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Home > Analysis and Commentary, Association, Election, Manufactured Home Communities, News, Politics, regulation, Trends > Manufactured Home Communities’ Dodd-Frank Moment Looms, Senator Elizabeth Warren Takes Aim at Several Manufactured Housing Institute Community Members

Manufactured Home Communities’ Dodd-Frank Moment Looms, Senator Elizabeth Warren Takes Aim at Several Manufactured Housing Institute Community Members

May 29th, 2019

 

ManufacturedHomeCommunitiesDoddFrankMomentLoomsSenatorElizabethWarrenTakesAimSeveralManufacturedHousingInstituteCommunityMembersMHProNews

On 5.28.2019, U.S. Senator Elizabeth Warren (MA-D), a rising 2020 Democratic presidential hopeful, issued letters to numerous manufactured home communities (MHCs).

 

Among those manufactured home (MH) communities she has named and taken aim at? Apollo Global Management/Inspire Communities, Blackstone, Brookfield Asset Management, Federal Capital Partners/Horizon Land Company, Havenpark Capital, Stockbridge, The Carlyle Group, and TPG Capital/RV Horizons, the later of which is associated with Frank Rolfe and Dave Reynolds.

 

Manufactured home community owners and independent industry members should mark your calendars. Because what is taking shape isn’t not just ‘coming,’ its advanced wave is already here. In several ways, it is shaping up as the community-sector’s version of the MH industry’s Dodd-Frank style moment.

About the Consumer Financial Protection Bureau (CFPB), Wikipedia says that “The agency was originally proposed in 2007 by then Harvard Law School professor and current US senator Elizabeth Warren.”  The same source added, “On September 17, 2010, President Obama announced the appointment of Warren as Assistant to the President and Special Advisor to the Secretary of the Treasury on the Consumer Financial Protection Bureau to set up the new agency.”

Manufactured home industry members are then reminded that the Dodd-Frank legislation gave birth to CFPB regulations reportedly cited by U.S. Bank, and other lenders in manufactured housing, to cease or curtail making manufactured home loans. Sam Landy, JD, President and CEO of publicly-traded UMH Properties is among those who made that point in an article linked here.

Against that backdrop, a routine connection between the firms Warren has addressed are direct or indirect ties to the Manufactured Housing Institute (MHI).  Several are listed as MHI members, others have different apparent connections to the Arlington, VA based trade group and its prime institutional backer, Warren Buffett led Berkshire Hathaway.

Another connection is that some firms addressed by Senator Warren were specifically mentioned in Last Week Tonight with John Oliver’s errantly named “Mobile Homes” viral video. As of this morning, that video has 6,029,326 views on YouTube.

The firms were also among those routinely targeted by Manufactured Housing Action (MHAction), including, but not limited to the co-authored white paper featured by the Washington Post.

 

“Billion Dollar Empire Made From Mobile Homes,” What Washington Post’s Peter Whoriskey Didn’t Report

 

Each of these are topics previously covered by MHProNews and/or MHLivingNews.  Each of these same issues are topics have largely been avoided – or have arguably been misleadingly, improperly and inadequately covered by bloggers in the industry’s trade media.

Recall that Warren Buffett, via dark money nonprofit channels, has funded the Tides, which funds MHAction.  Since MHProNews made that point in the in-depth report, linked below, MHAction’s website homepage footer was changed to reflect that fact.

 

Prosperity Now, Nonprofits Sustain John Oliver’s “Mobile Homes” Video in Their Reports

 

Rephrased, Buffett and Berkshire Hathaway’s various companies money have been backing both MHI and MHAction. Buffett is paying both sides.  For whatever reasons, the MHAction side seems to routinely obtain more effective media coverage in support of their stated goals than MHI does. That’s arguably obliquely reflected by the industry’s new home shipment levels, which have had 7 months of year-over year declines.

