Vermont Legislature SmartTranscripts:

[Speaker 0]: Good afternoon, everyone. This is the House Committee on General and Housing, and today is Tuesday, January 27. We are continuing to hear H757, which is an act relating to manufactured homes and limited equity cooperatives that are manufactured home communities. We're going to take testimony from a number of parties this afternoon, but we're going to start with Rachel Siegel from the Pew Charitable Trust, and who I guess we've talked to before, but Pew has been very active in this field, and we thought that this would be a good place to start. We have received a walkthrough from our counsel, and so now we're ready to start taking testimony. Rachel, are you with us?

[Rachel Siegel (Pew Charitable Trusts)]: Yep, I'm here. Can you hear me all right?

[Speaker 0]: Yes, we can. Great. Welcome to the committee. There are several of us online. We've had a heavy snowstorm. Where are you, Rachel?

[Rachel Siegel (Pew Charitable Trusts)]: I'm in Maryland, and it's not heavy compared to your standards, but it's heavy for here.

[Speaker 0]: I bet it's heavy for there. Well, here we had 18 inches or two feet, depending on where you're at, so it was a number of us had trouble getting in or online. Anyway, welcome. Tell us your name for the record and then take it away.

[Rachel Siegel (Pew Charitable Trusts)]: Thank you. My name is Rachel Siegel, and I want to thank you, Chair Mihaly and Vice Chair Bartley and members of the committee for the opportunity to testify today. My name is Rachel Siegel, and I'm a senior officer on the housing policy initiative over at the Pew Charitable Trusts. Can you all see my slides okay?

[Speaker 0]: We can.

[Leonora Dodge (Member)]: We can

[Unidentified Committee Member]: see the first title. Great.

[Rachel Siegel (Pew Charitable Trusts)]: So for a little bit of background, the Pew Charitable Trust is a five zero one(three) nonprofit, nonpartisan organization. And the housing policy initiative over at Pew has a few key focuses. Manufactured housing, of course, which is what I'll focus on today. But there are a few other topics that actually tend to apply to manufactured housing as well. Specifically in financing, challenges we see with folks getting small mortgages, so anything under 150,000, as well as the use and regulatory gaps of alternative financing arrangements like rent to own and contract for deed. And then lastly, availability, such as zoning and land use policies as we think about bringing more housing supply in the country that's really needed at the moment. So I wanted to walk you through a bit of a roadmap of what I'll go through today, and certainly feel free to jump in if anybody has questions or concerns. Feel free to interrupt me. I may not be able to see if anybody has a hand raised or has a question, but just go

[Speaker 0]: ahead I'll and drop interrupt you if people here have questions, so don't worry.

[Rachel Siegel (Pew Charitable Trusts)]: Okay, great. Perfect. Thank you. So first, I want to talk a little bit about specifically what manufactured homes are and especially how they differ from mobile homes because these terms often get interchanged and that can make things confusing. Then we're going to talk through a little bit on the current use in Vermont and shipments. And then we'll get into how manufactured homes are titled and how that's different from other types of home, not just in Vermont, but honestly across the country. Because the way homes are titled, whether they can be owned as real estate or as personal property, which is more like a car, really impacts whether or not someone is able to get a mortgage. And when they're not able to get a mortgage, we're going to talk through what some of the ramifications are in terms of affordability and consumer protections. And then lastly, we'll talk a little bit about how Vermont compares with other states in terms of titling policy. And we'll look a little at federal mortgage programs that are helping to expand access to mortgages for folks who might not own their land and own a manufactured home. So first up, we're going to look at the difference between a mobile home and a manufactured home. So on the left here, we have a mobile home. These are both homes that I pulled from zillow.com yesterday, actually, in the state of Vermont. And one of the defining features of a mobile home is that it was built before 1976 when the Housing and Urban Development or HUD code was put into place. After that code was put into place, and this developed standards, minimum standards for durability, wind resistance, and many other factors, after 1976, when the HUD code went into place, a very similar looking structure had to meet or exceed the HUD code standards. And I wanted to also mention that significant updates were made in the 1990s that led to much higher quality minimum standards. So on the right, we have-

[Speaker 0]: You got a question, Rachel. Please. Sorry.

[Unidentified Committee Member]: So what I'm hearing you say there is actually a true difference between a mobile home and a manufactured home. And a manufactured home that was built after 'seventy six could not be considered a mobile home by definition.

[Rachel Siegel (Pew Charitable Trusts)]: That's right. And I will note that people often use both terms to refer to the other. So it's certainly not uncommon that they get flip flopped. Even The US census still refers only to mobile homes and doesn't ask about manufactured homes. So there's a lot of catching up to do in terms of the way these are referred to. But some of the confusion happens because people, this gets mixed up. And so we end up talking about mobile homes when we're talking about higher end newer homes that are actually manufactured homes. And yeah, the stigma gets really challenging because honestly, that HUD code was put into place because there wasn't a good standard. And many, not all, but many of the pre-nineteen seventy six homes just weren't built strong enough, built well, and so we needed these minimum standards put

[Speaker 0]: in Could you give an example, Rachel, a couple of examples? What's in the HUD code that really makes a difference? I mean, we've heard of it, but we don't know really that much about it.

[Rachel Siegel (Pew Charitable Trusts)]: Sure. I'd love to get back to you with specifics there. A couple of things come to mind, but I might have better information to share to give you, like, stronger sense here. There are some specifics in terms of wind durability, and there are a couple of different levels in terms of insulation when it's colder, certainly. But I know that there are many different components there, and so I'd love to get back to you with the specifics of the HUD code.

