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Whistleblower! Ex-Clayton Homes Team Member on TV Denounces Manufactured Housing Giant’s Practices

December 5th, 2018 No comments

 

WhistlblowerExClaytonHomesTeamMemberOnTVDenouncesManufacturedHousingGiantsPracticesDailyBusinessNewsMHproNews

Foreword: a Manufactured Housing Institute (MHI) member messaged our publisher, “You seem to have conceptual IQ [and] that is more important than spelling ability.”

 

That there are divisions in manufactured housing ought to be self-evident. That’s true for any industry or large group. But among the many questions that ought to be asked, are those divisions in manufactured housing (MH) bad?

Are some distinctions within the MH Industry useful — or even good?

Within companies there are different points of view too.  The larger the organization, the more points of view will exist.

It goes without saying that Clayton denies recurring allegations that have surfaced in 2018, that have been visible for some years in mainstream media. Before we get into the Clayton whistleblower mainstream TV news video, this topic is serious enough where it merits a giant step back for perspective.

 

MH Divisions

It goes without saying that neither MHI, nor the Manufactured Housing Association for Regulatory Reform (MHARR), are entirely monolithic organizations. Because there are some dual members of both national trade groups, there have at times been some in MHVille that mistakenly believe that the two are one in the same.

Hardly. A close look at the track records of the two trade groups make it abundantly clear that there are real differences in style, goals, and more.

There are those in manufactured housing who believe there should only be one national trade group.  To that point – we ask, if that is logical – then why are there so many trade groups in:

  • Mainstream housing: National Association of Home Builders (NAHB), National Association of Realtors (NAR), Mortgage Bankers Association (MBA), and on down the list or remodeling, finance, and more.
  • Automotive – According to Wikipedia, there are some 29 pages of associations in the automotive field. Just starting with A: Auto Care Association. Alliance of Automobile Manufacturers. American Automobile Association. American Highway Users Alliance. American Hot Hod Association. American Motor League. Association of Global Automakers.
  • How about RVs? There are producers, dealers, owners, suppliers, and a plethora of trade groups that represent the varied interests of Recreation Vehicles (RVs). FYI – for those who aren’t into RVing, an RV is not just a motorized vehicle, towable RVs are a huge part of the RV business. Some of those towable RVs are de facto a competitor to manufactured housing.  FEMA orders for RVs vs. MH are but one example.

So, if there are so many trade associations in other industries, why are there so few manufactured housing national trade groups?

That is arguably a problem for the manufactured housing industry.  There are inherent conflicts of interest in having manufactured home (MH):

  • Communities
  • Producers
  • Suppliers
  • Lenders and Financial Services
  • Retailers
  • Transporting and Installation
  • Professional Services and more

all in one trade association.

The proof is found in the results vs. the claims of MHI.  For all the bluster and what one ex-MHI member called their ‘Razzle Dazzle’ at appealing getaway spots, the declining sales of HUD Code manufactured housing for two straight months is all the evidence needed that MHI is at its core ineffective at best.  The report hot-linked via the box below can be read later for greater depth of understanding of this issue.

 

“Pants on Fire” – Latest New Manufactured Housing Shipment Report

 

As fabled author Adam Smith said in the Wealth of Nations,People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” Merely readingantitrust guidelines at an MHI meeting doesn’t automatically mean that monopolistic activity isn’t at play. When a high-profile congressional representative (see further below) and others in Congress raised that very concern about monopoly, why haven’t others in manufactured housing trade media done the same, save MHProNews?

 

The Elephant in the Room 

It was almost funny when some years ago when a now-former MHI leader said at one of their meetings that the ‘elephant in the room’ was Danny Ghorbani and MHARR. That’s a tip of the hat to the outsized-shadow they’ve cast, but the obvious actual elephant in the room is Clayton Homes, and the array of Berkshire Hathaway brands working in manufactured housing.

There is one kind of value to having Berkshire in manufactured housing, but it arguably already existed with Sam Zell of Equity LifeStyle Properties (ELS) fame and is limited to this next point.

Warren Buffett has given his seal of approval on the common sense value of manufactured housing.

But beyond that, there has been years of “consolidation” of manufactured housing production, retail, lending, supply, and more in our industry ever since Buffett-led Berkshire Hathaway entered our industry.

Our HUD Code manufactured home industry’s sales have overall declined – not rose – since Clayton and Oakwood were acquired by Berkshire.

 

ManufacturedHousingSHipmentsBloombergQuintFactoryBuiltRebuidRecoveryDailyBusinessNEwsMHproNEws

See related report, linked here.

 

There are a variety of reasons why the Washington, D.C. based Manufactured Housing Association for Regulatory Reform (MHARR) has argued that there must be one or more new post-production trade groups. We’ll refer readers to MHARR’s report, when they declined expanding to compete with MHI, because they believe that the industry should be more like housing, automotive or other industries with a myriad of representative bodies.  That is a natural way of blocking conflicts of interest that are arguably evident at MHI.

 

MHARR Releases Study Recommending Independent Collective Representation for Post-Production Sector

 

It should be noted that the Manufactured Housing Improvement Act of 2000 (MHIA) was achieved when MHARR, MHI and state association came together on areas of mutual interest.  But that is different than unity under one umbrella, which has demonstrably resulted in far lower shipment levels than existed in the late 1990s.

Kevin Clayton has been in the mainstream news several times in recent weeks, since the MHProNews exclusive in the hot-linked box below was published.

GIGO, Esther Sullivan, Clayton Homes, Boston Globe, GSMOL on ‘Manufactured Insecurity-Mobile Home Parks and Americans’ Tenuous Right to Place’

 

But the reality is that what could have been done in 2011 to promote the industry and growth – according to Kevin’s own statement in a friendly video interview – has been allowed to drag on until 2018.  For whatever reasons, there is no denying that what MHI and Clayton have done in the last two years has had no appreciable change in the modest growth the industry has had, especially when compared to the strong growth of the RV industry.

ManufacturedHomeMHShipments1990-2017DailybusinessNewsManufacturedHousingMHProNews600

RVsshipmentsTrailedMH1998WinnebagoDailyBusinessNewsMHProNews

So while

  • MHI’s Lesli Gooch has defended Clayton/Berkshire against charges of monopolizing the industry in a response to Doug Ryan at Prosperity Now, or
  • Clayton Homes has denied to local, regional, and national media the varied allegations against them,

there is also no denying that the claims keep popping up. In fact, when MHProNews offers MHI or Knoxville’s brands the opportunity to respond to reports like this, they’ve passed.  Why, if they had a good defense, would they miss out on the opportunity?

It is arguably absurd that the elected leadership of MHI’s current and prior 2 chairman have had serious negative media coverage, and yet have been allowed to continue as chair.  What image does that give the outside world about manufactured housing, or MHI?

ManufacturedHousingInstituteMHIBoardofDirectors1242018DailyBusinessNewsMHProNews

It is also absurd that that all three of the current and prior chairs have clear and deep ties to Berkshire Hathaway.  The real elephant in the room is Clayton and the Berkshire brands. If they want to claim leadership of the industry – and MHI and Clayton repeatedly do so – then the results of the industry logically fall at their feet.

