Buffett Helps Secure Passage of Mobile Home Bill
Two lenders in the manufactured housing industry-Vanderbilt Mortgage and Finance, Co., and 21st Mortgage Corp.-successfully lobbied for bipartisan passage of a bill that would allow for higher interest rates on mobile home loans in addition to revising the definition of "high-cost" loans which is stipulated in Dodd-Frank. Both lenders are owned by Warren Buffett's Berkshire Hathaway.
The bill, named the Preserving Access to Manufactured Housing Act of 2013, is sponsored by Rep. Stephen Fincher (R-TN). The creation of the bill was partly a result of Dodd-Frank's classification of a high-cost loan, which is applied to a broad spectrum of the housing industry. Proponents of the bill argue that the broad definition of a high cost loan cannot be applied as readily to manufactured housing which is distinct from on-site built housing.
Supporters of the bill also believe there are negative connotations surrounding the term "high cost" that could ultimately cause lenders to become disinterested in providing loans due to increased liabilities often connected with high cost loans.
However, interest rates will increase dramatically if the manufactured housing bill is passed into law. Currently, the Consumer Financial Protection Bureau (CFPB) sets the interest rates for some loans at 8.5 percent above the prime rate.
The manufactured housing bill would allow for interest rates of 12.5 percent for transactions of $30,000 or less, "or a higher percentage established by the Bureau not to exceed 14.5 percentage points in such cases, if the Bureau determines that the lower rate would restrict access to credit and that raising the rate would not have a detrimental impact on consumer protection," according to the bill. With over 22 million Americans living in manufactured housing, the heightened interest rate would affect the way millions of Americans receive loans.
"This legislation is vital. It protects the availability of financing for manufactured homes that many families across the country rely on for affordable housing," stated Fincher in a press release.
Many consumer protection advocates have protested the bill. In addition, some Democrats supporting the bill are hoping to find ways to reduce the increased interest rate that would occur if passed into law.
However, it is unlikely that the bill will become law. Rather, lobbyists such as Buffett's companies are more focused on altering the definition of high cost loans and hope to persuade the CFPB through their support of the bill. The bill will now head to the House for further voting.