Manufactured Homes Bill Stirs Strong Emotions in Washington

Tuesday’s passage of proposed amendments to the Dodd-Frank Act in the House has reheated the debate over whether the changes really serve lower-income Americans who purchase manufactured homes or opens them up to predatory lenders on a large scale.

The Preserving Access to Manufactured Housing Act , introduced by Rep. Stephen Fincher (R-Tennessee), passed a House vote Tuesday 263-162, mostly along party lines. While Republicans praised the measure‒‒which seeks to lessen the chances of mobile home purchases becoming “high cost” transactions for strapped buyers‒‒Democrats said the language of the bill would create opportunities for predatory lending that would redirect and amplify what lower-income buyers would have to face.

Speaker John Boehner (R-Ohio) lauded the bill and its passage, taking care to emphasize that it was a bipartisan measure‒‒indeed, the bill has three Democrat co-sponsors: Reps. Terri Sewell of Alabama and Kyrsten Sinema and Ann Kirkpatrick of Arizona‒‒but also referred to it as “part of House Republicans’ continued focus on the American people’s priorities.”

Rep. Tom Graves (R-Georgia) said the Fincher bill “will preserve home ownership options and reduce unnecessary barriers put in place by Washington liberals that make it harder for some families to qualify for a mortgage.”  Rep. Jeb Hensarling (R-Texas), a longtime critic of financial reforms in the wake of the Wall Street collapse, said the bill will give “a competitive, transparent, innovative capital market” option for all buyers of mobile homes, regardless of income.

Opposition was strongest from Rep. Maxine Waters (D-California), the ranking member of the House Financial Services Committee and an early supporter of the Fincher bill. Waters said the measure would not ease mortgage burdens for lower-income buyers, but would instead “allow an incredibly profitable industry to make even more money by charging exorbitant interest rates and fees to low-income borrowers.” President Obama has threatened to veto the bill if it passes in the Senate.

Outside Capitol Hill, left-leaning advocacy groups such as the Center for American Progress and  the Leadership Conference on Civil and Human Rights say the measure is a bad visit to the past. “By gutting important protections contained in the Dodd-Frank Act, House Republicans seem intent on turning back the clock to the height of the housing crisis, when predatory lending was the norm,” said  Julia Gordon, senior director of housing and consumer finance at the Center for American Progress.  She said such legislation will do “serious harm to the mortgage market by opening the door to the type of high-cost and unsustainable lending that caused the foreclosure crisis, without doing anything to increase access to high-quality mortgage credit.”

Wade Henderson, president & CEO of the Leadership Conference, and EVP Nancy Zirkin wrote in a letter to the House that the Fincher bill would “raise the interest-rate and points-and-fees thresholds for mobile home lending under the Home Ownership and Equity Protection Act (HOEPA), which protects consumers from abusive terms in especially high-cost mortgages.”

Not all on the left foresee doom, of course. Sewell, who said that manufactured housing makes up 14 percent of her state’s inventory, said that consumers will continue to have “a wide range of mortgage protections,” including the Qualified Mortgage Standards “Ability to Repay” requirement, the prohibition against steering a consumer toward a predatory loan, loan term disclosures, and the prohibition on mandatory arbitration.

“Without this bill, working families and retirees with limited credit or fixed incomes will be forced into more expensive housing options,” she said.