what is a chattel mortgage 
a chattel mortgage is a loan to purchase movable personal property such as a manufactured home or construction equipment the property or chattel secures the loan and the lender holds an ownership interest chattel loans are commonly referred to as security agreements the terms personal property security lien on personal property or even movable hypothecation are other synonyms for a chattel mortgage types of chattel mortgagesborrowers secure chattel mortgages to purchase moveable property these loans tend to have shorter terms than regular mortgages if a borrower defaults on a chattel mortgage the creditor or lender can take possession of the financed property and sell it to pay off the loan chattel mortgages finance mobile or manufactured homes on leased land borrowers cannot opt for a traditional mortgage since the land does not belong to the homeowner instead the mobile or manufactured home is considered personal movable property and security for a chattel mortgage the financing arrangement remains in effect even if the mobile home is moved to a different location the u s department of housing and urban development hud the u s department of veterans affairs va and the u s department of agriculture s rural housing service all have programs to guarantee manufactured home loans issued by approved private lenders to eligible borrowers 12 a hud entity the federal housing administration fha manufactured home loan insurance program guarantees loans for manufactured homes without land 3businesses use chattel mortgages to purchase new or used heavy equipment for construction farming or other purposes a chattel mortgage allows the buyer to use the equipment while the lender retains an ownership interest the lender can repossess the equipment and sell it to pay off the loan balance if the buyer defaults the u s small business administration provides low cost financing for business related equipment like other government agencies it doesn t issue loans but guarantees eligible loans issued by an approved list of commercial lenders its 504 loans provide funding for long term machinery and equipment purchases 4see our picks for best equipment financing companies chattel mortgage vs traditional mortgagea chattel mortgage differs from a traditional mortgage in that the lender owns the property until the borrower has fully paid the loan with a regular mortgage the lender isn t the owner but holds a lien on the property allowing it to take possession in the event of a default with a chattel mortgage ownership transfers to the buyer at the end of the mortgage term assuming all the payments have been made chattel mortgages tend to carry higher interest rates and have fewer consumer protections than regular mortgages 5 they also have shorter terms so monthly payments may be higher examples of chattel loansvehicles airplanes boats farm equipment and manufactured homes are common examples of assets often financed with a chattel loan approximately 42 of the loans used to purchase manufactured homes are chattel loans according to the consumer financial protection bureau cfpb 5 chattel loans have specific rules which vary according to the property and state or federal law in florida chattel home loans must be listed in a public registry so that third parties can be aware of them before entering into financing agreements with potential borrowers who want to put up the property as security for another loan 6 for security agreements associated with aircraft chattel mortgages must be recorded with the aircraft registration branch of the federal aviation administration 7mortgages on personal property like chattel loans typically carry higher interest rates than traditional mortgages and come with shorter terms 