LouisianaManufacturedHousingAssociationOklahomaMHAOManufacturedHomeDailyBusinessNewsMHproNews

Louisiana is one of the top ten states for manufactured home shipments in recent years, per data collected by HUD and reported by MHARR. Clayton Homes has a serious presence in the state. Yet, sales are declining. Why???

And those results have been towards ever more consolidation of the industry in the hands of a few, including Clayton Homes and their sister companies involved in manufactured housing.

ClaytonHomesOakwoodHomesBerkshireHathawayMarketShareofManufacturedHousingEndof2003DailyBuisnessNewsMHanufacturedHousingIndustryProNews

One more point must be made. When the allegations of racism and other claims of financing malfeasance were lodged against Clayton and their related lenders – 21st Mortgage and Vanderbilt Mortgage and Finance – first surfaced, MHProNews and MHLivingNews leapt to their defense. Why?  Because we knew of no such examples, and asking some industry pros, they said similarly.

Lies, Advocacy Journalism and Statistics – Seattle Times/BuzzFeed Attacks, Warren Buffett’s Clayton Homes Defends – charges of Racism and Discrimination – Critical Analysis

 

But as the claims have continued, and other facts emerged, we looked deeper.  Our understanding of the issues has matured, in part with input from others in manufactured housing.  Unlike MHI or Clayton, which rarely wants to admit in public an error, our publisher has said ‘mea culpa’ several times, as we have pivoted to our clarified understanding.

 

ClaytonHomesSkylineChampionCavcoIndustriesMarketShareManufacturedHousingIndustryConsolidationGraphicPieChartMHProNews-e1528746976415

With that tee up, we now show the video from the Clayton headquarters – the Knoxville metro’s own TV news media – is shown below.

 

 

Former Clayton Team Member Blows the Whistle on TV on Clayton Homes Business Practices

With that backdrop is this ongoing controversy about Clayton Homes and concerns over racism and unjust lending practices.

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Maxine Waters is among those who signed the letter that this local Knoxville TV news media report reflects.

ClaytonHomesSubsidiariesDiscriminateLowModerateIncomeMinorityBuyersHighCostLoansLeaveMaxineWatersCA-DClaytonlogo21stMortgageLogoVanderbiltMortgageLogo

One of several reasons to provide this to 2018 Knoxville TV news report to industry members at this time is that Waters will likely become the next chairperson for the important House Financial Services Committee.

 

CongressAsksDOJInvestigateClaytonHomesCreditTwitterWikipediaMHProNews

U.S. Representatives Maxine Waters (D-CA), Keith Ellison (D-MN), Emanuel Cleaver (D-MO), Mike Capuano (D-MA). Image credit, Twitter, Wikipedia.

 

Waters has called Clayton and Berkshire ‘near monopolies.’ That charge may take on new meaning in 2019. The Democrats have an anti-monopoly plank in their revised platform.

 

As the Daily Business News on MHProNews has previously documented, there are voices across the left-right divide that are seeing the challenges to small and independent businesses from monopolies.

Monopolies and growing consolidation over time causes ripples in costs to consumers, and for employment opportunities and thus wages too.

Some will act out of habit and ‘stroke the check’ to renew their MHI membership.

Others will feel compelled for reasons that sources say are akin to RICO related concerns.

For those who don’t want to be part of feeding the hand that bites them, this is a good time to step back and decide to cancel membership in Berkshire dominated MHI, and explore other options.

To learn more, see the related reports, and click on the hot-linked boxes further below.

Finally, it should be noted that Berkshire vice-chairman, and longtime Warren Buffet partner, Charlie Munger has said on camera that he doesn’t doubt that some wrongdoing has occurred.

 

 

While denying the thrust of the anti-Clayton claims, Warren Buffett has said similarly to what Munger has said.

It’s a complex puzzle.  But MHProNews is committed to providing the facts that unravel the fog in a way that no others in MH trade media will give you.  That way, you can make more informed decisions to operate your business.

DearTonySoheylaNoGreaterResourceSpeakstoIssuesOpportunitiesWeFaceAsIndependentRetailersGusRodriguezTejasHomesTX

Gus’ message came in response to a series of exposes on issues within manufactured housing, as well as tips, strategies, and opportunities.

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Machiavellian “Godfather” – Sam Zell, Warren Buffett, Capital, Lending and Crossed Lines in Manufactured Housing

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Housing Choice, Where Modular, Manufactured, Tiny, Conventional Housing Crisis, MHI and MHARR Intersect

Crisis of Misinformation, Fact Checks, and Manufactured Housing

New York Times-David Leonhardt-“The Monopolization of America,” Manufactured Housing Slant

#$2Trillion U.S. GDP Growth via Affordable Housing Plan Few Discuss – Introducing #YimbyVictory2020

 

 

 

 

Clayton Homes and 21st Mortgage’s Manufactured Housing “Spies”

September 7th, 2018 Comments off

ClaytonHomesLogo21stMortgageCorpLogoManufacturedHomesLoansLendingFinanceRepSpyingDailyBusinessNewsMHProNews600

It’s [a] standard operating procedure...”
–        Clayton representative, to the Daily Business News on MHProNews.

 

TimWilliams21stMortgageCEOMHProNews

Tim Williams, photo credit, MHProNews.com

At 21st Mortgage, we have access to a wide variety of resources that the independent business or professional in MH may lack.”
Tim Williams,
President and CEO of Berkshire Hathaway owned
21st Mortgage Corp., to MHProNews

 

It’s another example of the truth that is often hiding in plain sight.

Clayton Homes and 21st Mortgage Corp each have numerous field and other representatives. These men and women often see and hear things that are useful to Clayton, 21st, Vanderbilt Mortgage and Finance (VMF), or other parts of the Berkshire Hathaway conglomerate. They don’t carry the title of ‘spy.’

But the word “spying” is what an insider used to described part of their duties.  Another said, they wouldn’t be comfortable with the terms “spy” or spying,” but admitted that “reps” are in fact gathering information that’s reported and collected by management. As one Clayton rep put it, “It’s [a] standard operating procedure…”

A look at a dictionary definition of spy is revealing. The underscoring is added, but here is what the Oxford Dictionary says: “spy – a person employed by a government or other organization to secretly obtain information on an enemy or competitor.”

SpySpyingDefinitionGoogleClaytonHomes21stMortgageManufacturedHousingIndustryDailyBusinessNewsMHProNews600

This reporting work isn’t necessarily ‘top secret,’ as these representatives from 21st and Clayton periodically walk into sales centers or community offices as who they are.  That happens at locations across the country.

But there are also cases, per sources, where individuals are “rewarded” by the Berkshire manufactured housing brands to go and visit competitors under cover, pretending to be someone that they are not.

All of it has a similar goal. It’s to gain information on competitors, which Clayton, 21st and others they work with then use for their own corporate benefit.  That begs questions like these:

  • Do those who allow CMH or 21st reps onto their sales lots or into their offices realize that information they collect is allegedly being collected and reported up the chain of command, in ways that may be used against an independent’s business interests?
  • Do communities and retailers realize that files are reportedly being created, updated, and maintained, per sources within those Berkshire organizations?

Those are the case, per insider and informed sources to MHProNews.