One might ask, how is that possible during an affordable housing crisis? For new readers, that report can be accessed later by clicking on the text image box shown.

 

Shocking, True State of the Manufactured Housing Industry, plus Solutions for Profitable, Sustainable Growth – May 2019

 

Manufactured housing professionals must also bear in mind that she has made strong statements about antitrust activity, which if pursued, could prove useful for manufactured housing’s independents. That’s been spotlighted by reports like the one, linked below.

 

 

Warren and other Senate Democrats – including other 2020 presidential hopefuls – signed a letter earlier this month that fingers Clayton Homes, and Berkshire Hathaway lending in manufactured housing.

 

Senate Democrats – Including 2020 Presidential Contenders – Ask CFPB Protect Consumers Against Predatory Lenders — Point Finger at Clayton Homes, Berkshire Hathaway Lending

 

MHProNews sources in Washington, D.C. and beyond said weeks ago that a new storm is brewing for the industry. Aren’t these indicators of how it is shaping up?

 

Senator Elizabeth Warren’s Letters to Community Owners

In Senator Warren’s letters to corporate leaders for the organizations named above, Warren cites MHI statistics, and then cites the “Private Equity Stakeholder Project, MH Action, and Americans for Financial Reform Education Fund, “Private Equity Giants Converge on Manufactured Homes: How private equity is manufacturing homelessness & communities are fighting back,”” Newer or first time readers here are reminded that MHProNews often turns quoted text bold and brown to make it pop, but otherwise leaves the cited quote unaltered.

The letters from Senator Warren’s office have been obtained by MHProNews, and are available as a download, linked further below.  Some are co-signed by Dave Loesback, a member of Congress from Iowa.

Gannet-owned newspapers, including the Des Moines Register, have done a series of reports that have blasted Havenpark Capital, one of those firms addressed by Warren. In the prior report, linked below, MHProNews noted that a Berkshire Hathaway firm brokered the deal that resulted in the bruhaha over MHI member Havenpark Capital.

 

Gannett Media Exposés, MH Community Owner Moves Sparks Outrage – IEDs of Manufactured Housing

 

There is word sources in Iowa that the office of Senator Bernie Sanders (VT-I), another Democratic 2020 presidential hopeful, also contacted residents impacted by Havenpark’s aggressive “predatory” hikes in site fees or ‘lot rent.’  It was announcement by Havenpark to residents of steep increases in site fees that sparked residents to organize and ‘resist’ those increases.

Iowa legislators took up possible measures that aimed to counter such aggressive tactics by community investors, but failed to pass it during their legislative session.

With those items in the backdrop, the letters from Senator Warren largely follow a similar format.

For example, beyond citing MHI statistics, they then pivot and routinely cite statistics and claims from the MHAction co-branded “Private Equity Giants Converge on Manufactured Homes: How private equity is manufacturing homelessness & communities are fighting back” white paper.  That document is available linked here as a download.

What isn’t cited by Warren are statistics that MHI claims to have generated about resident satisfaction.  That purportedly positive research the geniuses at MHI have hidden behind a login on their website.  By contrast, MHAction makes their attack white paper available as a free download. Those factoids about MHI are reminiscent of what Mark Weiss, JD, President and CEO of the Manufactured Housing Association for Regulatory Reform (MHARR) called “The Illusion of Motion.”  MHI meetings and activities appear to be doing something, but in fact appear primarily for show.

 

The text from Warren’s letter to Havenpark Capital corporate leaders is below. Note that sections of the letter are cross referenced with footnotes that are also included in the text.

CongressofUnitedStatesLetterheadMay282019ManufacturedHousingInstitutememberHavenparkCapitalMHProNews

J. Anthony Antonelli
Managing Partner
Havenpark Capital
51 W Center St.,
Suite 600 Orem,
Utah 84057

 

Robbie Pratt
Managing Partner
Havenpark Capital
51 W Center St.,
Suite 600 Orem,
Utah 84057

Dear Mr. Antonelli and Mr. Pratt:

We write today regarding Havenpark Capital’s investments in manufactured housing communities (MHCs), and to request information about how Havenpark Capital manages the MHCs it owns.

