What is the difference between a chattel loan and a mortgage for a factory-built home?

A chattel loan is secured only by the home itself, treated as personal property, while a mortgage is secured by the home and the land together as real property. The CFPB found that in 2019 about 42% of manufactured home purchase loans were chattel loans. Those loans had a median interest rate of 8.6% versus 4.9% for manufactured home mortgages, and a shorter median term of 23 years versus 30. Chattel loans often close faster and cost less up front, but the CFPB notes they carry fewer consumer protections than mortgages, which fall under federal settlement-disclosure rules. Rates and terms vary by lender and by borrower, so these are national medians, not quotes.

Sources

• Manufactured Housing Finance: New Insights from the Home Mortgage Disclosure Act DataConsumer Financial Protection Bureau
• CFPB Finds Majority of Manufactured-Housing Borrowers Have Expensive LoansConsumer Financial Protection Bureau