 

The Motivation? “Competitive Advantages”

Corporate espionage is probably not what you think of when you hear the word spy. It’s not Sean Connery with his debonair manner, nor is it Tom Cruise hanging from suspension cable;” said Investopedia. Rather, its information being gathered – including online, though freedom of information requests, through reps and/or by other means – all of which can be legal.

Knowing a competitors next product line, bid price or any other sensitive data can give a rival company a competitive advantage,” said Investopedia.

 

MH Associations, CMH and 21st

Sources also tell MHProNews that associations are also “fertile ground” for collecting information on people, and businesses for Berkshire Hathaway brands in manufactured housing.

Here’s an example that was used, as to how innocently it can happen.  “What do you know about…” a certain person or business, comes an innocuous sounding question at a meeting or by phone.

Manufactured Housing Institute (MHI) or state association executives and/or staff will routinely answer questions by the ‘big boys,’ say sources familiar with the practice.  They don’t think of themselves as “spies” for Clayton or 21st, but they will do and say things because of the how ‘gold rules.’

All of it is gathered and distilled into reports used for competitive insights, and thus advantages in the marketplace.  Some information is purchased from third parties, which can all be done legally.

It’s [a] standard operating procedure,” per a Clayton source, “and it’s been done for years.”

 

Summary

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Files on competitors are maintained.  It can be accessed by management as they wish. The people involved may never think of themselves as spying, or as a spy.  But they report their findings to superiors just the same.

Information is power, just as capital or financing are power in business too.

Until positive changes are made by the powers that be, these sorts of issues, plus those in related reports (found further before), are all worth pondering before:

–        More business is placed by independents with a corporate giant,

–        before an association renewal check is sent,

–        or relaxed answers are made to reps, or at a meeting to a smiling face that reports what you said to others.

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Related Reports:

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Fresh Facts, Figures, Future of Affordable Housing -Comparisons- Conventional Site-Built v Mobile/Manufactured Home Industry Data

 

“Why Advocates Need to Rethink Manufactured Home Quality,” Harvard, GSE, Genz, “High Satisfaction”

July 5th, 2018 Comments off

RichardGenzWhyAdvocatesNeedRethinkManufacturedHomeQualityHarvardGSEHighSatisfactionDailyBusinessNewsMHProNews

There are those who slam manufactured housing as being less expensive due to inferior quality. But a “Harvard study refutes that, labeling as “exaggerated” the “concerns about the difference between manufactured homes…and [homes] built to applicable local building codes” (Vermeer and Louie 1995, section IV, 2). The study found that code standards have little to do with manufactured housing’s price advantage.”

 

So wrote Richard Genz in a 22 page research report on manufactured homes for a foundation for a Government Sponsored Enterprise (GSE).

The document also stated that:

Housing advocates might find it surprising to walk through a couple of new homes at a dealer’s lot, keeping the monthly payment in mind and mentally comparing the local rental stock available for the same price. Interiors have good light. Insulation standards are solid. Floor plans have come a long way from the time when residents said that living in a mobile home was like living in a hallway.”

RichardGenzManufacturedHousingIndustryDailyBusinessNewsMHproNewsWhy take a flashback look now at the 2001 report by Richard Genz for Housing & Community Insight?

Because the report was done for the Fannie Mae Foundation.

It cited sources such as Harvard, Foremost Insurance – plus other third-party, often peer-reviewed – researchers.

While some of the data points have shifted since Genz penned them, it has generally been improvements in the manufactured home product quality, as the Manufactured Housing Improvement Act of 2000 standards have fully kicked in since Genz published his insightful work.

It’s equally valid to review this now, given the arguable short-shrift Fannie Mae has been giving to the legally mandated Duty to Serve (DTS) implementation. Compare what Genz said then, vs. what Sarah Edelman recently wrote. That linked report below, which includes Edelman’s article for Fannie Mae, can be read later for greater depth of understanding.

“Take the MH Advantage Challenge – Can You Tell the Difference?” Fisk of Sarah Edelman, Director of Duty to Serve, Single-Family Mortgage Business for Fannie Mae

Further, because the HUD Code and new home standards keep improving, what was true when Genz said it back then, is arguably as or more accurate now.

NewDurhamEstatesSouthManufacturedHomeLivingNewsDailyBusinessNewsMHProNEws

That said, the analysis that follows notes that while Genz often praised manufactured homes, he did not turn a blind eye to problems then existing in the industry. That too will be reviewed herein, because manufactured housing cleaned up key issues that Genz identified.

So, while the total numbers of residents and manufactured homes has grown since his report, and pricing has obviously changed, the percentage of savings remains the same. Then and now, the United States Census Bureau has noted consistently similar levels of statistical savings for decades.

SunCommunitiesSUI-InvestorPage11ManufacturedHomeVsSingleFamilyHousingManufacturedHomeCommunitiesIndustryDailyBusinessNewsMHProNews600

Graphic, data, per Sun Communities (SUI).

Thus for a variety of reasons, Genz’s 22 page document merit the careful consideration of the manufactured home industry’s:

  • professionals,
  • advocates,
  • public policy pros,
  • politicos,
  • and investors careful consideration.
SunCommunitiesSUI-InvestorPageComparetoMultiFamilyHousing10ManufacturedHomeCommunitiesIndustryDailyBusinessNewsMHProNews600

Graphic, data, per publicly-traded Sun Communities (SUI).  Note that Sun’s rental rates may be higher than some others in the industry..

With that introduction, the Daily Business News will review and analyze key highlights of what Genz unearthed.

It’s a potentially multiple billions of dollars worth of housing insights. Thus it’s a potentially rewarding, and highly insightful, reading experience.  As you read this analysis of Genz, keep the points previously shared in the report below in mind, which can be read or reviewed later for related insights.

YIMBY vs. NIMBY, Obama Admin Concept Could Unlock $1.95 Trillion Annually, HUD & MH Impact

 

Stigma and Manufactured Homes

Genz goes after the stigma attached to manufactured homes and their owners early, and often.

Here’s an example.

There is a palpable stigma attached to manufactured homes, dating back to when workers towing trailers moved from city to city, chasing jobs and crowding into muddy, unsanitary trailer parks… However, these serious shortcomings [in public policies, perceptions] are not inherent in the factory-built home itself. Rather, they are the product of laws, policy choices, and business practices that are selling millions of people short.”

Genz notes that while values weren’t the same, he explains that it was because of reasons not connected with the homes themselves.

That’s arguably a valid point then, and now.

The Fannie Mae Foundation researcher also noted that the net worth of manufactured home owners was dramatically higher – even then – than the $5,000 renting households average worth now have, per data cited repeatedly by HUD Secretary Ben Carson last year.

Median net worth is $59,000 for owners of manufactured homes, compared with $102,000 for all homeowners.”

Rephrasing that as a takeaway.  Those who own a manufactured home enjoy a significant improvement in their collective standard of living.  That’s a point that advocates like ROC USA, Prosperity Now (formerly known as CFED), or this trade publisher have often made.

Genz notes another point that MHLivingNews and MHProNews has hammered home repeatedly. It’s this.

One of the industry’s strong points is its appeal to distinctly different market segments. Owners tend to be either very young or elderly (Vermeer and Louie 1995). Although most buyers have low incomes, one segment of the market is quite well off: About 10 percent of manufactured home residents report a net worth of more than $250,000, and another 19 percent are worth more than $100,000 (Foremost Insurance Group 1999).”

