Both of Indiana's U.S. senators are backing a bill they say would ease credit for manufactured housing buyers.
At one time, Elkhart County was almost as famous for making manufactured housing as it now is known for producing recreational vehicles.
But the number of manufactured homes made in Indiana plummeted from 16,189 in 2003 to 4,630 in 2012, a 71 percent decrease, according to statistics obtained from the Arlington, Va.-based Manufactured Housing Institute. During that same time, production nationwide declined by 58 percent.
Also during that time, Indiana’s share of manufactured housing production fell from 12 percent to 8 percent.
Some of the reduction in the Elkhart area can be attributed to transportation costs, said Mark Bowersox, executive director of the Indiana Manufactured Housing Association-Recreation Vehicle Indiana Council. Because more people live in manufactured housing in the South and Southwest, manufacturers gradually have shifted some production to those regions.
But the entire industry, including the roughly 10,000 people it still employs in northern Indiana, could receive a boost under a bill that’s been proposed in the U.S. Senate.
The Preserving Access to Manufactured Housing Act of 2013, co-authored by U.S. Sen. Joe Donnelly, D-Ind., would ease credit standards that manufactured housing lenders must follow under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the law President Obama signed in the aftermath of the financial crisis.
“In this economy, manufactured housing should be booming,” Bowersox said. “Unfortunately, federal laws and regulations have kind of handcuffed consumers’ ability to get into the product they want to get into.”
Since Donnelly and co-author Tom Coburn, R-Okla., introduced the bill in December, eight senators have joined as sponsors, including Indiana Republican Dan Coats. The tighter credit standards took effect in January, despite a letter seeking delayed implementation that Donnelly and other senators sent Consumer Financial Protection Bureau director Richard Cordray in November.
The Dodd-Frank law expanded the definition of the range of loan products that can be considered high-cost mortgages under the Home Ownership and Equity Protection Act. Under the new guidelines, if a transaction is for less than $50,000 and the home is considered personal property, then the interest rate on a mortgage cannot exceed the average prime offer rate by more than 8.5 percent. If it does, the loan is subject to added liability and disclosure, making it less likely to be granted to the prospective buyer.
Donnelly and Coburn's bill would change that threshold to more than 10 percent of the average prime offer rate, for transactions under $75,000.
"We should be doing all we can to preserve access to affordable housing, especially when it comes to manufactured housing, which can be the bet option for many families," Donnelly said.