Millions of Americans Have Used Risky Financing Arrangements to

Overview

Most homebuyers in the U.S. use mortgages to purchase their homes. However, many others use alternative

ﬁnancing arrangements, such as rent-to-own, that research indicates are generally riskier, more costly, and

subject to far weaker consumer protections and regulatory oversight than traditional mortgages.

Evidence

suggests that a shortage of small mortgages, those for less than $150,000, may be driving some home borrowers

(i.e., people who purchase a home with ﬁnancing) who could qualify for a mortgage into these alternative

arrangements.

And other factors related to a home’s habitability and the ownership of the land beneath a

manufactured home—the modern version of a mobile home—can make certain homes ineligible for mortgage

ﬁnancing altogether.

Despite the evidence of potential consumer harm, little is known about the prevalence of alternative ﬁnancing

in the U.S., primarily because no systematic national data collection exists. The U.S. Census Bureau collected

data on the number of Americans who reported using certain types of arrangements until 2009, and in 2019,

the Harvard Joint Center for Housing Studies analyzed alternative ﬁnancing in selected states that require public

record-keeping, but a persistent lack of data has prevented regulators and policymakers from understanding the

full scope and scale of this market.

Millions of Americans Have Used Risky

Financing Arrangements to Buy Homes

Naonally representave survey nds disparies by race, ethnicity, and income in

potenally harmful borrowing

Granger Wootz/Getty Images

April 2022

Brief

To help address this evidence gap, The Pew Charitable Trusts conducted a nationally representative survey of

U.S. adults that examined the prevalence of alternative ﬁnancing and borrower demographics. (See the separate

appendix for full survey methodology.) The survey’s key ﬁndings are:

• Approximately 1 in 5 home borrowers—about 36 million Americans—have used alternative ﬁnancing at

least once in their adult lives.

° Of those, 22% have used more than one type of alternative arrangement across multiple home

purchases, which suggests that some borrowers face repeated barriers to mortgage ﬁnancing.

° Use of alternative ﬁnancing varied by race and ethnicity and was highest among Hispanic borrowers.

• Roughly 1 in 15 current home borrowers—around 7 million U.S. adults—currently use alternative

ﬁnancing.

° Among borrowers with active home ﬁnancing debt, those with annual household incomes below

$50,000 were more likely to use alternative ﬁnancing.

These ﬁndings underscore the urgent need for better national and state data collection that can enable regulators

to fully understand the prevalence of alternative ﬁnancing arrangements and ensure that tens of millions of

Americans, especially those from minority and low-income communities, are not overlooked in policy decisions

aecting home borrowers. This brief looks closely at the survey ﬁndings, their implications for homeownership

and family ﬁnancial well-being, and how federal and state policies intersect with the alternative ﬁnancing market.

What is alternave nancing?

Typical alternative ﬁnancing arrangements, such as land contracts, seller-ﬁnanced mortgages, lease-purchase

agreements, and personal property loans, dier from mortgages in important ways. For the purposes of this

analysis, a mortgage is a real estate purchase credit agreement that typically involves a third-party lender

who has no prior or other interest in the property separate from the loan and must comply with federal and

state regulations. In mortgage transactions, title—that is, full legal ownership of the property as documented

in a deed—transfers from seller to buyer at the same time the loan is initiated. By contrast, certain common

alternative arrangements, for example land contracts, are not subject to signiﬁcant regulations, and in purchases

using these types of ﬁnancing, the seller—and not the buyer as in a mortgage transaction—keeps the deed to

the property for the duration of the ﬁnancing term. And because many jurisdictions do not consider buyers

to be homeowners if they do not ocially hold title and have the deed in hand, this structure can create legal

ambiguity and make it dicult for buyers to establish clear ownership or know with certainty who is responsible

for property taxes and maintenance.

Although the rights and protections aorded to mortgage borrowers can provide useful comparisons for

understanding the risks that accompany alternative ﬁnancing, not all ﬁnancially qualiﬁed borrowers can get a

mortgage, because of the shortage of small mortgages and because some kinds of properties are not mortgage-

eligible. For example, some homes may not meet required habitability standards, such as having certain utility

connections or a fully ﬁnished kitchen or bathroom, and manufactured homes are often titled as personal

property, which is movable property such as a car or a refrigerator, rather than real property, also called real

estate, which includes land and any permanent structure on it.

