Manufactured Housing Backed Loans

An asset-backed security can be collateralized with a pool of loans for manufactured houses. Manufactured houses (commonly known as mobile homes in the United States) are a type of prefabricated houses that are largely assembled in factories and then transported to sites where they need to be installed.

These securities may (not always) be issued by Ginnie Mae.  When issued by Ginnie Mae, the securities have the credit backing of the U.S. government.

Manufactured housing ABS are similar to MBS in that the loans are typically 15 to 20 years, and have a repayment schedule similar to a regular home mortgage. The loan itself could be a mortgage loan or a consumer installment loan.

The prepayment is measured in terms of CPR. Prepayment risk for manufacture housing ABS tends to be lower than MBS because:

  • The loans are smaller and therefore the borrowers have less incentive to refinance;

  • Manufactured homes tend to depreciate in value faster than the loan principal declines, which makes refinancing difficult to obtain; and

  • Manufactured home buyers tend to have low credit quality and might not be able to refinance.

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