medium · Asset-Backed Securities asset-nuances
A manufactured housing (MH) ABS structure features an 'Extended Shifting Interest' lockout.
Why is this period typically 10 years compared to the 3-5 years seen in home equity ABS?
- Servicing costs for MH loans run structurally higher, consuming excess spread.
- MH losses tend to develop more slowly and peak much later in the pool's life.
- The MH investor base is simply more risk-averse and demands it.
- MH homes depreciate faster than site-built homes, requiring more immediate senior paydown.
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