[Speaker 0]: Okay, thank you.

[Rachel Siegel (Pew Charitable Trusts)]: One other thing that I should mention that was true for mobile homes as well is currently manufactured homes are all required to be built and remain on a chassis. That's the steel undercarriage that allows them to be pulled whole down the highway or road. And on the left hand picture in the mobile home, you can actually still see the hitch is still attached. Usually, these are removed when they're installed. But that steel chassis is still a requirement of the HUD code. However, at the federal level, there is both a bill and some work within HUD to look at removing that as a requirement so that manufactured homes could be built a little more flexibly. So we've already talked about what a manufactured home is. But now that we know that, I want to talk a little bit about why this is so important. Specifically, there's a drastic lack of smaller, more affordable homes across the country, both existing and new, but we're really starting to see developers pick up manufactured housing as a new way of building more affordably priced, smaller single family homes. But some of the challenges get in the way here, specifically financing and also some zoning issues. So difficulty with gaining access to mortgages, as well as overly large minimum lot sizes, which can make manufactured homes on owned land more expensive, and exclusionary zoning that makes it tougher to place a manufactured home and use it as a substitute for a single family home. And since a picture is worth a thousand words, I wanted to give a sense of what these structures can look like. So basic HUD code manufactured home up on the top left, you have a single section home built to the HUD code. On the right is a home I just pulled yesterday from zillow.com in Burlington, Vermont, which is a double section home. And then a couple of examples of newer styles we're starting to see in the market. So the Brown home in the middle is an example of what's called a cross mod. And a cross mod is built to energy efficient standards, higher quality. The goal is to be used as a substitute for a single family home, usually with porches and garages or at least one porch and one garage, although even that is starting to be potentially more flexible. And then on the bottom here, the blue home is an example of a duplex where you have two single sections that are connected with the roof pitch is able to be raised after it's installed. And so two families could live in this home both in modestly sized units, and especially if this was able to be put on a small lot could be especially affordable. And then on the right is an example of a two story manufactured home. These are not very common yet, but if the chassis requirement is removed, that may be much more feasible.

[Speaker 0]: If the chassis is Can removed

[Leonora Dodge (Member)]: you say more?

[Speaker 0]: If the chassis is removed, how does it how does it get to the site?

[Rachel Siegel (Pew Charitable Trusts)]: That's a fantastic question. So and this has come up a couple of times. So it would still be on a chassis for transportation. What would happen is once it got to the site, the home would be using a crane. And this is where if you're building a neighborhood or something like that, you have efficiency of scale.

[Speaker 0]: Okay.

[Rachel Siegel (Pew Charitable Trusts)]: Using a crane, you would move the unit, either onto the top or onto the site itself. Does that make sense?

[Speaker 0]: Yep. Thank you.

[Rachel Siegel (Pew Charitable Trusts)]: That also means that the chassis itself can get reused, because, really, they as long as it's being installed on a permanent, foundation, the chassis really doesn't serve a purpose structurally after, the home is installed. So as long as it's got a slab foundation, the chassis doesn't really serve a purpose and just adds cost and, use of steel.

[Speaker 0]: Tom, got a question here. I do. So manufactured home that has a chassis that can be removed is different how from a modular home, volumetric modular.

[Rachel Siegel (Pew Charitable Trusts)]: Yep, so one thing that's different in manufactured housing from most modular, although I can't say all of it, is that the plumbing and the electrical and the walls are all installed at the factory. And then the siding just does the final finishes. So many modular homes are built more panelized and are more constructed on-site. And the other difference is that modular has to conform to the local building standards, whereas manufactured homes are inspected and conform to the federal HUD code standards. So the standards that they need to meet and the way they're inspected differs a little bit. Okay. Is is anybody else have a question about that? Or is that enough?

[Speaker 0]: That's enough. I think No.

[Gayle Pezzo (Member)]: I do. I have one question. So a modular home doesn't have hookups and a manufactured home does?

[Rachel Siegel (Pew Charitable Trusts)]: In terms of utility hookups? I don't know. I can't speak for every modular home out there, but in general, what I can say is that a manufactured home does already have all the electrical done and the plumbing done, and then it's connected, once it reaches its site. Yeah. In modular, my understanding is that often a good bit of that is finished on-site. But I wouldn't want to say that that's every single modular home because there's variety.

[Gayle Pezzo (Member)]: Thank you.

[Speaker 0]: You're welcome. Thank you.

[Rachel Siegel (Pew Charitable Trusts)]: Okay. So this slide just gives a sense of the difference in manufactured versus site built homes. Pew commissioned the Harvard Joint Center for Housing Studies to look at manufactured homes and compare them with similarly sized new site built single family homes. So this is a new manufactured home compared with a new site built home. And if you look on the left, these are single section homes around 1,200, 1,400 square feet. And in 2020, when the data were collected, a single section manufactured home would have cost about $57,000. This is just the home, not land underneath. Whereas the cost to build a new site built home, similarly, just the home, not the land underneath, was $162,000 So in other words, a modest size home here, the home buyer would pay up to 63% less for a manufactured home compared with site built. And a double section,

[Speaker 0]: oh yeah, I'm

[Unidentified Committee Member]: so sorry. It's okay. So just looking at this, looking at single section to double section, it looks like there, for the manufactured home, there's almost an increase, double in size, where the site build equivalent is a much smaller increase. I'm wondering if you can speak to that and also whether or not you have more updated data.

