medium · Asset-Backed Securities asset-nuances
Why can loss severity on manufactured-housing chattel loans be higher than on traditional auto loans?
- A government guarantee requires every recovered manufactured home to be destroyed before any resale proceeds can be collected.
- Federal law fixes every manufactured-housing chattel loan at a 5% rate, which mechanically eliminates collateral recoveries.
- Transport, storage, site work, and disposition costs can consume much more of a manufactured home's resale proceeds.
- Federal law prohibits resale of repossessed manufactured homes, so every default produces a total collateral loss.
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