Genz added to that point above, “Many of the owners with high net worth live in well- planned subdivision-style communities with recreation centers, pools, and even golf courses. These high-end communities demonstrate the potential of factory-built homes, but also represent a continuing shift away from the industry’s original focus on serving the affordable housing market.”

 

tristar-estates-bourbonnais-il-CreditMHC-MD-com, posted MHPorNews.com.

Arial photo credit, TriStar Estate, credit MHC-MD.com. Note that all of the illustrations shown were provided by MHProNews, not the original document written by Genz.

Stated differently, he makes sure that his readers know that manufactured homes are not just housing for the poor, or those who have no other options.

It’s a key factoid that some in the industry’s association world need to take notice of, and perhaps now will begin to do so?

Despite wide-spread perceptions of low quality and short life, Consumer Reports says that “manufactured housing can last as long as site-built housing,” (“Manufactured Housing ” 1998, 30).”

Readers should keep in mind that the improvements mandated by the industry-sought Manufactured Housing Improvement Act of 2000 (MHIA). So whatever concerns were noted then about installation have since been dealt with.

Industry professionals, policy wonks, officials, and advocates should note that it was the Manufactured Housing Association for Regulatory Reform (MHARR) that led-the-charge for the MHIA 2000. They did so by aligning the Texas Manufactured Housing Association’s leadership, and then finally found a change in leadership at the Manufactured Housing Institute (MHI) they could work with. That permitted the three to then advance the MHIA through Congress, per our sources.

That segue noted, the review of Genz’s fertile work continues.

Fresh, new, private living space; easy shopping and financing; adequate quality; and homeownership now add up to a powerful appeal, and with a little reflection, it becomes easier to see why manufactured homes have been chosen by an average of 29 percent of new home buyers every year since 1980 (Manufactured Housing Institute 2001).”

MostMenAppearnNeverConsideredWhatHouseIsNeedlesslyPoorAllTheirLivesHenryDavidThoreauManufacturedHomeLivingNews

For newcomers to this website, or otherwise not familiar with modern manufactured homes, you can learn more by clicking the image above or the link here.

That was debatably the Manufactured Housing Institute (MHI) that was, prior to the power being exercised over the Arlington, VA based trade group by Berkshire Hathaway acquired Clayton Homes in 2003. Their related lenders were acquired too, as were several other industry connected suppliers and other firms since.

Instead of MHI’s allegedly weaponized ‘research’ and maneuvers to promote a controversial, “new class of homes,” and the like – why hasn’t MHI provided encouragement for more such independent study as Genz did?

Or why does MHI fail to publicly mine such useful research today?

Those questions noted, continuing with the Genz’s analysis, there are far more gems to discover.  They are potentially as useful now as then.

 

Not Enough Advocacy, Said Genz

RichardGenzHousingCommunityInsightLinkedInSydexManufacturedHousingIndustryDailyBusinessNewsMHProNews

Richard Genz.

Some consumer advocacy is taking place, but not much in view of the scale of the manufactured housing sector. Government, nonprofit, and philanthropic involvement is strikingly less than in the world of “real homes.”

When one ponders the foot-dragging by the GSEs, apparently brooked by the FHFA, this quote is also noteworthy: “…a majority of buyers have held the same job for 5 to 10 years, a Freddie Mac economist notes that “except for lower incomes, the profile of manufactured home buyers seeking financing does not appear to differ greatly from site-built loan borrowers” (Bradley 1997, 4).

Note that in a systematic fashion, Genz cited his third-party, often peer-reviewed sources. Again, as the Daily Business News analysis above noted, much of what has changed since 2001 have been equally well documented improvements.

So the case made by Genz is still useful.  It is also historic.

Genz provides an independent yardstick to see what the industry’s ‘leaders’ have or have not done.

 

Identifying Valid Concerns

For those who never knew or witnessed sellers loading up customers with years of insurance or credit life, etc. the next quote will be a dose of reality.

For those pros who will recall, it’s a blast-from-the-past that explains some of the stiff losses by the subprime lenders of that era. “[manufactured housing] retailers can and frequently do earn commissions, rebates, or other payments on loan originations, credit life insurance, property insurance, and other services arranged for at the time the loan is closed” (HUD and NAHB 2000, 41).”

That was then, not now. Thus the report by Genz isn’t all glowing, as he takes on some industry practices in lending, some that apparently had a level of MHI support.

Rephrased, this researcher for Fannie didn’t mind questioning MHI.

By contrast today, Fannie and MHI seem to be “playing footsie,” according to several sources in MHI.

Among the examples that have been cited by those sources, MHARR and others, is that Fannie is now a MHI member. Furthermore, Fannie and MHI have reportedly held closed door meetings, without producing for the public those meeting minutes.

What’s there to hide?

Fannie Mae Touts MH Advantage Program, But Manufactured Housing Association Slams Plan as “Illegitimate,” “Bait and Switch”

 

GSE Commitment Canceled?

As recently as last week, Sarah Edelman, Director of Duty to Serve, Single-Family Mortgage Business at Fannie Mae and others there respectfully declined to provide minutes or any explanation of such meetings with MHI, in inquiries by this publication to the federally regulated mortgage giant.

Note that a communications team member committed to MHProNews that Edelman would answer several questions on-the-record.

Those promised replies to several specific inquiries were later delayed. Finally, the same communications team member at Fannie said they were not going to answer the questions asked.

Why not?

So much for transparency at Fannie today?

It is also worth mentioning for later review that House Financial Services Committee Chairman Jeb Hensarling has told MHProNews via a statement that he has serious concerns about lobbying by the GSE.  If so, that’s important because it would be in contravention to federal law while they are in receivership under FHFA. That related report can be reviewed later, and is linked below.

Update on Fannie Mae Lobbying, and Manufactured Housing Controversy

 

How Many Pre-HUD Code Mobile Homes?

Back to the research by Genz, he stated then that nearly 3 million pre-HUD Code mobile homes were still in service.

According to Gentz, “As many as 3 million homes in the nation’s current manufactured housing inventory were built be- fore the implementation of the HUD building code in 1976, when some homes had a useful life as short as 10 years (Meeks 1995; Vermeer and Louie 1995). Many of these were built in the boom years of 1968 through 1973, when 2.7 million new homes were sold.”

TrailerHouseMobileHomeManufacturedHomeFactoryBuiltHousingEvolution101MHProNews-MHLivingNews

Make a habit of using the correct terminology.

Once more an aside is warranted. Because the data that Genz cited demonstrates that the Rollohome experience was not a one-off.

What occurred during the Rollohome era in terms of the rapid ramp up and production of more factory built housing pre-HUD Code could arguably be done today too.

Rollohome, Creating 60,000 Factory-Built Homes in 2 Years

Investors, public officials, advocates, and industry pros? Are you seeing how enormous the manufactured housing industry’s potential is? This is a theme that MHProNews and MHARR have said for years can be accomplished, because it has in fact already been previously proven to be doable.

Given the correct support, the 8.3 million housing unit shortages cited by Lawrence Yun at the National Association of Realtors (NAR) could rapidly be corrected. But if HUD Code producers don’t step up to the plate more seriously, other prefab builders cited at the end of this report have already said that they will.