[Rachel Siegel (Pew Charitable Trusts)]: So in terms of size, the single section manufactured home to the site built comparison, they were the same square footage that got compared.

[Leonora Dodge (Member)]: Okay.

[Rachel Siegel (Pew Charitable Trusts)]: But in terms of updated data, I took a look this morning because census does have some data in there that allow us to take a look cost of single section, double section and site built. And across the board, we see certainly prices have increased, labor costs are up, components cost more. So overall, site built has gone up, more than 30% and manufactured housing has gone up more than 40%. But there's still significant differences here. And one of the other things I would draw your attention to is that, to be honest, across the country, very few modestly sized new site built homes are produced. And so oftentimes they tend to be quite a bit larger than either a single or a double section home. Although a manufactured home could be built as large as you want it to be, you could use three sections, four sections. But the opportunity here is to fill a real gap where site built builders just are not able to make it pencil for a more modestly sized starter home, whereas manufactured homes can fill that gap.

[Unidentified Committee Member]: Do you have an idea of what an average of square foot is for a single section? Like what an average single section would be in square footage?

[Rachel Siegel (Pew Charitable Trusts)]: Square footage, I believe it's about 1,200 to 1,400 square feet, and double section is usually about 1,700, 1,600, 1,700 square feet.

[Speaker 0]: Okay, thank you. Welcome.

[Rachel Siegel (Pew Charitable Trusts)]: So there are three key ways that we've seen to improve manufactured home availability and affordability. The first is financing, which we'll focus a lot of our attention on today. But I wanted to also mention a couple of other things. One of them is reducing minimum lot sizes because land can be very expensive. And when you're talking about putting a manufactured home or honestly any type of home on land, the ability to have smaller lot sizes can really impact the affordability of homeownership. And then the last one here is zoning. We're starting to see both state and localities update their zoning laws to allow manufactured housing to be used where single family homes are allowed. And over the last five years, we've seen nine states update their zoning policies for manufactured housing, and we've seen that Virginia has actually introduced a new zoning bill to do something similar. Now, just to get a sense of where we are in Vermont in terms of manufactured home use, about 6% of housing across Vermont is manufactured homes or mobile homes. Some of these are mobile homes as well. The light yellow is zero to 6%. And then when you look at this map, the darker orange yellow is between 1219.9%. And there's a tiny bit of light blue up in the far, Northeast corner that is up to 19.9%. In addition to that, I took a look at median home values. And according to Zillow, the median currently for manufactured home I'm sorry, for homes in general in Vermont is $380,000 Looking at manufactured homes on owned land between 2018 and 2024, the median was about 175,000. And for homes on rented land, it was more like 85,000. Though, of course, when a person owns a home and is renting the land, you'll have the additional cost of the land rental. Looking at shipments, shipments really across the country, and this is this graph is specific to Vermont. Shipments have really gone down over the years, peaking in the 1990s in Vermont around 700. And then from about 2008, 2009, following the Great Recession has really stagnated, though it's gone up just a hair in the last couple of years. But it's gone down pretty dramatically. And and across the country, it's down by a third, but it's a little bit more dramatic in Vermont.

[Speaker 0]: You know why?

[Rachel Siegel (Pew Charitable Trusts)]: Yeah, well, so I have some educated guesses, but we haven't been able to study this in great detail yet. A couple of things, though, that come to mind is that following the Great Recession, there were some pretty big changes in availability of financing for manufactured housing, specifically federal lending for manufactured homes that are not owned as real estate, so not mortgage, this is just for the home, used to be that there was more loan availability through FHA and also through Fannie Mae that no longer exists. FHA, the program exists. This is the Title I program, but it hasn't come back yet. And then in addition to that, there are a lot of zoning restrictions that have been put in place over the years, and that may be contributing to where these homes can be used. Now looking at Vermont specifically, I wanted to show a little bit about how land is owned or rented and what the status is. So in the state of Vermont, this is just among borrowers who use either a mortgage or some kind of home only financing. 79 were direct landowners. So in this scenario, they own their home, they own their land. This is very much like any other site built single family home. The green is paid leased land. 19% are paying to lease the land beneath their home. These are often in land leased communities or what people might call mobile home parks. And then 1% each, were indirect landowners. So these are folks in resident owned communities or cooperatives where most of the homeowners also have an ownership stake in the community itself. And 1% were also unpaid leases. And this is often family land or tribal land where the person doesn't own the land, but they are not paying for the land beneath their home either. So now that I've given kind of a lay of the land, I wanted to move into titling and financing to talk about how this all works for manufactured housing. So the first thing to understand here is that homes other than manufactured homes are automatically owned as real estate across the country. But manufactured homes are treated differently in most states, and this includes Vermont. Specifically, manufactured homes are automatically titled as personal property. This is like the way you own a car or boat, movable property. And this fact is a really big deal because real estate ownership is necessary for mortgage eligibility. Mortgages have the strongest consumer protections, the lowest interest rates, and the longest repayment terms of home loan options, so they really impact affordability as well as potential outcomes. Now I want to mention that Vermont has been flagged as having one of the better titling policies across the country, although many, many states need to modernize these policies. But one of the reasons it's been noted is because it's one of the few states that at least theoretically allows real estate conversion, even when the homeowner does not also own the land. Our research also shows that Vermont conversion policies seem to be working fairly well for landowners. So folks who own their home and own their land when they go to get a loan, the majority of those folks are able to get a real estate mortgage. However, conversations with some lending experts reveal that conversion to real estate for folks who do not own their land, although it's theoretically possible, seems like it isn't usually happening in the state of Vermont right now. So just to be really specific, manufactured home financing can vary quite a bit. We've got mortgages, which are just like any other mortgage for a site built single family home. Home only loans, which use just the home as collateral. These can also be called chattel loans or personal property loans and are often really the next best choice compared with a mortgage. But I want to mention that these have fewer consumer protections compared with mortgages, namely they can be repossessed instead of foreclosed on if a person falls behind, and they have higher interest rates. But lastly, we see in our research that contract financing, like lease purchase or contract for deed, which can be risky and often costly, are more likely to be used for manufactured housing than for other types of homes. And part of the reason this is more risky is because there are very few state and federal level laws that apply, and especially if a manufactured home is not titled as real estate. Question. Oh, yeah, please go ahead.