The most common alternative arrangements are:

• Land contracts.In these arrangements, also called “contracts for deed” or “installment sales contracts,”

the seller extends credit directly to the buyer, who then pays regular installments on the debt often for

an agreed-upon time period, without the involvement of a third-party lender. Some buyers refer to their

contract payments as “rent,” though—as with a mortgage—at least some portion of the payment goes

toward the purchase price for the home as dictated by the contract terms. Unlike a mortgage, however,

the deed does not transfer to the buyer at the outset in most states; instead, the seller retains full legal

ownership of the property until the ﬁnal payment is made, leaving the buyer without clear rights to either

the home or the equity that has accrued.

Among alternative ﬁnancing arrangements, land contracts have

received the most attention from academics and legislators.

• Lease-purchase agreements.Under these arrangements, commonly referred to as “rent-to-own” or “lease

with option to purchase,” the seller is also the landlord, and the buyer occupies the property as a tenant and

typically pays an upfront fee or down payment in exchange for the option to purchase the home within a

designated period. If the buyer exercises that option, a portion of the buyer’s previous monthly payments,

which often exceed market rent for a comparable property, may also be applied toward the down payment

for purchase. Then, either the seller or a ﬁnancial institution extends credit to the buyer for the balance to

be repaid over time, and usually the deed transfers at the time the loan is originated. However, if the buyer

is unable or unwilling to ﬁnalize the transaction, the terms of the lease-purchase agreement may allow the

seller to keep some or all of the buyer’s payments.

Buyers and landlords often describe lease-purchase agreements as a way for tenants to improve their credit

scores, build a credit history, and save for a down payment, but little is known about how many lease-

purchase buyers ultimately achieve homeownership, continue renting, or withdraw from the deal without

exercising their option to buy.

• Personal property loans. These ﬁnancing products, also known as “home only” or “chattel” loans, are

used to buy manufactured homes and are frequently issued by subsidiary lenders of manufactured home

builders, although some banks, credit unions, and other lenders also oer this type of ﬁnancing. Personal

property loans typically have much higher interest rates and shorter terms than comparably sized

mortgages, resulting in more expensive monthly payments and more interest paid over the life of the loan.

In addition, personal property loan borrowers have fewer protections in default: In many states, lenders

can quickly repossess homes bought with personal property loans, because they are not subject to the

foreclosure process required for mortgages.

When borrowers purchase manufactured housing with these loans, they are buying their homes as personal

rather than real property, and only the structures—not the land beneath—are included in the titles and paid

for with the loans. By contrast, in real property transactions, the home and land are titled together and can

be ﬁnanced jointly with a mortgage. Although 73% of personal property loan borrowers rent the land under

their homes and face associated risks—unique among homeowners—such as sharp land rent increases

and the possibility of being evicted, the remaining 27% own their land and could be eligible for mortgages,

assuming they meet underwriting requirements.

However, to get a mortgage, these landowners would

ﬁrst need to have the home and land retitled together as real rather than personal property. And depending

on state laws, such title changes can be dicult or impossible to accomplish, leaving some landowning

homebuyers no choice but to ﬁnance their manufactured home purchase with a personal property loan.

• Seller-ﬁnanced mortgages.In these arrangements, the seller also acts as the lender, directly extending

credit to the buyer to purchase the home, with no third-party lender involved. The deed to the home

transfers to the buyer at the start of the agreement—just as with a traditional mortgage—giving the buyer

full ownership rights while the loan is repaid over time. But almost no states have enacted laws for seller-

ﬁnanced mortgages, and federal rules apply only to sellers who ﬁnance more than three properties per

12-month period.

These limited protections generally leave buyers without clear recourse if the seller

has not taken steps to ensure that the home is habitable, the contract terms are fair, and the title has no

competing claims.

All of these arrangements fall under the rubric of alternative ﬁnancing, but the required contractual

provisions and applicable consumer protections for each vary widely from state to state. In general,

research has shown that alternative arrangements are associated with higher long-term costs, less

favorable contract terms, and an increased risk of losing home equity compared with commensurate

mortgages.

Approximately 36 million home borrowers have used

alternave nancing

Pew’s survey found that, although most of the roughly 171 million U.S. adults who have ever borrowed to buy

a home have used traditional mortgages, about 36 million Americans, or 1 in 5 home borrowers, have used

alternative ﬁnancing at least once—and many have used both at dierent times.

(See Figure 1.)

Personal property loans are the most common type of alternative arrangement; about 11% of home borrowers

have used them to buy a home.

Much more is known about these loans than other alternative arrangements,

because the Home Mortgage Disclosure Act requires lenders who make personal property loans to report details

for each loan application to the Consumer Financial Protection Bureau (CFPB). That data shows that, compared

with manufactured home buyers who obtain mortgages, personal property loan borrowers have similar ﬁnancial

characteristics but pay much higher interest rates.

