactured homes, they are actually in high demand these days. Here's why you need to be thinking about manufactured home loans for the future of your portfolio.


Any solid investment strategy must include a healthy level of diversification. The manufactured home sector provides exactly this type of diversification by straddling two different segments of the market. In the case of manufactured homes that are purchased independently of land, the loans are written as chattel or personal property loans. On the other hand, manufactured homes that are already placed on land typically qualify for traditional mortgage terms. Thus, you can easily balance your portfolio by mixing in a selection of manufactured home loans on both sides of the fence. Diversifying your portfolio during the early days of this trend will mean that you have the chance to experiment and set the bar for your own program. The sooner you start researching your options, the more control you will have over the balance of your portfolio going forward.

Higher Yields

As mentioned above, many manufactured home loans are actually considered personal property loans. This means that they typically have shorter terms and higher interest rates. For you, that means higher yields in the immediate future. Contrary to popular belief, borrowers must still go through a rigorous qualification process to acquire the loan, so your relative risk level is minimial while the interest earned increases. Plus, there is additional opportunity to finance land purchases and other improvements. By tying all of these products together, you can increase your yield within your existing customer base.

Demand is Increasing

Whatever you may think of manufactured homes, the truth is that modern manufacturing facilities are now subject to a variety of HUD rules and regulations that have drastically improved the quality of construction, sometimes beyond that of traditional site-built homes. With the improvements in construction quality, we are also seeing an increase in demand for these homes. Meanwhile, Millennials and Gen Y are interested in the energy efficiency and cost-saving aspects of manufactured homes, as well as the opportunity to customize a home for their personal needs. With this in mind, traditional homes will have a hard time meeting the expectations of future buyers. Banks who get on board with manufactured home lending today will have a long runway for building a profitable machine in years to come. Aside from consumer demand for these types of affordable homes, the government is also taking action in this sector. There will now be more federally insured loans available for manufactured homes, and more insurance programs available to cover new manufactured homes since few traditional insurers have taken up the plight.

Manufactured home loans are going to be an important part of the housing market in the coming years, and now is the best time to get ahead of the curve and start investing. You can take advantage of higher interest rates and shorter loan terms to boost your yield right away, while still maintaining stringent qualification standards to ensure that your risk is minimized. As the housing market shifts to smaller homes with more efficient options on the table, manufactured homes are looking to be the perfect solution, and even the government and other companies are getting in on the action by providing support and new products to push innovation and accessibility to new levels. To learn more about investing in this unique opportunity, contact Triad Financial Services today.

Tagged under: Loan Portfolio Improvement Tips, Credit Union Tips, Indirect Lending

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