[Speaker 0]: So, a personal loan, if you buy one and you don't get a mortgage, you have a personal loan, What happens if halfway through you miss payments, it's repossessed?

[Rachel Siegel (Pew Charitable Trusts)]: Right, so I wanted to just mention one thing. So on the personal property loan, one difference between this and a personal loan that you might get on a bank that's just to use generically is that and this, I guess, strikes at the heart of this question, too, is a personal property loan, the home is used as collateral. So, right, if a person falls behind and there's a little bit of variety based on the state, so I'm not an expert specifically in how this works in Vermont. But in general, personal property loan, if a person starts to fall behind on their loan, the home can be repossessed. I suppose not quite like a car because it's not nearly as easy to move a manufactured home as it is to move a car, certainly. But the process is usually much shorter and fewer remedies are required in order for the person to catch up. Whereas in a mortgage, there's a whole consistent waterfall of loss mitigation approaches that lenders need to take and servicing in order to foreclose and then take back the home. Does that make sense?

[Speaker 0]: This is true, yes. Is there a difference between the home only loan and the contract financing in that respect, and then the bridge under it, is this contract financing the same where if you fall behind on the lease purchase, it just terminates and you're out or something?

[Rachel Siegel (Pew Charitable Trusts)]: Yeah, so the contract financing, I would say, is more likely to be riskier for a couple of different reasons. One, contract financing, especially lease purchase, contract for deed, rent to own, the actual deed, the ownership of the home does not transfer until

[Speaker 0]: the

[Rachel Siegel (Pew Charitable Trusts)]: final payment is made. Whereas on mortgages and also these home only personal property loans, the person becomes the homeowner when they purchase the home and the loan is started. There's just a lien on the property. Whereas if you're paying through rent to own or contract for deed, you're not gaining that actual home ownership at the beginning of the contract. It only transfers at the end. And what we've seen around the country and we've talked to folks in legal aid around the country about this is that they're seeing issues of fraud where many times people will have paid all of those payments on contract financing, get to the very end, and then discover that there's a tax lien on the home or the person they've been paying maybe doesn't even actually have the ownership of the home. So there's a little more potential for fraud. But in addition to that, because there are so few state and federal level protections, fewer certainly than the personal property loans, There's just much less that's required and much less that's clear here.

[Speaker 0]: I'd just like to inject one minute worth of history here. It used to be in the middle ages that the idea of a mortgage didn't exist. And that if you wanted to buy a home on time, you were essentially in a rent to own situation. You didn't have title until the end. And it was only the end, people used to, land owner used to do things like disappear on the last payment date, just disappear, and then you wouldn't make the payment and then they would say, too bad, you're not getting the deed. And the whole idea of a mortgage, we now assume, you know, we don't even think about it, where the title transfers to you in the beginning and you own it, but it's the loan that if you don't pay, they have a right to foreclose and come in subject to all the protections. That is a new idea, sort of really, I don't know when it was dreamed up, but certainly in the last few hundred years. Go ahead.

[Leonora Dodge (Member)]: If you were to default on another thing like another type of loan that you might be carrying, like college loans or you end up getting very sick and take out a loan, How do these two types of situations affect you differently? Are you at greater risk of losing whatever equity you've built if you have a mortgage versus if you are on a rent to own type situation with the first property because it's not really diverse yet?

[Rachel Siegel (Pew Charitable Trusts)]: Yeah. The the rent to own, lease purchase and contract for deed scenarios are are much riskier in terms of losing equity. And at the beginning of our project, when we first started looking into these areas, we did some pretty deep interviews with folks living in homes, both in manufactured and site built homes, using these kinds of contracts. And many of them, like any other homeowner, make improvements to the home. They update floors or they patch roofs and they invest in all kinds of different ways. But they don't have that ownership of the home yet. And so if for some reason they can't make all the payments and they lose the home or there's a fraud situation, there's nothing, there's very little that helps folks get that investment back or their payments. But again, it does vary by state, but it's worth thinking about. And I'm going to flip to this graph to show you because our research has shown that manufactured homes are homeowners and borrowers are much more likely to use some form of contract financing. So this is part of why I wanted to ensure we brought this up. When we look at this graph here on the left, we have site built homes. These are borrowers who own a site built home and on the right manufactured homeowners who've borrowed for their manufactured home. And this is specifically from research we commissioned through which is a nationally representative survey of manufactured home residents in 2022. And when you look at the site built on the left, 95% of borrowers said they were using a mortgage to pay for their home and 5% were using contract financing. So certainly it comes up in the site bill housing space as well. But we're really shocked when we looked at manufactured housing specifically, a full 20% of manufactured home borrowers reported use of some form of contract financing. And when we dug a little bit deeper, looking at how the home is titled, when the home is titled as personal property, they were much more likely to be using contract financing. In that case, 28% of personal property manufactured homeowners and borrowers said they were using contract financing. So it's an especially challenging space when the home is not owned as real estate. Some of that could be related to challenges with getting financing because other research we've done has shown that getting financing for manufactured housing is harder than for site built homes, and that's especially true, when a mortgage is not possible. And I'm sorry, I want to make sure, did I fully answer your question?