For example, over the life of a $100,000 home loan, a

personal property loan borrower would pay a 7.75% interest rate, twice that of a mortgage borrower’s 3.75% and

costing almost $48,000 more.

After personal property loans, the survey found that other common types of alternative ﬁnancing are lease-

purchase agreements (6%), seller-ﬁnanced mortgages (6%), and land contracts (5%). Most research into the

prevalence, terms, and outcomes of these alternative arrangements has focused on land contracts, because

some state and local governments require public recording of land contract transactions while almost none do for

seller-ﬁnanced mortgages or lease-purchase agreements.

Additionally, and in part because of a lack of consistent national regulatory or statutory conventions deﬁning

these three types of alternative arrangements, such as exists for mortgages, the language used to describe them

varies across the U.S., and unscrupulous sellers can use the resulting lack of clarity to their advantage, referring

to arrangements by other names to circumvent laws. For example, in states with strong land contract laws but

weak renter protections, land contract sellers could skirt the consumer protections by marketing their ﬁnancing

to buyers as rent-to-own arrangements, while still structuring the ﬁnancing as land contracts.

Further, the available evidence indicates that lease-purchase agreements, seller-ﬁnanced mortgages, and land

contracts often share risky features that lead buyers to pay higher costs and can result in default and potentially loss

of the home and all funds paid. For example, sellers may inﬂate their asking prices for a property because third-party

appraisals are not required; they may insist that buyers pay for repairs to properties for which the buyers do not hold

clear title; or they may evict buyers without ﬁrst oering buyers the opportunity to catch up on missed payments.

Because seller-ﬁnanced mortgages and lease-purchase agreements are about as common as the better-studied

land contracts and can lead to similarly harmful outcomes, they merit more research attention.

1 in 5

home borrowers have used alternave nancing

Among borrowers who have used alternative ﬁnancing, 22% have used more than one of the arrangements that

Pew studied. (See Figure 2.) And although the available evidence is insucient to explain why borrowers use

these alternatives, it does indicate that even ﬁnancially capable borrowers face systemic barriers to accessing

mortgages.

The increased costs and risks associated with alternative ﬁnancing raise concerns about their recurring use by

the same households. For example, legal aid advocates and researchers have called attention to proﬁt-driven

“churning,” which occurs when an owner initiates the sale of the same house repeatedly, receiving deposits or

other unsecured payments from successive buyers under alternative agreements that, because of the lack of

regulatory controls on such arrangements, never result in any of the buyers achieving full ownership or recouping

their investments.

However, little is known about how often this occurs and at what point these agreements

typically collapse, so more research is warranted.

Personal property loan

Lease-purchase agreement

Seller-ﬁnanced mortgage

Land contract

Any alternative arrangement

0% 5% 10% 15% 20% 25%

Figure 1

Personal Property Loans Are the Most Common Alternave

Arrangement

Percentage of home borrowers who have ever used each type of nancing

Notes: Results are based on responses from 3,694 survey participants who have ever borrowed to buy a home. Respondents

were asked, “Which of the following best describes how you are currently paying for your home?” and “Have you EVER used

any of the following loans or arrangements to pay for a home NOT including your current loan (if you have one)?” “Home-only

loan, personal property loan, or chattel loan; rent-to-own or lease-purchase agreement; seller-ﬁnancing; contract-for-deed

or land contract.” The percentages of borrowers who have used each type of alternative arrangement do not add up to the

percentage who have used any type because some have used multiple types of alternative ﬁnancing at dierent times.

Source: Pew’s alternative ﬁnancing survey, 2021

Use of alternave nancing varies by race and ethnicity

Among home borrowers, the likelihood of using alternative arrangements varies by race and ethnicity. Hispanic

households that have ﬁnanced a home purchase are more likely to have used alternative ﬁnancing compared with

other households: 34% of Hispanic borrowers reported using at least one alternative arrangement compared

with 23% of non-Hispanic Black borrowers and 19% of non-Hispanic White borrowers. (See Figure 3.)

Other research aligns with these ﬁndings and oers additional insights. For example, CFPB found that, among

buyers of manufactured homes, Hispanic, Black, and Indigenous families were more likely than other households

to use personal property loans.

Further, an analysis from the Federal Reserve Bank of Minneapolis found that

Indigenous people living on reservation trust lands were more likely than their neighbors who do not live on trust

land to apply for personal property loans to purchase manufactured homes—at least in part because of obstacles

to using trust land as collateral for a mortgage.

And the Federal Reserve Bank of Atlanta found that, from

2001 to 2009, Hispanic and Black households were more likely than other households to use land contracts to

purchase a home.