Potentially tens to hundreds of billions of dollars in business annually is up for grabs.

Once more, it is almost inescapable how these facts point to what award-winning independent retailer Alan Amy said. Manufactured Housing could be the future, which is why he and others have said that the billionaires are gobbling up the industry’s assets.


Ouch, and another Ouch, but then…

Regarding gains or losses in value, “…Consumers Union reports that two-thirds of units depreciate. However, the converse is that one-third of manufactured homes have held their value or appreciated (“Manufactured Housing” 1998). Several other studies establish the simple fact that some manufactured homes increase in value, and some decline.

But Genz uses logic akin to what MHProNews has utilized, noting that “Research is needed to sort out the factors that cause values to go up or down. With better information, policies and practices that build wealth for owners of manufactured homes can be designed.

In fact, Genz has outlined several of the causes of a loss in value. He also suggested some of the keys to supporting value, like no more credit life or others previously noted.

Thus, the initial groundwork for more appreciation – which even the problematic Urban Institute report noted by the Daily Business News said is already underway – is now largely in place.

Rephrased, there are no valid reasons for the GSEs to slow-walk implementation of robust yet sustainable chattel and other manufactured home lending. There is no need for yet another apparent dodge, this time in the form of a MHI’s questionable “new class of homes.”

Secretive “NEW” Class of Manufactured Housing Raises Serious Concerns

So in retrospect, what Genz laid out was this.

marty-lavin-jd-manufacturedhomefinanceexpert-DailyBusinessNews-mhpronews

Marty Lavin, JD.

When insurance is loaded up on a contract at the time of sale, or prices may vary 5k-10k per identical homes in the same market, the natural outcome is those homes ‘lost’ value. That’s similar to concerns that MHI award winner Marty Lavin raised for years.

But it must also be noted that Lavin said in a video interview with MHProNews that the industry cleaned up that act.

So once more, the rationale for slow-walking the potentially robust GSE entry into manufactured housing is missing.

Quite the opposite exists. Genz gave a veritable road map of why and how manufactured housing lending could and should be done successfully in ways that are as sustainable, as Titus Dare exclusively encouraged in statements to MHProNews.

So those abuses Genz reported then were wrenched from the chattel lending system by the lenders who remained in the market during the post-Conseco/GreenTree meltdown.

Rephrased, as Lavin noted, the remaining marketplace lenders corrected the issues.

Said Genz, “The accurate answer to the question “Can manufactured homes appreciate?” seems to be “It depends.” Like the value of any home, the value of a manufactured home over time is contingent on many factors. Unfortunately, the perception that depreciation is somehow inherent in manufactured homes is widespread. It is at the root of disinterest about them among development bankers, advocates, planners, and nonprofit developers. These professionals are rightly concerned that housing should be a foundation for building wealth, but if advocates simply write off the preference of so many home buyers for lower-cost manufactured units, we passively contribute to a problem we should be helping to solve. Available data suggest that depreciation is not a mystery. It can be understood and, in many cases, reversed.”

What Genz did was argue that the industry could reverse much of its image and fortunes.

Make some common sense changes, and much could be done.

More than 8 out of 10 manufactured homes placed in 1998 were titled as personal property, or chattel (U.S. Bureau of the Census 1998).” That number is similar today.

Genz buys into the argument made by those who want to reclassify manufactured homes, forcing all to be real estate loans. That’s a non-starter for most lenders in the industry. It is an example of how the “wheat and chaff” approach must be used with any person, or any organization.

That said, he next makes another point similar to what Marty Lavin has made.

Discriminatory treatment of manufactured home residents flows from the unexamined matrix of law, finance, taxation, land use regulation, and custom within which manufactured housing exists.”

Lavin put it more bluntly, by calling the HUD Code “a discrimination code.”

But discrimination – past or present – could be a motivation in urging industry pros to act for change in the future.

That said, what exists today are policies that can include “…many tax systems automatically depreciate manufactured homes like vehicles, regardless of their actual market value. This practice worsens the budget drain.”

Genz demonstrates how a simple change of mind can yield positive change.

Recognizing the real character of manufactured housing contributes to the asset base of an entire community. For example, the tax assessor of Henderson County, NC, decided to begin taking manufactured homes seriously in the early 1990s. Once values were established, the assessor determined that the use of depreciation schedules had systematically undervalued this stock of residential property. The result was a $53 million increase in the tax rolls over two years,” Genz said.

Then he stated a point routinely made by MHLivingNews and MHProNews. How education by that North Carolina county and discipline in the proper use of terminology could yield positive changes measurable in dollars and cents.

They [local officials] repeatedly had to explain to concerned taxpayers that a “trailer” is something you haul around behind a vehicle and that their increased valuation was based on the actual market value of a home that happened to have been built in a factory.”

Today, there are numerous studies that demonstrate that manufactured homes can and do appreciate for the same reasons as conventional housing. But the way to accomplish that isn’t by creating a problematic, unnecessary, and controversial “new class of homes” promoted by MHI.

Rather, an important part of the industry’s potential progress is achieved by education of consumers on existing homes.

 

 

That education comes in part by speaking with those who know on camera.

Education also can obviously be accomplished in part by engaging the mainstream media.

Retiring MHI Ann Parman previously praised MHProNews publisher L. A. “Tony” Kovach for promoting that plan. But as numerous industry members – like Frank Rolfe, who previously blasted MHI for not properly engaging the media – know, MHI has allowed most slurs, miscues, and errors that slight manufactured housing to go unaddressed.

Rephrased, the facts and legitimate third-party research needed to successfully promote the manufactured home industry are available.

While the Arlington, VA based trade group has done problematic advertorials – which have at times cited ‘facts’ that other MHI ‘data’ contradicts – has posted a few lightly viewed items to YouTube, or social media, there’s been no discernible, systematic and robust effort by them to defend and/or promote the industry as needed.

MHI member MHVillage’s own data proves just how ineffective the efforts to date are.

2018-06-22_0521ConversionRatiosPerMHVillageLogoManufacturedHousingIndustryDailyBusinessNewsMHProNews600

Data per MHVillage, collage by MHProNews. 

So it is little wonder that a pair of state associations broke away from MHI, and have announced they are forming a new post-production association.

Rephrased, there is a growing body of evidence and numbers of industry voices that in various ways have alleged that MHI is debatably blowing it for the small to mid-sized operations that make numbers of that trade group’s members.

‘Tip of Iceberg’ – Rick Rand; Marty Lavin, Communities have ‘No Confidence’ in Manufactured Housing Institute, New National Trade Group Announced

As attorney Lavin succinctly put it in the report linked above, the big boys work for the interests of the rest of the industry only to the extent that it benefits the big boys.

 

Genz Makes the Case Concerned Industry Voices Have Advocated

Said the Fannie Mae Foundation’s researcher Genz. “Low- and moderate-income people should not be left to learn about asset-building and the meaning of homeownership from their tax assessor. The protests from mobile home dwellers confirm what our housing system has inculcated in them: that their housing is a depreciating asset, like a vehicle. How many buyers of conventional homes would trade a lower annual property tax bill for depreciating home value?


As a Deer Valley Homes sales manager James McGee, and their current president, Chet Murphree said, “It’s all about education.” as they and others praised the work done here and on MHProNews to educate.