[Speaker 0]: Also, just in response, Leonora, to your question, if you're just taking out a loan for an education or for something that's not related to real estate, it's unsecured. And instead of paying, that's why your credit card charges you 18% as opposed to 7% for a mortgage and maybe nine or 10 or something like that for one of these alternatives.

[Leonora Dodge (Member)]: Right, they're taking a big, the credit is supposed to

[Speaker 0]: be taking a bigger risk. They can sue you. Right. And you can't bankrupt it. But they don't

[Leonora Dodge (Member)]: have there's nothing they can take. If you're so because you're not so in some ways you're protected by being by financing not a mortgage, because you don't have title to your

[Speaker 0]: property, but You're not protected because they can take the property from you.

[Leonora Dodge (Member)]: You don't own it though, if you're Well,

[Speaker 0]: they don't take it, they just take it because they own it, and it's gone. In either case, you own a mobile home, you don't own it. If you live in a mobile home that you bought with a contract and you improved it, etc, and you miss a payment, it's gone, it's not yours anymore. It wasn't yours ever, but you're out, they're in.

[Leonora Dodge (Member)]: Do do our bankruptcy laws protect a person from having to give up their home if they're if they're if don't have the deed, if they don't hold the deed?

[Speaker 0]: I don't believe so, Rachel.

[Leonora Dodge (Member)]: They're considered renters. It's like they were.

[Speaker 0]: I'm not

[Rachel Siegel (Pew Charitable Trusts)]: sure for Vermont how it's treated. It's worth looking into. I don't know if there's a Vermont lawyer that might be able to answer that question. We can

[Speaker 0]: ask the next. We have Ed Fitzpatrick coming in, Bartley, and maybe he can answer that question. But I don't even think you're in as good a position as a renter because a renter has landlord tenant protections. Right.

[Rachel Siegel (Pew Charitable Trusts)]: Yeah, it's worth understanding and understanding how the particular laws in Vermont impact folks and their ability to remedy if they fall behind or remedy honestly if there's a fraud scenario going on. But yeah, I appreciate this conversation is really helpful. With mortgages and home only loans, the home is still securing the loan. And so if you fall behind on the loan, while mortgages do have longer to repay or longer to cure the problem, in both cases, you could lose the home. In contract financing, you would certainly still lose the home. It's just that there are fewer remedies, really, but you're still losing the home. And most people, when we ask folks who are in some form of contract financing, whether they think of themselves as a homeowner or if they think of themselves as more like a renter, about half of them still think of themselves as a homeowner, but they just don't technically have that homeownership yet. And in disaster, this gets even trickier. So I can't tell you exactly how that happens in Vermont, but certainly the technical ownership comes into play, in insurance and in disasters as well. Okay. So taking a look at the difference in affordability, our research shows that when a person owns their home and the land, interest rates and terms on a mortgage are better than when the person just owns the home. So in other words, even if a person owned just the home and was able to get a mortgage, the interest rates are likely to be a little bit higher and the terms or length of the loan is likely to be a bit shorter, just because the collateral is different. And we see that in states across the country. And that's true regardless of the titling of the home. But to look at, how much Vermont manufactured homeowners who do not own their land could save if they were more able to title as real estate and get a mortgage, we can compare their interest rates in terms to the neighbors in New Hampshire because New Hampshire has slightly different titling policies. So in New Hampshire, all manufactured homes that are connected to utilities are automatically titled as real estate. So even when they get a home only loan, it's actually mortgage. And in comparison in Vermont, although the titling as real estate is theoretically possible, it seems that few borrowers are actually able to get a home only real estate mortgage. So if you look at the box on the bottom here to look at an apples to apples comparison, we look at a loan amount of $100,000 for Vermont compared with New Hampshire. These data are based on the Home Mortgage Disclosure Act data between 2018 and 2024. The median interest rate in Vermont was 6.88% with a loan term of one hundred and eighty months, which is about fifteen years. Well, exactly fifteen years. In New Hampshire, the interest rate was a little bit lower, 6.5%, but the loan terms were longer at two hundred and forty months or twenty years. And due to these differences, the monthly payment in Vermont for the same size loan, the borrower would pay $146 more in Vermont per month or about 16% more than the same size loan in New Hampshire. I went ahead and looked because I know rates have changed a lot and this gets the median between 2018 and 2024. The current median rate, interest rate on a home only manufactured home loan in Vermont in 2024 is 9.5. So certainly it's gone up. But the difference between home and land mortgage and home only mortgage has stayed similar at about two and a half or 3% difference.

[Leonora Dodge (Member)]: Yes.

[Speaker 0]: Okay.