Have used

2 or more types

of alternatives

Have used

1 type of

alternative

Figure 2

Almost a Quarter of People Who Have Used Alternave

Arrangements Have Used More Than 1 Kind

Percentage of alternave nancing borrowers, by number of types used

Notes: Results are based on 750 survey respondents who ever used alternative ﬁnancing. Respondents were asked, “Which

of the following best describes how you are currently paying for your home?” and “Have you EVER used any of the following

loans or arrangements to pay for a home NOT including your current loan (if you have one)?” “Home-only loan, personal

property loan, or chattel loan; rent-to-own or lease-purchase agreement; seller-ﬁnancing; contract-for-deed or land contract.”

Source: Pew’s alternative ﬁnancing survey, 2021

Hispanic

Black, non-Hispanic

White, non-Hispanic

Other

All borrowers

0% 5% 10% 15% 20% 25% 30% 35%

40%

Figure 3

Hispanic Borrowers Are Most Likely to Have Ever Used

Alternave Financing

Percentage of borrowers who have used alternave arrangements, by race

and ethnicity

Notes: Results are based on responses from 3,694 survey participants who have ever borrowed to buy a home. Respondents

were asked, “Which of the following best describes how you are currently paying for your home?” and “Have you EVER used

any of the following loans or arrangements to pay for a home NOT including your current loan (if you have one)?” “Home-only

loan, personal property loan, or chattel loan; rent-to-own or lease-purchase agreement; seller-ﬁnancing; contract-for-deed or

land contract.” “Other” includes “Other, non-Hispanic” and “2+ races, non-Hispanic.”

Source: Pew’s alternative ﬁnancing survey, 2021

These disparities in the use of alternative ﬁnancing may reﬂect racial and ethnic inequalities in mortgage

approval rates and loan costs: Historically, Hispanic and Black borrowers have been more likely to have mortgage

applications denied and to receive high-cost mortgages if their applications are approved.

Approximately 7 million adults currently use alternave

nancing

Among the roughly 114 million adults who have debt on their home, Pew’s survey found that about 7 million, or 1

in 15 current home borrowers, currently use one of these arrangements.

Use of alternave nancing is higher among borrowers with lower

incomes

The survey found that lower-income borrowers are more likely than those with higher incomes to use alternative

arrangements, making ﬁnancially vulnerable families less likely to beneﬁt from the consumer protections granted

to federally regulated mortgages. Among all current borrowers, those with annual household incomes under

$50,000 were more than seven times as likely to be using alternative ﬁnancing instead of mortgages to buy their

homes compared with individuals with annual household incomes above $50,000. (See Figure 4.)

Some low-income households may use alternative arrangements because they cannot qualify for mortgages

under current underwriting standards. For instance, low-income families are more likely than higher-income

households to have volatile incomes and little or no credit history, both of which are barriers to being approved

for a mortgage.

Further, underwriting practices have not historically recognized borrowers’ demonstrated ability

to make regular monthly rent payments as evidence that they could manage comparable mortgage obligations,

although Fannie Mae did launch an underwriting program in September 2021 to expand mortgage eligibility to

households with rental payment histories, which should help address this gap.

However, several other factors, including habitability standards for low-cost homes, manufactured home titling

issues, and the shortage of small mortgages, also may drive borrowers into alternative ﬁnancing, and some may

not seek mortgages at all. More research is needed to understand how borrowers enter alternative arrangements

and what roles mortgage eligibility and access play.

Under $50,000

$50,000 or more

All current borrowers

0% 5% 10% 15% 20% 25%

Figure 4

Nearly a Quarter of Borrowers Earning Less Than $50,000 Annually

Are Using Alternave Financing

Percentage of current borrowers using alternave nancing, by annual

household income

Notes: Results are based on responses from 2,331 survey participants who are current home borrowers. Respondents were

asked, “Which of the following best describes how you are currently paying for your home?” “Home-only loan, personal

property loan, or chattel loan; rent-to-own or lease-purchase agreement; seller-ﬁnancing; contract-for-deed or land contract.”

Source: Pew’s alternative ﬁnancing survey, 2021

Understanding alternave nancing can help policymakers

beer protect, support consumers

Research suggests that the harms associated with some alternative ﬁnancing arrangements persist largely

because of the lack of consumer protections, particularly contract recording requirements, or the insucient

enforcement of such protections where they do exist.

Recording an alternative ﬁnancing contract with a local

government clerk or records oce provides documentation of agreements made between seller and buyer and

of the buyer’s rights to the home.

Pew-commissioned research from the National Consumer Law Center found

that about a dozen states have enacted laws or ordinances mandating public recording of land contracts and that

none have done so for seller-ﬁnanced mortgages.

