Manufactured Home Financing

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​What is a Chattel Loan?

If you're familiar with a traditional mortgage, you might know that a mortgage secures the loan to real property. Real property is defined as land, all the permanently attached structures to that land, and the rights of ownership. On the other hand, a chattel loan is secured by a piece of personal property that is movable. The borrower on a chattel loan may not own the land where the property sits so a chattel loan remains intact even if the property is moved off-site. Chattel loans are a common way to obtain a manufactured home in a lease community. According to the Consumer Financial Protection Bureau (CFPB), about 42% of loans used to buy manufactured homes are chattel loans. These moveable manufactured homes are considered personal property, which is why they are sometimes referred to as mobile homes.

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What Manufactured Homes are Eligible for a Chattel Loan?

Once manufactured homes are constructed and transferred to their site, if they are not situated on piers, wooden pillars, a solid foundation, or a basement, then they're considered personal property and therefore require a chattel loan. Although the chassis is hidden and the home typically doesn't move once it's been placed, these manufactured homes still retain a permanent chassis for transportation. As a result, these homes may still be commonly referred to as mobile homes.

 

Before June 15, 1976, the terms mobile home and manufactured home were used interchangeably and had the same meaning. On that date, the U.S. Housing and Urban Development (HUD) implemented stricter standards for mobile homes. As a result, homes manufactured after that date are technically referred to as manufactured homes, while homes constructed before that date are mobile homes. These HUD standards apply to the design, construction, transportability, strength, energy efficiency, fire resistance, and overall quality of the manufactured home.