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Program Helps Low-Income Buyers Afford Mobile Homes

Demand is growing for a year-old program that’s helping Vermonters who don’t have the financial resources to buy a mobile home. 

Like any home buyers, mobile home purchasers must clear three hurdles to secure a mortgage: credit, income and down payment. 

Randy Rouleau, who has been selling mobile homes in Central Vermont for more than 35 years, says for mobile home buyers, those hurdles are higher and more difficult to clear today than they’ve been in the past.

Rouleau says for a buyer who owns the land where the mobile home is located, it’s easier to get financing.  The situation is most difficult for those in mobile home parks who lease the land they live on.

According to the state there are 246 parks, with nearly 7,000 mobile home units.

Rouleau says since the recession, credit restrictions have tightened.  For many mobile home buyers who are lower income, credit can be a problem in securing a loan.

"In the car business you can almost get a car if you're breathing. In the housing business, it's not so simple." - Randy Rouleau, mobile-home salesman

“So many times we’ll sit down with someone’s credit and they’ll say, ‘I didn’t know I had that, I didn’t know that was a collection’," says Rouleau. "In the car business you can almost get a car if you’re breathing.  In the housing business, [it's] not so simple.”

Even for those with good credit, coming up with a 20 percent down payment can be an issue.  For an average mobile home, that’s more than $10,000. 

At one time, the Vermont Housing Finance Agency was the solution for many buyers.  The agency makes it possible for eligible Vermonters to buy a home with a low down payment.  It was once the state’s largest mobile home lender, but that’s not the case anymore.

“We used to do a lot more mobile home lending and we had to pull back from that for a variety of reasons,” says Maura Collins, VHFA’s policy and planning manager.

She says rating agencies that look at VHFA's lending practices are wary when the portfolio contains too many mobile home loans.

Another problem for buyers is the fact that mobile home loans often come at higher interest rates than typical home mortgages.

All of these factors make it an uphill battle for many people hoping to purchase a mobile home. The situation is better than it was immediately after the recession, but finding financing isn’t nearly as easy as it was a decade or more ago.

Since last November, the Champlain Housing Trust's Manufactured Housing Down Payment Loan Program has provided qualified buyers with up to 50 percent of the cost of a new Energy Star-rated mobile home.

There has been one bright spot. 

Since last November, the Champlain Housing Trust’s Manufactured Housing Down Payment Loan Program has provided qualified buyers with up to 50 percent of the cost of a new Energy Star-rated mobile home.

The loans are at zero percent interest and buyers don’t repay unless they sell, refinance or transfer a mobile home.

The program means buyers can avoid the usual down payment and secure smaller loans from a bank or credit union to cover the balance.

The housing trust worked with VHFA, the Agency of Commerce and Community Development and the Vermont Housing and Conservation Board to raise the money for the program through the sale of state tax credits.

“The demand has steadily increased as word has spread about the program. We’ve had 110 inquiries and those have come from all over the state,” says Emily Higgins, director of home ownership with the housing trust.

Higgins says the program has leveraged $369,882 in loans to help borrowers secure another $759,403 in financing from other sources.  But the program is limited by the money available.  As of the end of October, the program had closed 12 loans in nine Vermont counties.

“There is a cap on the amount of tax credit that the state issued over a certain period of time, so we can do 15 to 20 of these per year, but not more than that,” Higgins says.

The down payment loan program grew out of an effort to help people whose mobile homes were flooded in Tropical Storm Irene.  Higgins acknowledges that there are larger structural problems with mobile home lending that still need to be addressed.

"There were next to no options for people two to three years ago. And now, with our program, we are filling the gap and making purchases possible." Emily Higgins, Champlain Housing Trust

“We are trying to fill in with a stop-gap measure, essentially,”   she says.  "There were next to no options for people two to three years ago and now with our program we are filling the gap and making purchases possible."

At Village Homes in Central Vermont, Randy Rouleau says the program has been instrumental in helping him and other dealers sell mobile homes.   

“I think we’d have a real big problem in this state if it wasn’t for that.  It just happened to come along, almost magically,” he says.

One of the advantages of the program is that it’s also generating sales of more energy efficient mobile homes to replace older models.

Emily Higgins says one lender, North Country Federal Credit Union, has also lowered interest rates from 11 percent to 8 percent on loans it gives to mobile home park borrowers in conjunction with the down payment loan program.

Manufactured Housing Down Payment Loan Program Brochure