But statutory requirements aside, legal aid providers have

observed that sellers sometimes choose to record alternative ﬁnancing arrangements to protect their ownership

interest if a borrower defaults.

However, when alternative ﬁnancing arrangements are not recorded, the resulting lack of documentation can

prevent lawyers, housing advocates, government ocials, and other stakeholders from determining who holds

legal ownership of a property. This, in turn, can obscure the assignment of responsibilities, such as paying taxes

or ensuring habitability, as well as the distribution of rights and beneﬁts, including eligibility for homeowner tax

exemptions, natural disaster relief, or insurance claim payouts.

Without public recording, lawmakers cannot know how many households use alternative ﬁnancing or

appropriately allocate ﬁnancial aid or other resources when needed. During the COVID-19 pandemic, for

instance, federal and state governments have provided ﬁnancial assistance and eviction protections to

homeowners and renters. But the legal ambiguity associated with some alternative arrangements has meant

that borrowers were often ineligible for those supports, and given the disparities in alternative ﬁnancing use, this

ineligibility is likely to have compounded hardships for the low-income and minority families who were the most

likely to struggle ﬁnancially during the pandemic.

Some recent policies have explicitly included alternative ﬁnancing borrowers alongside mortgage borrowers. For

example, the U.S. Department of the Treasury released guidance in August 2021 to clarify that its Homeowner

Assistance Fund can provide ﬁnancial assistance to homeowners with land contracts or personal property loans

for manufactured homes, as well as those with mortgages.

However, the guidance leaves it to state ocials

to determine the number of borrowers in their states who are eligible to receive the funding. Some states,

such as New York and Wisconsin, have taken proactive steps to include land contract and personal property

loan borrowers in their Homeowner Assistance Fund distribution plans. But in most states, without recording

requirements to document borrowers and policy action to expand eligibility, many of the 7 million people who

currently use alternative ﬁnancing might not receive funds for which they would otherwise qualify should

they need assistance. In addition, the Federal Emergency Management Agency in September 2021 provided

mechanisms for manufactured home owners, who do not have a deed or similar traditional documentation, to

prove ownership.

These policy changes reﬂect a growing recognition at the federal and state levels of the need

to address the challenges faced by home borrowers who use alternative ﬁnancing.

Conclusion

This new survey data shows that nationwide, tens of millions of families have used alternative ﬁnancing

arrangements at some point to pursue their goals of homeownership, but also that some borrowers are more

likely than others to do so. The ﬁndings highlight disparities by race, ethnicity, and income that reﬂect broader

inequalities in the mortgage market.

State and federal policymakers have proposed legislation, regulation, and programmatic guidelines in recent

years that have sought to include alternative ﬁnancing. But scarce information about the prevalence of these

arrangements as well as who uses them and why, among other challenges, has limited the reach of those

eorts, leaving millions of borrowers at risk. The data presented in this brief can begin to ﬁll that gap and help

policymakers craft better strategies to protect all home borrowers.

External reviewers

This brief beneﬁted from the valuable insights of Heather K. Way, clinical professor, University of Texas at Austin

School of Law, and Darrius Woods, sta attorney, Atlanta Volunteer Lawyers Foundation. Although they reviewed

drafts of the brief, neither they nor their institutions necessarily endorse the ﬁndings or conclusions.

Acknowledgments

This brief was researched and written by Pew sta members Ryan Canavan, Tara Roche, and Rachel Siegel. The

project team thanks current and former colleagues Louisa Barnes, Gaby Bonilla, Nick Bourke, Jennifer V. Doctors,

David East, Alex Horowitz, Carol Hutchinson, Krista Jenkins, Aesah Lew, Linlin Liang, Omar A. Martínez, Matt

McKillop, John Murphree, Bernard Ohanian, Tricia Olszewski, Jennifer Peltak, Travis Plunkett, Andrew Qualls,

Sarah Spell, Avi Schlosburg, Ryland Staples, and Mark Wol for providing important communications, creative,

editorial, and research support for this work.

Endnotes

1 The Pew Charitable Trusts, “What Has Research Shown About Alternative Home Financing in the U.S.?” (2022), https://www.pewtrusts.

org/en/research-and-analysis/issue-briefs/2022/04/what-has-research-shown-about-alternative-home-ﬁnancing-in-the-us.