[Rachel Siegel (Pew Charitable Trusts)]: I wanted to give a few examples of resources and other state approaches to updating titling. First is the Manufactured Housing Act of 2012, which was done by the Uniform Law Commission. This is a form of model legislation that gives approaches to modernize titling in states and expand eligibility among homeowners who don't own their land. A couple of other states have been looking at this and have passed laws recently. In 2025, Washington passed a law to expand availability of real estate conversion for homeowners with a land lease of thirty five years or longer. And they also allow manufactured homes that will also ultimately be owned as real estate to skip the personal property titling entirely. Maine is also looking at this. In 2025, the governor's Office of Policy Innovation and the Future led working groups with main lenders, housing finance agencies, and national and state legal and nonprofit experts and submitted a report on the findings looking at titling changes. Currently, they only allow manufactured homes on owned land to be owned as real estate. And the last example is New York State, which currently has no statute on manufactured home titling, but they just passed this bill that allows conversion for landowners or with landowner permission if the homeowner is renting the land and as long as it's on a permanent foundation. But this won't go into place until December 26.

[Unidentified Committee Member]: I've got

[Leonora Dodge (Member)]: a question.

[Speaker 0]: Go ahead.

[Unidentified Committee Member]: Okay. Yeah. I understand the words, but I don't understand the meaning of, allows potential in Washington that allows potential conversions to skip personal property titling. How do how do you know whether a or is it plus homes that will ultimately be real estate to skip personal property titling. So is are the criteria for homes that will ultimately be real estate are the criteria, a thirty five year or longer leasehold? Or how do you know whether something will ultimately be real estate?

[Rachel Siegel (Pew Charitable Trusts)]: Sure. So how

[Unidentified Committee Member]: do they know?

[Rachel Siegel (Pew Charitable Trusts)]: Yep. Essentially, you think about it this way, when a person is buying, let's say, a new manufactured home, you purchase the manufactured home and you're working with a lender, you're setting up the mortgage or whatever kind of financing you're going to be able to use, in that process, and this varies by state a bit, but essentially in that process, most states require that the home gets a personal property title first. And then once they have the title, once the home gets to the land and meets foundation requirements and checks all those boxes, then a person can apply to transfer the title or what some states call de title from personal property and convert it to real estate. And then that's recorded with the registrar of deeds or something similar in the state. So if you think about the example of a regular single family home, the bricks and mortar and various pieces are never owned as personal property. The home gets constructed and then it's recorded as real estate. And so you never have that process of calling all of these components personal property. It just goes directly to real estate ownership. And this is kind of similar in the fact that you can skip the requirement of getting the personal property title and then proving that you've met all the criteria to get real estate. You can say, yes, I'm going to do X, Y, and Z, whatever the state law requires. And so that paperwork gets to be skipped. Honestly, it's in my mind like getting rid of some red tape because you're doing paperwork only to get rid of the paperwork again. Does does that make sense?

[Unidentified Committee Member]: It does make sense. And and I do understand what you're saying, but it it it, yes, it seems like a policy that is helping to get rid of red tape, but also because it's so nonspecific or open to interpretation, it seems like it could also potentially close doors that it's meant to open. Is what the way I

[Rachel Siegel (Pew Charitable Trusts)]: Yeah. So I'll say this is just my summary, super high level summary. I can send some other information so you can take a look. Fannie Mae just recently put out a new report on manufactured home titling that details how homes are titled and can be owned as real estate in every state in the country. And that not only gives a much more detailed summary, but also points to the policies themselves. You can look in in detail. But, yeah, I I, this is this is just super high level version.

[Speaker 0]: Gayle, did you have a question?

[Gayle Pezzo (Member)]: That B title, does that need to be purged?

[Rachel Siegel (Pew Charitable Trusts)]: The personal property title?

[Gayle Pezzo (Member)]: That you called it a B title?

[Rachel Siegel (Pew Charitable Trusts)]: Oh, I might have said deed. D title. D. D. D. Title. Basically to almost like untitle. Yeah. So and again, this is not specific to Vermont, but in general, usually when homes are owned as personal property, the title is held at the Registry of Motor Vehicles or the Department of Motor Vehicles, literally just very similar to a car. And then when it gets converted to real estate, gets recorded, just like any other deed so that there needs to be the official conversion. Does that answer it for you?

[Gayle Pezzo (Member)]: So does it just automatically disappear, or is there a legal process where it needs to be purged before it can become real property and a deed?

[Rachel Siegel (Pew Charitable Trusts)]: I think it's worth asking your legal professionals in Vermont to be sure. But what I can tell you from talking to folks in other states is that having some kind of high quality process for keeping these records is really paramount because when titles and ownership gets lost, the true homeowner doesn't have home there's no way for them to prove that they actually own the home before. So I've heard examples in some states where titles are automatically shredded after a certain number of years regardless of conversion or scenarios where they're purged but not recorded properly somewhere else. And so those kinds of scenarios can lead to horrific paperwork problems that lead to people losing their their true ownership

[Speaker 0]: stuck in the home. I think that our we're gonna hear next from Rachel McLeod from East Rise and from her attorney Ed Fitzpatrick, and we might get answers to these questions at that point. I think a lot of it has to do with whether either the seller or the mortgage or when there's a mortgage, whether you get a warranty deed or whether you get a UCC based certificate of sale or something like that. But we'll talk to them coming up.

