Loan Contracts

Once the loan contracts are signed, consumers cannot change their mind and get their downpayment back, even if the home has not been delivered and no site preparation started. The law requiring refunds of "deposits" does not apply to "down payments," so once a deposit becomes a "down payment" (when it is transferred to the loan document as part of the consumer's share of the purchase price), it is no longer refundable. Nor does Texas law provide for a "cooling off" period to consider the details of a manufactured home loan.

Ms. G. of Pharr, Texas changed her mind a few days after signing the loan documents and purchase contract for an Oakwood home (but before delivery). According to Ms. G., she asked if she would be able to change her mind and get her down payment back at any point and sales people had assured her she could. Oakwood denies any such representations. Ms. G. was concerned that she was not going to be able to make the payments. And her loan payments were scheduled to increase in three steps from an initial $370.02 to $515.26 for most of the life of the loan (28 years). In a letter to the Attorney General, Oakwood responded, "The fact that Ms. G. has had a change of heart about the home does not relieve her from her contractual obligations to OMHI."(25)

Lenders generally have a strong interest in a consumer's ability to repay a loan, and most lending law assumes that an independent loan approval process will eliminate people who are over extended. But in the manufactured housing market, many of the lenders (Oakwood, Vanderbilt, Countryplace, and others) are affiliated with the manufacturer, and share an interest in high sales volume.

Independent lenders have recently emphasized volume over quality, and tens of thousands of loans to people who could not afford them are already foreclosed. James Clifton of the Manufactured Housing Institute recently said, "In many cases you were lending to people whose credit scores suggest they were never capable of making a payment in their lives." (26)

A mandatory "cooling off" period of at least five days, with full and final disclosure of loan terms, would give consumers the opportunity to realistically assess their ability to pay before finalizing a deal.

Home Delivery:
This is not my
Beautiful House!

Manufactured homes of the same model should be very similar, one to the next. They are built in a factory with standardized construction methods, a variety of floor plans, and standard upgrade packages. The model home that a consumer walks through at the dealership should be just like the actual home that arrives on the consumer's lot, with any changes requested by the buyer. This is why most consumers accept the fact that they must sign contracts and put money down without actually seeing their own home constructed first.

But sometimes the home that arrives is very different from the model home, and consumers who try to reject the home upon delivery may have to get a lawyer to get them out of the deal-although the Deceptive Trade Practices Act clearly prohibits any kind of bait and switch.(27) Twenty nine families, or about 7 percent of complainants, reported delivery of a very different home from the one they thought they purchased.

Sometimes consumers reject the home because it was poorly constructed, lacked special features, or was otherwise different from the model they walked through. An Edinburg family purchased a Southern Energy double wide from E-Z Manufactured Housing, putting $5,625 down. But when the home arrived, the family rejected it outright and wanted their down payment back. "We were in shock. The mobile home was not built like I had ordered it. All of us were disappointed with the construction and workmanship of the home. It was constructed poorly..[the salesman was] disappointed with the mobile home. He spoke to... a representative of Southern Energy. He said we would have to take legal actions." According to the dealership, the family ultimately accepted the home and the dealership repaired the items of concern.(28)

An Itasca, Texas couple selected their home because the salesperson offered several special features, including a built-in stereo, six inch interior walls, shutters all the way around (not just on the front), and a popcorn acoustic ceiling. The home arrived with 4 inch interior walls, shutters on the front only, no stereo, no french doors, and no popcorn ceiling. According to the dealer, the manufacturer no longer built the home with the requested features. The manufacturer said some of the special features were not on the order form. The dealer would not refund their deposit (see discussion of Special Order Homes, p. 24).(29)

About half of these families reported receiving a home that was smaller, older, used instead of new, without upgrades, or otherwise less valuable than the make, model, year or type of home they thought they purchased. When they tried to reject the homes they faced loss of their down payment, a bad credit report, and mandatory arbitration.
Ms. S. of Eagle Lake, Texas signed loan and purchase contracts to buy a single wide mobile home for $27,000. According to Ms. S., the home that was delivered was not the one she ordered. It did not have two bathrooms and the arrangement of rooms was incorrect, so she refused to accept it. The dealer refused to refund her $3,100 down payment.(30)

Similarly, when a 74-year old Porter, Texas woman refused to accept delivery on a home that was not what she ordered (an older model year), the dealer refused to take it back and the lender reported her to the credit bureau. The home sat for three months, according to the consumer, before the lender picked it up for resale, and she was turned down for credit when she later attempted to buy a car. "I had nothing against my credit when I signed the contract, and Green Tree refused to delete from my credit," she wrote. After correspondence from the Attorney General, Green Tree agreed to "request a deletion of any negative credit reporting it may have placed on the credit report."(31)

Mr. E. of Breckenridge bought a mobile home from a Ft. Worth dealer in 1998, but when the home was delivered and he saw the title he found that the home was 4 feet shorter and 112 sq. feet smaller than he expected. "We based our purchase almost entirely on cost per square foot in comparison to other homes we were looking at," they told the Attorney General. Although the dimensions he thought he purchased were typed throughout his closing documents, the dealer explained that this was merely a typographical error and suggested that Mr. E. go to mandatory arbitration.(33)

A Lancaster, Texas consumer responded to a flier from a dealership in Hillsboro describing a repossessed three bedroom double wide. She looked at the home, took the flier and decided to buy it. Believing she was buying the home in the flier, she signed all the closing papers, but when the home was delivered it was a completely different home-different year, smaller by 96 square feet, different floorplan. It turned out this smaller home was the make and model actually written into some of her closing documents. Three months later she hired a lawyer to force the company to rescind the loan contract and refund her money.(34)

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