2 A. Horowitz and T. Roche, “Small Mortgages Are Hard to Get Even Where Home Prices Are Low,” The Pew Charitable Trusts, Sept. 11,

2020, https://www.pewtrusts.org/en/research-and-analysis/articles/2020/09/11/small-mortgages-are-hard-to-get-even-where-home-

prices-are-low; B. Eisen, “Small Mortgages Are Getting Harder to Come By,” The Wall Street Journal, May 9, 2019, https://www.wsj.com/

articles/small-mortgages-are-getting-harder-to-come-by-11557394201; A. Carpenter, T. George, and L. Nelson, “The American Dream or

Just an Illusion? Understanding Land Contract Trends in the Midwest Pre- and Post-Crisis” (Joint Center for Housing Studies of Harvard

University, 2019), 3, 13-14, https://www.jchs.harvard.edu/sites/default/ﬁles/media/imp/harvard_jchs_housing_tenure_symposium_

carpenter_george_nelson.pdf.

3 Alanna McCargo et al., “Small-Dollar Mortgages for Single-Family Residential Properties” (Urban Institute, 2018), V-VI, https://

www.urban.org/research/publication/small-dollar-mortgages-single-family-residential-properties; Consumer Financial Protection

Bureau, “Manufactured Housing Finance: New Insights From the Home Mortgage Disclosure Act Data” (2021), 3-4, 7, https://ﬁles.

consumerﬁnance.gov/f/documents/cfpb_manufactured-housing-ﬁnance-new-insights-hmda_report_2021-05.pdf. Manufactured

houses, unlike their mobile predecessors, are built to robust federal quality standards that may even exceed local standards for site-

built homes. Manufactured housing is eligible for mortgage ﬁnancing when owned as real property—where the home and land are titled

together. However, when manufactured homes are titled as personal property separate from the land beneath, buyers are not eligible for

a mortgage.

4 Carpenter, George, and Nelson, “The American Dream or Just an Illusion?,” 1; A. Carpenter, A. Lueders, and C. Thayer, “Informal

Homeownership Issues: Tracking Contract for Deed Sales in the Southeast” (Community and Economic Development Department,

Federal Reserve Bank of Atlanta, 2017), https://www.frbatlanta.org/-/media/documents/community-development/publications/

discussion-papers/2017/02-informal-homeownership-issues-tracking-contract-for-deed-sales-in-the-southeast-2017-06-14.pdf.

5 Alanna McCargo et al., “Small-Dollar Mortgages for Single-Family Residential Properties,” V-VI; Consumer Financial Protection Bureau,

“Manufactured Housing Finance,” 3-4, 7.

6 The Pew Charitable Trusts, “What Has Research Shown About Alternative Home Financing in the U.S.?”; National Consumer Law Center,

“Summary of State Land Contract Statutes” (2021), 3-4, https://www.pewtrusts.org/en/research-and-analysis/white-papers/2022/02/

less-than-half-of-states-have-laws-governing-land-contracts.

7 Consumer Financial Protection Bureau, “Manufactured Housing Finance,” 25, 33, 38.

8 N. Bourke and R. Siegel, “Protections for Owners of Manufactured Homes Are Uncertain, Especially During Pandemic,” The Pew

Charitable Trusts, Sept. 11, 2020, https://www.pewtrusts.org/en/research-and-analysis/articles/2020/09/11/protections-for-owners-of-

manufactured-homes-are-uncertain-especially-during-pandemic.

9 Consumer Financial Protection Bureau, “Manufactured Housing Finance,” 34.

10 Ibid., 33-34, 36-37.

11 Consumer Financial Protection Bureau, 12 CFR Part 1026 (Regulation Z) § 1026.36, Prohibited Acts or Practices and Certain Requirements

for Credit Secured by a Dwelling, https://www.consumerﬁnance.gov/rules-policy/regulations/1026/36/; Texas Finance Code, Chapter

180. Residential Mortgage Loan Originators, Texas Secure and Fair Enforcement for Mortgage Licensing Act of 2009 (2009), https://

statutes.capitol.texas.gov/Docs/FI/htm/FI.180.htm. Pew commissioned the National Consumer Law Center (NCLC) to analyze state

laws, statutes, and major legal decisions governing seller-ﬁnanced mortgages. The study found that only Delaware and Texas have laws

speciﬁc to these loans, that Delaware’s law addresses only certain processes required before closing, and that Texas’ does not impose

additional conditions on small-scale sellers who are exempt from federal regulation. NCLC did not ﬁnd any states with seller-ﬁnanced

mortgage laws speciﬁcally related to recording requirements, habitability standards, or remedies upon default.

12 The Pew Charitable Trusts, “What Has Research Shown About Alternative Home Financing in the U.S.?”

13 Pew’s survey found that about 67% of U.S. adults have ever borrowed to buy a home, roughly 14% of U.S. adults have ever used

alternative ﬁnancing, and approximately 62% have ever had a mortgage. The percentages of adults who have ever used mortgages and

alternative arrangements do not add up to the percentage who have ever borrowed, because some have used both at dierent times.