[Rachel Siegel (Pew Charitable Trusts)]: Yeah. Terrific. I'm gonna see if I can watch as well. So that'll be helpful for me as well. So I wanted to draw your attention to a couple of follow-up a couple of federal policy approaches, that have been in place to try to help expand mortgage access for manufactured home owners and borrowers. But it's really important to note here that these federal policies only work for folks who can own their home as real estate. So, state titling policies really make a big difference in access to these programs. So first Fannie Mae has a pilot that they've done in New Hampshire, and they're expanding to Vermont and Oregon, which purchases mortgage mortgages for homebuyers and homeowners in resident owned communities. And we've seen that they're looking into expanding to land lease communities as well. Freddie Mac is working with buyers who live on tribal land. And both Fannie Mae and Freddie Mac are treating both double section and single section cross mod homes. So these are the highest end and energy efficient manufactured homes like site built for both appraisal and for mortgage rates. So what I didn't mention earlier is that non cross mod models often have about a half of a percentage point added just because they're manufactured homes, regardless of whether they're on their land or not. But this allows a manufactured home cross mod borrower to get the exact same mortgage rates as any other single family home buyer.

[Speaker 0]: It's just a question here. Do I understand that the difference is without Fannie Mae or Freddie Mac support, if a bank makes a loan, they have to keep the loan, which means that you keep paying them, but they're out the loan. They can't turn around and lend it to somebody else. Whereas, if Fannie Mae or Freddie Mac will buy the loan, which they will do for normal single family residential loans, if they'll buy the loan, then the bank is taken out and they have the money. Mae pays them the principal and you pay Fannie Mae indirectly, and then the bank has the money and can lend it out again. The first type of loan is known as a portfolio loan, where they have to keep it, and that's one of the reasons they charge more. Because they have to take that money Yeah, out of they can't sell it to Fannie Mae or Freddie Mac. Is that your understanding, Rachel?

[Rachel Siegel (Pew Charitable Trusts)]: Yeah, that's exactly right, and also within real estate overall, when you own home and land, Fannie Mae, Freddie Mac, FHA, VA, USDA, they all will purchase, insure or guarantee manufactured homes just like they do single or very similar to single family homes. But, yeah, you're absolutely right. When those programs aren't in play, the lender has to keep it on portfolio, keeps all the risk and can't make more loans. So it really reduces their ability to scale lending. The last one I wanted to mention was USDA. They recently expanded their mortgage lending to allow older homes on on their own land and also new energy efficient homes for manufactured housing, even when they a person does not own their land, as long as it has a long term lease that's a little bit longer than the term of the mortgage.

[Unidentified Committee Member]: Can I just ask, when you say that's a new program, how new is that program?

[Rachel Siegel (Pew Charitable Trusts)]: Let me think back. I believe that program was put into place The at the either the 2024 or the 2025, so it's pretty it's pretty recent. Thank you. They had some pilots in the works ahead of that.

[Unidentified Committee Member]: Thanks.

[Rachel Siegel (Pew Charitable Trusts)]: So we're coming around the end here and I want to be mindful of your time, but I wanted to give a few key takeaways. First, we're seeing states updating zoning and expanding with building for with manufactured homes as a lower cost way to build new single family homes, especially where minimum lot sizes are not overly large. And we're seeing developers start to work with land banks to fill vacant lots and also for profit and nonprofit developers work to build new neighborhoods using manufactured housing. Second, titling policies and access to mortgages are really key to retaining the affordability of manufactured housing. And lastly, Vermont already has a manufactured home titling policy that allows homes to be converted to real estate regardless of land ownership, which is considered to be better than most states. However, and most manufactured home and land owners are able to convert to real estate and use a mortgage. But it seems like many who don't own their land are still struggling with this conversion process and access to mortgages. So when we look at New Hampshire manufactured homes, which are automatically owned as real estate among home only borrowers, there was about a 16 savings on their monthly payments compared with Vermonters for the same size loan on a home only loan. And with that, I want to thank you all, Chair Mihaly, Vice Chair Bartley, and members of the committee for the opportunity to testify today, and please stay in touch if you have any questions.

[Speaker 0]: Rachel, thank you so much. I do have one final question. The current bill before us, one of the things that came up was, right now, for owned lands, a home on owned land, the current statute says that it has to be treated as real estate. For non owned land, the current statute says it may be treated as real estate. We considered the possibility of making it mandatory cases, but the banks took the position that if we did so, the problem is that their loan policies are such that there are people who, I mean, of their lending is via mortgage, but that their loans are such that they are, you know, like 20% down is required, etcetera, that there are people who cannot afford to have the loan and that leaves them with the alternative of personal property loan, and that we shouldn't eliminate that because if we did, we'd be restricting low income people's access. Do you have any thoughts about that?

[Rachel Siegel (Pew Charitable Trusts)]: So let me just make sure I understand you properly. It sounds like when you talk to lenders, they were concerned that lower income borrowers wouldn't be able to afford the mortgage?

[Speaker 0]: Wouldn't be able to qualify.

[Rachel Siegel (Pew Charitable Trusts)]: Oh, to qualify for a mortgage?

[Speaker 0]: Yeah. Like, for example, my impression is that the mortgages are generally 20% down and that the personal loans have lower down payments.

