IBA Compliance Connection

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An examiner told us we had violated the Home Ownership and Equity Protection Act (HOEPA) by treating certain mobile home loans as auto loans. When a loan secured by a mobile home that has not been permanently affixed to the ground but rather rests on a slab and can have its wheels reattached, we treat the loan as a vehicle loan. Are these types of loans subject to HOEPA?

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Yes, we believe that mortgages secured by mobile homes — whether or not they are permanently affixed to real property — are subject to HOEPA coverage if the mobile home is the consumers’ primary residence.

Mortgage loans classified as “high cost” under the HOEPA regulations may include any consumer credit transaction secured by a consumer’s principal dwelling, and Regulation Z defines a principal dwelling to include mobile homes, whether or not they are attached to real property. The Official Interpretations to Regulation Z also clarify that “mobile homes, boats, and trailers are dwellings if they are in fact used as residences.”

Under Regulation Z, a mortgage loan secured by a mobile home titled as personal property will be considered “high-cost” if the loan’s annual percentage rate exceeds the average prime offered rate (APOR) for comparable transactions by more than 8.5% if the loan amount is less than $50,000 and the loan is a first lien. Otherwise, the threshold is 6.5% over the APOR for first-lien transactions and 8.5% over the APOR for subordinate-lien transactions, and the points and fees and prepayment penalty triggers also may apply.

For resources related to our guidance, please see:

  • CFPB, HOEPA Rule Small Entity Compliance Guide, Page 15 (November 2018) (“Mortgages secured by manufactured housing (whether titled as real property or personal property) and other types of personal property (e.g., an RV or a houseboat) are subject to HOEPA coverage if the dwelling is the consumer’s principal dwelling.”)
  • Regulation Z, 12 CFR 1026.2(a)(19) (“Dwelling means a residential structure that contains one to four units, whether or not that structure is attached to real property. The term includes an individual condominium unit, cooperative unit, mobile home, and trailer, if it is used as a residence.”)
  • Regulation Z, Official Interpretations, Paragraph 2(a)(19), Comment 2 (“Use as a residence. Mobile homes, boats, and trailers are dwellings if they are in fact used as residences, just as are condominium and cooperative units. Recreational vehicles, campers, and the like not used as residences are not dwellings.”)
  • Regulation Z, 12 CFR 1026.32(a)(1)(i) (“The requirements of this section apply to a high-cost mortgage, which is any consumer credit transaction that is secured by the consumer’s principal dwelling, other than as provided in paragraph (a)(2) of this section, and in which:

(i) The annual percentage rate applicable to the transaction, as determined in accordance with paragraph (a)(3) of this section, will exceed the average prime offer rate, as defined in § 1026.35(a)(2), for a comparable transaction by more than:

  • (A) 6.5 percentage points for a first-lien transaction, other than as described in paragraph (a)(1)(i)(B) of this section;
  • (B) 8.5 percentage points for a first-lien transaction if the dwelling is personal property and the loan amount is less than $50,000; or
  • (C) 8.5 percentage points for a subordinate-lien transaction; or . . . .”)