Consumers Union Southwest Regional OfficeIn Over Our Heads, February 2002Page 1
Conclusion and
Recommendations
Home equity remains
the primary vehicle for
most low and moderate
income families to accrue
wealth. Homeownership for
lower income families is a
national priority supported
by dozens of federal, state
and local programs because
it offers a way out of the
cycle of poverty. In recent
years, public officials and
families are increasingly
hoping that reasonably
priced manufactured homes
can fulfill their dream of
home ownership.
Yet, the cases discussed
here demonstrate the
misfortune that can follow a
manufactured home pur-
chase if the market is not
reformed to protect con-
sumers from starting out
with far less than they pay
for. Like our study, a major
Oregon news investigation
found that mobile home
dealers there negotiated
(and lenders approved)
loans of 30 percent above
the home’s sticker price to
cover extras including land
improvements and insur-
ance.84 High interest rates
further reduce a family’s
ability to accrue equity.
More recently, lenders
started to withdraw from
the market after taking
large losses, and industry
representatives predict that
repossessions will continue
to rise through next year as
tens of thousands of fami-
lies lose their homes. Faced
with rising losses, manufac-
tured home lenders have
tightened access to credit
and expect to weather
another down turn.85
This is not the first
time that lending excesses
of easy money have hit
manufactured housing
consumers hard, and
without structural change it
will not be the last.86 With a
rising tide of repossessed
homes competing
directly with new
homes for the
consumer dollar,
the pressure on
sales people to
move inventory will
be intense in the
coming months. As
lenders move to
tighten their
underwriting standards, the
temptation to misrepresent
a consumer’s ability to pay
could become more intense
as well.
In Texas, structural
change began on January 1,
when mobile home loans
that include a land pur-
chase became “real estate”
and s