California State Senate Passes Legislation to Expand Home Financing Options

SACRAMENTO – Today, the California State Senate approved Senate Bill 996 by Senator Steve Padilla (D-San Diego). The bill would allow manufactured homeowners to title their homes as real property, allowing access to more favorable financing options and opportunities to build generational wealth.

Manufactured homes are a low-cost, but underutilized, form of housing; however, finding affordable financing options for these homes has historically been challenging. Under current California law, a manufactured home can only be classified as real property for tax purposes when it is affixed on a permanent foundation. Instead, homeowners are required to title their homes as personal property, similar to an RV or car.

According to research by the Pew Charitable Trusts, inability to classify their homes as real property causes many manufactured-home borrowers to rely on high-risk contract financing with very high interest rates and limits access to other real property benefits. For example, high-cost loans available for personal property have interest rates anywhere from 8-12% while conventional mortgage financing rates are around 5-7%.

Analysis by the Pew Charitable Trusts shows that a “$100,000 mortgage will save a typical borrower roughly $49,000, compared with home-only financing, over the life of the loan.” This is a significant saving for California families and could move the needle on making homeownership a more realistic dream for all.

“Expanding access to homeownership is a vital step in supporting affordability and wealth building for working class households,” said Senator Padilla. “Manufactured homes are a part of this solution, but currently a legal technicality has made affordable financing on manufactured homes unnecessarily difficult and expensive, effectively creating a tax on working families. We need to align our policies to make owning a manufactured home more affordable for Californians.”

SB 996 would create an opt-in process allowing homeowners to title their home as real property. This bill is a meaningful step toward ensuring that the millions of Californians who plant roots in manufactured homes have access to the same financial tools and options as any other homeowner.

SB 996 is supported by a broad coalition of housing and community advocates and is sponsored by Neighborhood Partnership Housing Services and Resident Owned Communities USA.

"Since 1980, California has taxed Manufactured Homes, also called ‘mobilehomes’ as they do all other real-property homes. But on paper, we've "titled" the home as personal property, rather than real property, which means legally, these folks aren't recognized as homeowners because they do not own the land under their home” said Clemente Mojica, President and CEO of NPHS. “SB 996 expands safe, strong, and fair financing options for all of California's manufactured homeowners."

SB 996 passed the Senate on a vote of 37-0. The bill now heads to the Assembly.

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Steve Padilla represents the 18th Senate District, which includes the communities of Chula Vista, the Coachella Valley, Imperial Beach, the Imperial Valley, National City, and San Diego. Prior to his election to the Senate in 2022, Senator Padilla was the first person of color ever elected to city office in Chula Vista, the first Latino Mayor, and the first openly LGBT person to serve or be elected to city office. Website of Senator Steve Padilla: https://sd18.senate.ca.gov/