Calculations of the numbers of adults are based on the 2019 one-year estimate for Americans 18 years of age and older: 255,271,738. U.S.

Census Bureau, American Community Survey, Table S0101-Age and Sex, 2019 one-year estimates.

14 Through focus groups with manufactured housing residents and a review of industry terminology, Pew has learned that personal property

loans are commonly referred to as “mortgages” even when the land is not included. However, these buyers know whether their home

loan includes the land beneath the home, as Pew researchers conﬁrmed by looking at focus group participants’ loan documentation.

Where respondents said they had a current mortgage that covered only their manufactured home and not the land beneath it (32 of 78

manufactured housing residents who reported a current mortgage), these loans have been classiﬁed as current personal property loans

and counted as current alternative ﬁnancing.

15 Consumer Financial Protection Bureau, “Manufactured Housing Finance,” 11-12, 25, 33.

16 Federal Financial Institutions Examination Council, Home Mortgage Disclosure Act, 2020, https://ec.cfpb.gov/data-browser/

data/2020. Pew’s analysis includes ﬁrst-lien, single-family (one to four units), owner-occupied, home-purchase loans originated in

2020 and excludes reverse mortgages, open-end lines of credit, and loans primarily for a business or commercial purpose. Pew deﬁnes

“personal property loans” as those secured by a manufactured home only and not the land beneath, as compared with “manufactured

home mortgages,” which are secured by both the home and the land. For manufactured homes sited on land that is owned by the

borrower, with loan amounts from $90,000 to $109,999, personal property loan borrowers had a median interest rate of 7.745% and a

median loan term of 23 years, compared with 3.75% and 30 years for manufactured home mortgage borrowers. Based on the respective

median interest rates and median loan terms, over the life of a $100,000 loan, the personal property loan borrower would expect to pay

$214,459.61, or $47,738 more than the manufactured home mortgage borrower’s total cost of $166,721.61, even though the personal

property loan term ends seven years earlier.

17 The Pew Charitable Trusts, “What Has Research Shown About Alternative Home Financing in the U.S.?”

18 Pew’s interviews with legal aid providers from across the U.S. have uncovered several instances in which bad-faith sellers took advantage

of the ambiguity in alternative ﬁnancing naming conventions to avoid regulations that protect borrowers from bad outcomes.

19 The Pew Charitable Trusts, “What Has Research Shown About Alternative Home Financing in the U.S.?”

20 J. Battle Jr. et al., “Toxic Transactions: How Land Installment Contracts Once Again Threaten Communities of Color” (National

Consumer Law Center, 2016), 1-2, 8, https://nclc.org/images/pdf/pr-reports/report-land-contracts.pdf; S. Mancini and M. Saunders,

“Land Installment Contracts: The Newest Wave of Predatory Home Lending Threatening Communities of Color” (National Consumer

Law Center, 2017), 10, https://community-wealth.org/sites/clone.community-wealth.org/ﬁles/downloads/Land%20Installment%20

Contracts.pdf; C. Olmedo and P.M. Ward, “Model Subdivisions: The New Face of Developer Lot Sales for Low-Income Colonia-Type

Housing in Texas,” Land Use Policy 52 (2016): 181-94, https://www.sciencedirect.com/science/article/pii/S0264837715003944.

21 Consumer Financial Protection Bureau, “Manufactured Housing Finance,” 5, 31.

22 R.M. Todd, “Race, Location, and Manufactured-Home Loans on American Indian Reservations” (Federal Reserve Bank of Minneapolis,

2018), https://www.minneapolisfed.org/article/2018/race-location-and-manufactured-home-loans-on-american-indian-reservations;

Federal Reserve Bank of Minneapolis, Center for Indian Country Development, “Chapter 11: Manufactured Homes: An Aordable

Ownership Option,” in Tribal Leaders Handbook on Homeownership, ed. P.H. Kunesh (Minneapolis: Federal Reserve Bank of Minneapolis

and Enterprise Community Partners, 2018), 119, https://www.minneapolisfed.org/indiancountry/resources/tribal-leaders-handbook-on-

homeownership/manufactured-homes-an-aordable-ownership-option.

23 Carpenter, Lueders, and Thayer, “Informal Homeownership Issues,” 6-7.

24 W. Li et al., “Measuring Mortgage Credit Accessibility” (working paper, Urban Institute, 2014), 16-22, https://www.urban.

org/sites/default/ﬁles/publication/49806/413284-Measuring-Mortgage-Credit-Accessibility.PDF; J.P. Steil et al., “The

Social Structure of Mortgage Discrimination,” Housing Studies 33, no. 5 (2018): 759-76, https://www.tandfonline.com/doi/

full/10.1080/02673037.2017.1390076.