Meanwhile, sources and evidence suggest that MHI, their surrogates and masters, have arguably sought to stymie the education necessary for the industry’s robust growth.

Why?

Warren Buffet has arguably given the correct answer. He likes a bargain.

Best Warren Buffett, Kevin Clayton, Clayton Homes, Berkshire Hathaway Annual Meeting, Competition, and “the Moat” Video Collection

By choking off other sources of lending, and limiting the capital flow into the industry, Buffet’s Berkshire Hathaway has gobbled up large chunks of the industry.

ClaytonHomesOakwoodHomesBerkshireHathawayMarketShareofManufacturedHousingEndof2003DailyBuisnessNewsMHanufacturedHousingIndustryProNews

MHI’s President Richard “Dick” Jennison, and others there or working for Berkshire Hathaway units have declined or ducked public discussion and debate on such vexing questions.

ClaytonHomesSkylineChampionCavcoIndustriesBalanceofIndustryManufacturedHousingIndustryConsolidationGraphicPieChartMHProNews

Graphic by MHProNews, using information provided by each corporation, or named entities.

Isn’t that a kind of tacit admission that these published concerns are valid?

When The Daily Business News has given repeated opportunities for MHI or Berkshire brands to respond publicly, why have they instead remained silent?

21stMortgageCorpLogoLetterheadJan302009TimWilliamsRetailersBrokersCutSpecifiedLendingMonopolisticPloyConcernManufacturedHomeDailyBusinessNewsMHProNews

This document was provided as a news tip to MHProNews. To see the related video with Kevin Clayton, click to read and view – Smoking Gun 3

Duty To Serve, “Complete Waste of Time” per Tim Williams, CEO/21st Mortgage; POTUS Trump, Warren Buffett Insight$

 

Genz’s Finale “Conclusion”

Clearing up misperceptions about manufactured housing and addressing the problems of buyers, owners, and renters should be the first priority for advocates. On a separate front, it should be possible to incorporate the cost advantages of manufactured homes into nonprofit housing developments (Wallis 1991). If stereotypes can be overcome, the nonprofit development community could eventually help reinvent manufactured homes as quality, wealth-building, affordable housing.

The report said that author “Richard Genz is Principal of Housing & Community Insight and a Project Manager with ICF Consulting, Inc.”

Genz’s report was written for the Fannie Mae Foundation.  The entire document is available as a download, linked here.

We Provide, You Decide.” © ## ## (News, event, and announcement.)

(Third party images, and content are provided under fair use guidelines.)

Related Reports:

Manufactured Home Owners – Satisfaction Survey Redux

Progressive “Nation” Reports on Monopolies Cites Buffett, Clayton, Others – MH Industry Impact?

 

Clayton Homes, Top 25 Manufactured Housing Industry Report, Trend Lines

 

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Seattle Times -Federal Investigations-Berkshire Hathaway’s Clayton Homes, GuruFocus Spotlights Buffett’s Clayton’s “Unethical,” Monopolistic Moat

May 21st, 2018 Comments off

MoatCastleBuffettBerkshireClaytonHomes21stMortgageVanderbiltMortgageManufacturedHousingIndustryDailyBusinessNewsMHProNews550x305

Just hours or days before an expected Congressional vote in the House on their version of S. 2155, the Seattle Times is reporting on federal investigations into the business practices of Clayton Homes, Vanderbilt Mortgage, and their affiliated Berkshire Hathaway lending units.

 

Gwen Schablik, a former Clayton employee who was featured in the 2015 article, said officials from HUD and the Department of Justice interviewed her about the issues last year,” per the Seattle Times’ Mike Baker.  “Schablik has said that she and other staffers raised concerns with superiors about Spanish-speaking borrowers who had signed loan documents they couldn’t understand. She said managers told her there was no need to translate the documents.”

Baker’s narrative said Clayton issued a statement to them, emphasizing a claimed culture of compliance, “and does not tolerate discrimination of any kind in its interactions with customers.” But when the Daily Business News asked Clayton to denounce racism last year, they did not accept the opportunity to do so.

We value working with federal and state agencies to improve processes and ensure all regulatory requirements are met and our customers are protected and treated fairly,” Clayton stated in writing, per the Seattle Times.

WBIR has a wrinkle in the report, shown below.

 

What It Means

The Seattle Times latest report confirmed several Daily Business News reports in 2017.

In that sense, Baker’s narrative is akin to the recent Washington Post report, which underscored facts reported by MHProNews, and/or by the Manufactured Housing for Regulatory Reform (MHARR).

Greener, Stylish Manufactured Homes – Hidden Facts in the Washington Post Manufactured Housing Narrative

The Post confirmed reports by MHProNews on issues related to

  • Pamela Danner, the former administrator of the Office of Manufactured Housing Programs (OMHP),
  • how the Manufactured Housing Institute (MHI) failed to ask HUD leadership to have Danner removed for numerous concerns over her allegedly problematic actions.    
  • MHI failed to act with respect to Danner, despite a widespread outcry against Danner’s repeated overreaches expressed by grass roots retailers, communities, producers, state associations, MHARR, and others. 
  • The overreaches were bad enough that HUD Secretary Ben Carson called them “ridiculous” in Senate testimony.

 

GuruFocus, Clayton’s Unethical Moats?

Days ago, “GuruFocus contributor John Engle asked the questionAre Warren Buffett’s Strategic ‘Moats’ Unethical?

 This isn’t the first time Buffett’s love of moats has been attacked,” per GuruFocus. “Berkshire Hathaway has been criticized for its business practices, which seemed to put profit over customers, particularly at its Clayton Homes division.”

It is worth noting that GuruFocus’  Rupert Hargreaves used the proper industry terminology – “manufactured home” – while Seattle Times still uses the incorrect term, “mobile home.”

SteveDukeLMHATheTerminologyMattersBecausetheTerminologyDefinesTheConstructionStandardsDailyBusinessNewsMHProNewsMHLivingNews1

For facts on accurate, proper factory-built home industry terminology, click here or above.

Clayton Homes, for example, the largest builder of modular and manufactured homes in the United States, has been accused of relying onpredatory sales practices, exorbitant fees and interest rates that can exceed 15 percent, trapping many buyers in loans they can’t afford and in homes that are almost impossible to sell or refinance.” Evidently, if the company were looking to expand its moat naturally,” said Hargreaves for GuruFocus,it would be trying to achieve the best reputation and results for customers rather than price gouging — a tactic only the largest [m]onopoly businesses tend to get away with.”

The Nation and others have also raised concerns about Clayton Homes, and their Buffett-led Berkshire Hathaway lending units. 

 

Evidence of Monopoly?

To date, only MHProNews – thanks to a news tip from a reader – published 2 documents from 21st Mortgage Corp related to allegations of overtly monopolistic practices.

According to what attorneys have said to MHProNews who examined those 21st mortgage documents – and when compared to the facts in Buffett’s Berkshire annual letter that same year, along with the related videos – have led them to say that there is good evidence of monopolistic practices.

Is it just a question of time before word leaks out of anti-trust investigations of Buffett’s Berkshire manufactured housing industry brands? Will that include reported concerns over the trade association they dominate, the Manufactured Housing Institute (MHI) too?