Manufactured homes, sometimes referred to as “mobile homes,” are factory-built structures that are transported and anchored on a plot of land. 1 Individuals who purchase manufactured homes can place those homes on plots of land they already own, or they can place their homes on rented land. Nearly 3 million manufactured homes in the United States are located in ” land-leased communities,” or MHCs, in which MHC owners rent out the land where individuals place their manufactured homes.2

Manufactured homes provide a critical avenue to affordable home ownership for millions of Americans. Compared to “new or existing site-built housing,” manufactured housing ” is 35 to 47 percent cheaper per square foot.”3 Manufactured home purchasers typically spend no more than $200,000 on housing, and sometimes can find homes for less than $10,000- a price

 

———– (MHProNews editor’s note: the Urban Institute also has ties to Warren Buffett)

1) U.S. Department of Housing and Urban Development, “Manufactured Housing and Standards- Frequently Asked Questions,” https://www.hud.gov/program offices/housing/rmra/mhs/fags.

2) Private Equity Stakeholder Project, MH Action, and Americans for Financial Reform Education Fund, ”Private Equity Giants Converge on Manufactured Homes: How private equity is manufacturing homelessness & communities are fighting back,” February 2019, http://pestakeholder.org/wp-content/ uploads/2019/02/PrivateEquity-Giants-Converge-on-Manufactured-Homes-PESP-MHAction-AFR-0214 19.pdf.

3) Urban Institute, “Manufactured homes could ease the affordable housing crisis. So why are so few being made?” Laurie Goodman, Edward Golding, Alanna McCargo, and Bhargavi Ganesh, January 29, 2018, https ://www.urban.org/urban-wire/manufactured-homes-couId ease-affordable-housing-crisis-so-why-are-so-few being-made.

 

“substantially lower than typical housing.”4 These low prices make manufactured homes attractive purchases for low-income and rural Americans. 5 Around 22 million Americans live in manufactured homes. 6

Twenty years ago, small, local, “mom and pop” businesses were the primary owners of MHCs. 7 In recent decades, however, ownership patterns have shifted. Today, “there is a growing trend among some of the largest private equity firms and institutional investors to acquire assets in the manufactured housing sector.”8 The largest 50 MHC owners own a cumulative 680,000 home sites, which represents a “26% increase between 2016 and 2018. “9

Investment companies are attracted to MHCs, in large part, because MHCs are “stable source[s) of revenue, including during economic downturns.” 10 This stability stems from residents’ lack of economic mobility. Manufactured homes can be difficult to resell, and the low-income homeowners who reside in manufactured homes often do not have access to more affordable housing options. 11 As a result, investment firms can expect a consistent revenue from the manufactured home owners renting land in MHCs.

MHC residents’ lack of economic mobility also makes them vulnerable to exploitation- and investment firms often engage in predatory management practices that boost profits at the expense of manufactured home owners. Investment firms exploit residents’ ” limited mobility” by “dramatically increase[ing] rents to quickly increase profits.”12 According to a recent report in the Des Moines Register, residents in two Iowa communities learned that their lot rents would increase 69% and 58% after a private firm purchased their MHC. 13 Though investment firms claim to use rent increases to pay for maintenance and community improvements, residents report drastically different experiences. According to one California MHC resident, her community’s private equity owner

—- (Editor’s Note: Gannett owns USA Today, and several newspapers that have covered such stories —

4) Private Equity Stakeholder Project, M H Action, and Americans for Financial Reform Education Fund, “Private Equity Giants Converge on Manufactured Homes: How private equity is manufacturing homelessness & communities are fighting back,” February 2019, http://pestakeholder.org/wp-content/uploads/20 19/02/PrivateEguity-Giants-Converge-on-Manufactured-1-lomes-PESP-M HAction-AFR-021419.pdf.