25 Pew’s survey found that approximately 45% of U.S. adults currently have debt on their home, including 3% of U.S. adults who use

alternative ﬁnancing and about 42% who have a mortgage. Calculations of the numbers of adults are based on the 2019 one-year

estimate for Americans 18 years of age and older: 255,271,738. U.S. Census Bureau, American Community Survey, Table S0101.

26 The Pew Charitable Trusts, “How Income Volatility Interacts With American Families’ Financial Security: An Examination of Gains,

Losses, and Household Economic Experiences” (2017), 4-7, http://www.pewtrusts.org/en/research-and-analysis/issue-briefs/2017/03/

how-income-volatility-interacts-with-american-families-ﬁnancial-security; Consumer Financial Protection Bureau, “Data Point: Credit

Invisibles” (2015), 6, https://ﬁles.consumerﬁnance.gov/f/201505_cfpb_data-point-credit-invisibles.pdf; U.S. Department of Housing and

Urban Development, “FHA Single Family Housing Policy Handbook 4000.1” (2021), II. A. 4. c. Income Requirements (TOTAL), https://

www.hud.gov/sites/dﬁles/OCHCO/documents/4000.1hsgh-072021.pdf.

27 M. Lerner, “Fannie Mae to Include Rent Payments in Mortgage Applicants’ Credit History Review,” The Washington Post, Sept. 8, 2021,

https://www.washingtonpost.com/business/2021/09/08/fannie-mae-include-rent-payments-mortgage-applicants-credit-history-

review/; Fannie Mae, “Fannie Mae Introduces New Underwriting Innovation to Help More Renters Become Homeowners,” news release,

Aug. 11, 2021, https://www.fanniemae.com/newsroom/fannie-mae-news/fannie-mae-introduces-new-underwriting-innovation-help-

more-renters-become-homeowners.

28 The Pew Charitable Trusts, “What Has Research Shown About Alternative Home Financing in the U.S.?”

29 Rural Law Center of New York Inc., “Buying a Home on a Land Contract,” https://rurallawcenter.org/wp-content/uploads/Buying-a-

Home-on-a-Land-Contract.pdf.

30 National Consumer Law Center, “Summary of State Land Contract Statutes.” Pew also commissioned NCLC to analyze state laws that

govern seller-ﬁnanced mortgages, and that review did not ﬁnd any states with seller-ﬁnanced mortgage laws speciﬁcally related to

recording requirements.

31 Pew’s interviews with legal aid providers from across the U.S. revealed instances when sellers have chosen to record alternative ﬁnancing

arrangements absent state requirements.

32 Bourke and Siegel, “Protections for Owners of Manufactured Homes Are Uncertain”; The Coronavirus Aid, Relief, and Economic Security

Act, Public Law 116-136, 116th Congress (2020), https://www.congress.gov/116/plaws/publ136/PLAW-116publ136.pdf. See Secs. 4022-4;

Pew Research Center, “Economic Fallout From COVID-19 Continues to Hit Lower-Income Americans the Hardest” (September 2020),

https://www.pewresearch.org/social-trends/2020/09/24/economic-fallout-from-covid-19-continues-to-hit-lower-income-americans-

the-hardest/.

33 N. Bourke, T. Roche, and C. Hatchett, “Homeowners With Risky Alternatives to Traditional Mortgages Eligible for COVID-19 Relief

Money,” The Pew Charitable Trusts, Nov. 1, 2021, https://www.pewtrusts.org/en/research-and-analysis/articles/2021/11/01/

homeowners-with-risky-alternatives-to-traditional-mortgages-eligible-for-covid19-relief-money; U.S. Department of the Treasury,

“Homeowner Assistance Fund Guidance,” Aug. 2, 2021, https://home.treasury.gov/system/ﬁles/136/HAF-Guidance.pdf.

34 Federal Emergency Management Agency, “FEMA Makes Changes to Individual Assistance Policies to Advance Equity for Disaster

Survivors,” news release, Sept. 2, 2021, https://www.fema.gov/press-release/20210902/fema-makes-changes-individual-assistance-

policies-advance-equity-disaster.

For further informaon, please visit:

pewtrusts.org/home-nancing

Contact: Omar A. Martínez, communications ocer

Email: [email protected]

Project website: pewtrusts.org/home-ﬁnancing

The Pew Charitable Trusts is driven by the power of knowledge to solve today’s most challenging problems. Pew applies a

rigorous, analytical approach to improve public policy, inform the public, and invigorate civic life.