The Daily Business News report, Smoking Gun 3, is linked below. “We Provide, You Decide.” ## (News, analysis, and commentary.)

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Related Reports:

Smoking Gun 3 – Warren Buffett, Kevin Clayton, Clayton Homes, 21st Mortgage Corp Tim Williams – Manufactured Home Lending, Sales Grab?

 

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Warren Buffett’s Annual Report to Berkshire Hathaway Shareholders, Clayton Homes and Manufactured Housing

February 26th, 2018 Comments off

WarrenBuffettBerkshireHathaway2017AnnualLetterReportShareholdersClaytonHomes21stMortgageVanderbiltNYTimesDailyBusinessNewsMHProNews

When examining an industry or an issue, such as the manufactured housing and regulations that impact an industry, common sense dictates that one spend time looking at the proverbial elephants in the room.

In manufactured housing, one elephant in the room is arguably Warren Buffett, Berkshire Hathaway and companies such as Clayton Homes, 21st Mortgage and Vanderbilt Mortgage and Finance.

Using their own annual report, Buffett’s copyrighted document says Clayton has about 49 percent of the industry’s production.

Other elephants in the room?  Financing (capital) and regulations must surely be among them.

Consider this.

  • The Manufactured Housing Institute (MHI),
  • the Manufactured Housing Association for Regulatory Reform (MHARR),
  • state associations,
  • and thousands of industry professionals and investors would – if prodded – likely say that federal, state and local regulations are an important impacts that influence their businesses.
  • Most if not all would all likely admit the importance that capital and financing plays in the industry.

The timing of the Berkshire Hathaway annual report is noteworthy.  It comes at about the same times as the deadline for public comments that the Department of Housing and Urban Development (HUD) has made for the top-down-review of the manufactured housing program it regulates. Those comments to HUD are due at 11:59 PM tonight, 2.26.2018.

Federal Manufactured Housing Program Review Comments Due Next Week, 2.26.2018

The entire Buffett/Berkshire annual letter and report are found as a download at the end of this report, provided by the Daily Business News under fair use guidelines.

Let’s look at some notable quotes from the annual letter and report.  Those facts will be followed by analysis of the quotes and data.

 

Notable Facts and Quotes

Keep in mind that while Clayton Homes is in the housing business, Berkshire lists it under financial services. From the Berkshire Hathaway Inc. 2017 annual report, page 13 (hereafter, just annual report), copyright 2018 © by Warren E. Buffett, page K21:

 

Finance and Financial Products

Berkshire’s finance and financial products activities include an integrated manufactured housing and finance business, transportation equipment leasing and furniture leasing. Berkshire’s finance and financial products businesses employ approximately 25,600 people in the aggregate. Information concerning these activities follows.”

Clayton Homes

Clayton Homes, Inc. (“Clayton”), headquartered near Knoxville, Tennessee, is a vertically integrated housing company utilizing manufactured, modular and site built methods. Clayton’s homes are marketed in 48 states through a network of over 2,000 retailers, including 353 company-owned home centers and 118 subdivisions. Home finance and insurance products are offered through its subsidiaries primarily to purchasers of manufactured and modular homes.

In 2015, Clayton acquired its first site builder and has since added four additional site builders. Clayton plans to continue to seek acquisitions that fit its business model. Clayton delivered approximately 49,000 homes in 2017 at various price points. Clayton competes based on price, service, delivery capabilities and product performance and considers the ability to make financing available to retail purchasers a factor affecting the market acceptance of its products.

Clayton’s financing programs support company-owned home centers and select independent retailers. Proprietary loan underwriting guidelines have been developed and include ability to repay calculations, including debt to income limits, consideration of residual income and credit score requirements, which are considered in evaluating loan applicants. Currently, approximately 70% of the loan originations are home-only loans and the remaining 30% have land as additional collateral. The average down payment is approximately 15%, which may be from cash, trade or land equity. Certain loan types require an independent third-party valuation; additionally, if land is involved in the transaction it generally is independently appraised in order to establish the value of the land only or the home and the land as a package. Originated loans are at fixed rates and for fixed terms. Loans outstanding include non-government originations, bulk purchases of contracts and notes from banks and other lenders. Clayton also provides inventory financing to certain independent retailers and community operators and services housing contracts and notes that were not purchased or originated. The bulk contract purchases and servicing arrangements may relate to the portfolios of other lenders or finance companies, governmental agencies, or other entities that purchase and hold housing contracts and notes. Clayton also acts as an agent on physical damage insurance policies, homebuyer protection plan policies and other programs.”

From annual report, page K-49:

 

Manufactured housing and finance

Clayton Homes’ revenues were $5.0 billion in 2017, an increase of $780 million (18%) compared to 2016. The revenues increase was primarily due to higher home sales, attributable to an increase in overall unit sales (9%) and higher average prices. The increase in average prices was primarily due to sales mix changes, which reflected increases in site built home sales, a relatively new business for Clayton. Site built homes include higher land content and unit prices tend to be higher, although gross sales margin rates are typically lower than manufactured homes. Interest and financial services revenues increased 2% in 2017 compared to 2016.

Pre-tax earnings increased $21 million (2.8%) in 2017 compared to 2016. Pre-tax earnings in 2017 from manufacturing, retailing and site built activities increased, while earnings from finance activities declined slightly from 2016. Earnings in 2017 also included a gain from a legal settlement, offset by increased employee healthcare, technology, marketing and other expenses. A significant portion of Clayton Homes’ earnings are generated from lending activities, which in recent years benefitted from relatively low delinquency rates and loan losses and from low average interest rates on borrowings. As of December 31, 2017, Clayton Homes’ installment loan portfolio was approximately $13.7 billion.

Revenues increased $654 million (18%) in 2016 compared to 2015, attributable to a 30% increase in revenues from home sales, primarily due to a 25% increase in units sold and product mix changes. Interest and other financial service income increased 1.8% from 2015. Pre-tax earnings increased $38 million (5.4%) compared to 2015. Earnings benefitted from increased home sales and improved manufacturing and retailing operating margins, partly offset by lower earnings from lending and financial services and increased insurance losses.”

 

More Notable Quotes

From the annual report, page 5.

Let’s move now to bolt-on acquisitions. Some of these were small transactions that I will not detail. Here is an account, however, of a few larger purchases whose closings stretched between late 2016 and early 2018.

Clayton Homes acquired two builders of conventional homes during 2017, a move that more than doubled our presence in a field we entered only three years ago. With these additions – Oakwood Homes in Colorado and Harris Doyle in Birmingham – I expect our 2018 site built volume will exceed $1 billion.

Clayton’s emphasis, nonetheless, remains manufactured homes, both their construction and their financing. In 2017 Clayton sold 19,168 units through its own retail operation and wholesaled another 26,706 units to independent retailers. All told, Clayton accounted for 49% of the manufactured-home market last year.

That industry-leading share – about three times what our nearest competitor did – is a far cry from the 13% Clayton achieved in 2003, the year it joined Berkshire. Both Clayton Homes and PFJ are based in Knoxville, where the Clayton and Haslam families have long been friends. Kevin Clayton’s comments to the Haslams about the advantages of a Berkshire affiliation, and his admiring comments about the Haslam family to me, helped cement the PFJ deal.”

From the annual report, page 13.