[Rachel Siegel (Pew Charitable Trusts)]: So, I'd like to take a look at the data and circle back to you a little bit on this. What I can say from our previous research is that, and this broadly across the country as opposed to specific Vermont. So that's what I want to take a look at. But in general, denial rates for manufactured home loans tends to be higher, both mortgages and personal property loans. But when we dig into that a bit more, folks who are able to qualify for FHA or VA often have much lower denial rates and various programs, the federal programs often don't require 20% down in order to make it easier for folks to qualify. Certainly thinking about portfolio loans, depending on the lender, they may have different criteria for a mortgage versus a home only loan or a personal property loan. But it seems like there should be a way of bridging that gap because in general, home only personal property loans have higher interest rates and shorter loan terms than mortgages, even when we look at home only mortgages. So from an affordability standpoint, a mortgage would usually be more affordable. And in general, mortgages tend to have lower denial rates than home only personal property loans, even when they're smaller. So I'd love to take a little deeper dive on that, but that's thinking through what we've researched so far. But I certainly can't tell you specific to any one lender what they would do or wouldn't do.

[Speaker 0]: Great. I

[Unidentified Committee Member]: have one last question.

[Speaker 0]: Okay, go ahead. I'm so sorry. Do need you. Go ahead. If you

[Leonora Dodge (Member)]: could just tell me if I'm looking at the slide about the mortgage payments that you gave us, Rachel, and I'm just trying to make sense. So, it shows that the number of payments that a Vermonter would make for a $100,000 loan would be 180 payments.

[Speaker 0]: It's a fifteen year mortgage versus probably a twenty year mortgage. Right, but so, here

[Leonora Dodge (Member)]: you're trying to point out the benefit to having access to a longer mortgage and I just, obviously you're paying, you're just paying a higher overall price for your home when you have longer to pay it.

[Speaker 0]: That's true.

[Leonora Dodge (Member)]: And so I just, you said that the savings in New Hampshire is 60 fewer payments, but it looks like it's 60 more payments. I'm trying to understand what

[Speaker 0]: New Hampshire has a slightly lower interest rate than the New Hampshire example. And it's got a is it longer or shorter? I've forgotten the slide.

[Leonora Dodge (Member)]: So like I can't just do a straight up. I multiply 180 times eight ninety two or 200 times seven forty six and I'm like $20,000 difference for the same $100,000 home. Yep.

[Rachel Siegel (Pew Charitable Trusts)]: So you're absolutely right. When you have more when you don't have a huge difference in interest rate and you do have a bigger difference in the number of payments, the overall interest over the life of the loan sometimes is more. And I think in this case, it would be. Basically, I did to look at this is I looked at the median interest rate paid by a home only borrower in New Hampshire and then in Vermont and both for the interest rate and the number of payments. So this is just to give a sense of the monthly payment. What we do see is some borrowers, and this is the same for single family site built homes, may choose a fifteen year mortgage compared with a longer one because they want to pay it off faster, because they want to pay less over the life of the loan. But oftentimes, there isn't an option. These terms tend to be shorter. Terms often are shorter, and there aren't a lot of options to extend it further out. But you're you're absolutely spot on that if one was to pay one hundred and eighty months at 6.88%, it would be less interest over the life of the loan than than the New Hampshire example.

[Leonora Dodge (Member)]: Yeah. No. I I I get I I'm just trying to well, the thing that confused me was the when in your box, it says savings in New Hampshire minus 60 under number of payments. It seems like it you're it would be more payments in in New Hampshire.

[Rachel Siegel (Pew Charitable Trusts)]: Yeah. You're right. It's just the way I did the math and and

[Speaker 0]: it.

[Rachel Siegel (Pew Charitable Trusts)]: So I apologize for that.

[Speaker 0]: Okay. Ashley, did you have a question? And then Gayle? My question is more conversational here so I can hold it. Okay, Gayle.

[Gayle Pezzo (Member)]: I just want to give an example of, say, three years ago, maybe a little bit longer. The difference between a chattel loan, the interest was 11.5. And to get a regular conventional mortgage was 6%. I believe, Rachel, it varies at times as well.

[Speaker 0]: Generally speaking

[Gayle Pezzo (Member)]: And only with a fifteen year mortgage. It's only recently in the last couple of years that the banks are allowing for a chattel loan up to twenty years, and that's that's even difficult. It's usually fifteen years.

[Leonora Dodge (Member)]: And then my last question, which I don't know if, Rachel, you're the person to ask this of, but are there any of the tax benefits of, if this is not a question for you, you can tell me, but you know, you, can you, obviously when you're just doing a personal property loan, you're not able to deduct your mortgage interest.

[Speaker 0]: You can deduct your personal property loan, deduct interest matter what. If you buy a dining room set and pay interest, can deduct it. That

[Rachel Siegel (Pew Charitable Trusts)]: is an important component that comes up in titling and what we started to see and we haven't delved deeply and I don't know this for Vermont yet. In some states folks who own their home as personal property are still paying real estate taxes. So they're they're not able to get a mortgage but they are Double way. Paying taxes as if it was real estate.

[Unidentified Committee Member]: That's what I

[Leonora Dodge (Member)]: was going to

[Unidentified Committee Member]: ask is if it I'd love to ask a a, alleged counsel whether how that affects the homesteading declaration. The homesteading declaration?

[Speaker 0]: Alright. Thank you. Thank you so much, Rachel. Really appreciate it. We are gonna take a break until twenty after Jeremiah Ward is the next Jeremiah, we're gonna take a little break, but we will be back in about ten minutes. Right? Sounds good. Thanks. All right. Thank you.