5) Id.

6) “Manufactured Housing Institute,” 2018 Manufactured Housing Facts: Industry Overview,” June 2018, https://www.manufacruredhousing.org/wp-content/uploads/2018/06/2018-MHI-Quick-Facts-updated-6-2018.pdf.

7) Private Equity Stakeholder Project, MH Action, and Americans for Financial Reform Education Fund, “Private Equity Giants Converge on Manufactured Homes: How private equity is manufacturing homelessness & communities are fighting back,” February 2019, http://pestakeholder.org/wo-content/uploads/2019/02/PrivateEquitv-G lants-Converge-on-Manufactured-Homes-PESP-M HAction-AFR-0214 19.pdf.

8) Associated Press, “Private equity firms rapidly investing in mobile home parks,” Zachary Oren Smith, April 20, 20 19, https://www.apnews.com/fcaf55d3ef8342b6a8e79fo06e I 5cc50.

9) Id.
10) Private Equity Stakeholder Project, MH Action, and Americans for Financial Reform Education Fund, “Private Equity Giants Converge on Manufactured Homes: How private equity is manufacturing homelessness & communities are fighting back,” February 2019, http://pestakeholder.org/wp-content/uploads/2019/02/PrivateEquity-Giants-Converge-on-Manufactured-Homes-PESP-MHAction-AFR-021419 .pdf.
II) Id.
12) Id. 13 Des Moines Register, “‘Investor firm that hiked lot rents at Iowa mobile home parks is subject of complaints in other states,” Lee Rod, May 5, 2019, https://www.desmoinesregister.com/story/news/20 19/05/05/mobile-hometenants-wary-history-complaints-havenpark-capital-partners-waukee-north-liberty-iowa-ia/3640 I 06002/.

 

[C]laims that they’ve spent over $100,000 on capital improvements in our community, and justifies rent increases because of that. But we don’t see what improvements they’ve made … What we do see is that they’ve promised their investors a return of 7-8%. The same amount our rents went up. 14

Unable to afford moving, and unable to sell their manufactured homes, some residents report that they are forced to choose between “paying for increase[ed] housing costs and other basic necessities, like food and medicine, or abandoning their homes.” 15

Havenpark Capital is an active investor in the manufactured home community market and owns over 25 mobile home communities. 16 Havenpark Capital has reportedly “racked up complaints related to its business practices with consumer protection officials and housing advocates in several states,” including Ohio, Iowa, Michigan, and Indiana. 17 To help us better understand the management practices that your company engages in, and the impact of those practices on the MHCs it owns, please provide answers to the following questions no later than June 18, 2019:

  1. How many manufactured home communities does Havenpark Capital own? For each community, please provide the following information:
    a. The number of mobile home sites;
    b. The number of occupied mobile home sites;
    c. The total number of community residents; and
    d. The average and median income of the community residents.

 

  1. According to recent reports, investment firms that purchase MHCs often drastically raise community rents as a means of making quick profits. For each MHC owned by Havenpark Capital, please provide the following information:

 

  1. What was the average lot rent for residents in the last full calendar year the day before Havenpark Capital purchased the community?
  2. What is the average lot rent for residents today?
  3. How many times has Havenpark Capital raised rents in the community?

 

 

——— (Editor’s note: Gannett media outlets, plus nonprofits tied to Warren Buffett/Berkshire Hathaway are common denominators in this referenced items) ——

14) Private Equity Stakeholder Project, MH Action, and Americans for Financial Re form Education Fund, “Private Equity Giants Converge on Manufactured Homes: How private equity is manufacturing homelessness & communities are fighting back,” February 2019, http://pestakeholder.org/wp-content/uploads/2019/02/PrivateEquity-G lants-Converge-on-Manufactured-Homes-PESP-MHAction-AFR-02 1419.pdf.

15) Id.

16) Des Moines Register, ” Investor finn that hiked lot rents at Iowa mobile home park is subject of complaints in other states,” Lee Rood. May 5, 2019, https://www.desmoinesregister.com/storv/news/2019/05/05/mobile-hometenants-wary-history-com plaints-havenpark-capital-partners-wa ukee-north-1 i berty-iowa-i a/364 0 I 06002/.

17 Id.

 

  1. What was the rationale for those rent increases?
  2. How many residents have been evicted since Havenpark Capital took over the community?

 

  1. How many manufactured homes have been abandoned since Havenpark Capital took over the community?

 

  1. What additional fees, if any, does Havenpark Capital charge residents at each of the MHC communities it owns?

 

  1. What is the sum total of rent collected by Havenpark Capital for each of the last five years (or, for the years since Havenpark Capital gained control of the MHC community, if the number is less than five)?

 

  1. What is the sum total of all other fees collected by Havenpark Capital for each of the last five years (or, for the years since Havenpark Capital gained control of the MHC community, if the number is less than five). Please provide a summary of each of the largest types of fees collected.

 

  1. What restrictions does Havenpark Capital place on the behavior and activities of residents living in its communities? For each MHC Havenpark Capital owns, please provide copies of the terms residents must agree to comply with as a condition for living in the community.

 

  1. For each MHC owned by Havenpark Capital please provide a list of profits reported to shareholders, investors, or limited partners for each year Havenpark Capital owned the community.

 

Sincerely,

 

SenatorElizabethWarrenMA-DemocratSignatureDaveLoebsackMemberOfCongressSignaureIOWADemocratMHProNews

— End of letter to Havenpark Capital —

 

The complete list of letters are available linked here as a download, and include those addressed to:

  • Apollo Global Management/LLC Inspire Communities,
  • Blackstone,
  • Brookfield Asset Management,
  • Federal Capital Partners/Horizon Land Company,
  • Havenpark Capital,
  • Stockbridge,
  • The Carlyle Group,
  • TPG Capital/RV Horizons. The latter firm has Dave Reynolds and Frank Rolfe as well-known partners.

Recall that Nathan Smith, a partner in scandal-plagued SSK Communities, while MHI Chairman, told MHProNews that the association had to be honest with itself and admit that it had not always been proactive.  That’s demonstrably accurate, as even then MHI Chairman Tim Williams, President and CEO of Berkshire Hathaway owned 21st Mortgage Corporation, said that the “horse left the barn” on issues related to the Safe Act and later CFPB woes.

 

Where is MHI’s response or reaction to the issues being raised?  Why is MHI standing by apparent ‘black hat’ behavior?

Recall too that MHProNews exclusively reported several weeks ago that the John Oliver hit video “Mobile Homes” was causing a stir among some on Capitol Hill and in the federal bureaucracy.

There are calls for rent control by residents in Iowa and elsewhere. Rent control measures can be viewed as more readily endurable by larger firms, but pose an increased burden on especially mom-and-pop independents.

Never mind that rent control has proven to be ineffective, just as the Nixon era ‘wage and price controls’ failed to achieve their goal. Economic principles work – or don’t – regardless of partisan labels.  Democratic President John F. Kennedy’s tax cuts worked as did GOP President Ronald Reagan’s.

To wrap this report, bear in mind that roughly 1/3 of new manufactured home shipments have in recent years gone into manufactured home land-lease communities.  What happens in communities reverberates through several parts of the industry.  Rephrased, this could foreshadow an impact on not just communities, but producers and suppliers, among others. During the recent downturn, that’s an additional challenge that the industry and those seeking affordable housing does not need.

That’s this afternoon’s exclusive look at the latest in manufactured home “Industry News, Tips, and Views Pros Can Use” © where “We Provide, You Decide.” © ## (News, analysis, and commentary.)

 

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