A final lesson from our bet: Stick with big, “easy” decisions and eschew activity.”

 

Quotes and Insights, According to Rupert Hargreaves, GuruFocus on Nasdaq 3.28.2017

Rupert Hargreaves in a column entitled “Warren Buffett and the Importance of Moats,” wrote: “Buffett himself only invests in such businesses [those with moats], but the problem is he’s never really set out exactly what he’s looking for in the best moats.”

Hargraves compiled this list of Buffett quotes on moats.

But all the time, if you’ve got a wonderful castle, there are people out there who are going to try and attack it and take it away from you. And I want a castle that I can understand, but I want a castle with a moat around it.” – Warren Buffett.

From the 2000 Berkshire annual meeting:

So we think in terms of that moat and the ability to keep its width and its impossibility of being crossed as the primary criterion of a great business. And we tell our managers we want the moat widened every year. That doesn’t necessarily mean the profit will be more this year than it was last year because it won’t be sometimes. However, if the moat is widened every year, the business will do very well. When we see a moat that’s tenuous in any way – it’s just too risky. We don’t know how to evaluate that. And, therefore, we leave it alone. We think that all of our businesses – or virtually all of our businesses — have pretty darned good moats.” – Warren Buffett.

“…I don’t want a business that’s easy for competitors. I want a business with a moat around it with a very valuable castle in the middle. And then I want the duke who’s in charge of that castle to be honest and hard-working and able. And then I want a big moat around the castle, and that moat can be various things.” – Warren Buffett.  

“…Most people will assume the service is fairly identical among companies, or close enough, so they’re going to do it on cost, so I gotta be the low-cost producer. That’s my moat. To the extent my costs get further lower than the other guy, I’ve thrown a couple of sharks into the moat.”  – Warren Buffett. 

Note, these quotes may reference other products and services.  But industry readers and researchers must keep in mind that these are principles that Buffett himself and his partner, Vice-Chairman Charlie Munger, have applied to all of their investments.

“…Things are all the time changing that moat in one direction or another. Ten years from now you can see the difference. Our managers of the businesses we run, I’ve got one message to them, which is to widen the moat. And we want to throw crocodiles and sharks and everything else, gators, I guess, into the moat to keep away competitors. And that comes about through service, it comes about through quality of product, it comes about through cost, it comes about sometimes through patents, it comes about through real estate location.” – Warren Buffett. 

 

Other Sources and Quotes on Buffett about Competition and the Moat

WarrenBuffett.com says, In business, I look for economic castles protected by unbreachable moats.” – Warren Buffett.

In Charlie Munger on Moats First of the Four Essential Filters, “

1.    A business with a moat,

2.    A business that can be understood by the investor,

3.    Management in place with integrity and talent, and

4.    A business that can be bought at an attractive price that gives an attractive margin of safety.” – Charlie Munger, Berkshire Vice-Chairman.

Stocks of companies selling commodity-like products should come with a warning label: ‘Competition may prove hazardous to human wealth.’” – Warren Buffett, per Sure Dividend. 

There are more such quotes about Buffett and the Berkshire philosophy, but perhaps among the most relevant for the industry are those from Kevin Clayton in the video linked in the report below.

Kevin Clayton Interview-Warren Buffett’s Berkshire Hathaway, Clayton Homes CEO

 

Analysis and Commentary 

Against that backdrop, lets return to this year’s letter.

Starting bottom of page 8, top of page 9 of the annual letter.

I have told you several times about HomeServices, our growing real estate brokerage operation. Berkshire backed into this business in 2000 when we acquired a majority interest in MidAmerican Energy (now named Berkshire Hathaway Energy).  MidAmerican’s activities were then largely in the electric utility field, and I originally paid little attention to HomeServices.

But, year-by-year, the company added brokers and, by the end of 2016, HomeServices was the second-largest brokerage operation in the country – still ranking, though, far behind the leader, Realogy.

In 2017, however, HomeServices’ growth exploded. We acquired the industry’s third-largest operator, Long and Foster; number 12, Houlihan Lawrence; and Gloria Nilson. With those purchases we added 12,300 agents, raising our total to 40,950. HomeServices is now close to leading the country in home sales, having participated (including our three acquisitions pro-forma) in $127 billion of “sides” during 2017.

To explain that term, there are two “sides” to every transaction; if we represent both buyer and seller, the dollar value of the transaction is counted twice.

Despite its recent acquisitions, HomeServices is on track to do only about 3% of the country’s homebrokerage business in 2018. That leaves 97% to go. Given sensible prices, we will keep adding brokers in this most fundamental of businesses.”

  • The 97 percent statement about housing, isn’t that arguably a clearly monopolistic phrase? 
  • Or Buffett’s comments about Clayton growing from 13% in 2003 to 49% by 2017 – in the light of the quotes above and linked, isn’t it also part of a monopolistic pattern? 

For those who compete with Buffett, you must think years ahead, because Buffett and his unit managers do. 

It is worth recalling that Fleetwood was once a powerful presence in manufactured home production and retail – duking it out in the late 1990s, and early 2000s – with Champion for the top spot. But after the “smoking gun” incident, as Kevin Clayton noted in his own words in the video in the report linked further above, Fleetwood’s retail was acquired by Clayton. 

Killing Off 100s of Independent Manufactured Home Retailers, Production Companies – Tim Williams/21st Mortgage “Smoking Gun” Document 2

No doubt, in fitting with the Berkshire way, at a bargain price…

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HUD Comment Letter – FR-6075-N-01 Regulatory Review of Manufactured Housing Rules

February 20th, 2018 Comments off

HUDCommentLetterFR-6075-N-01RegulatoryReviewManufacturedHousingRulesPixabayDailyBusinessNewsMHProNews

The Daily Business News reported yesterday about the looming deadline for comments to HUD about regulatory reforms desired by industry members, home owners, and others interested in manufactured housing.

 

Federal Manufactured Housing Program Review Comments Due Next Week, 2.26.2018

The message below reflects the essence of a comment letter
by this writer going to HUD, per their request for
manufactured housing program regulatory reform comments.
For more details on submitting your own comments, click the article linked above.

 

Dear HUD Secretary Ben Carson, MD,

A year and one month have gone by since President Donald J. Trump and Vice President Mike Pence have taken their oath of office.

As Juanita Duggan, President and CEO of the National Federation of Independent Business (NFIB), or Jay Timmons – President of the National Association of Manufacturers (NAM) have observed, the improvements in America’s economy and general confidence have soared.

Unemployment among all groups has improved in the last year, but it is particularly noteworthy among minorities and women.

The Trump Administration’s policies have yielded real wage growth, and numerous record economic milestones, in just 13 months.

But when that gaze is cast upon manufactured housing (MH), a different reality exists.

That is the focus of this MH Industry professional’s plea for regulatory relief of the much-needed, appealing, quality home product provided by manufactured housing professionals.

Reaching for the Sky, Multiple Level HUD Code Manufactured Homes

As the affordable housing crisis rages, with over 8 million housing units are needed now, per HUD, National Association of Realtors (NAR), and the National Low Income Housing Coalition (NLIHC) research – manufactured housing languishes at relatively low levels.

Why?

ManufacturedHousingIndustryShipmentsFEMAManufacturedHomesNotMobileHomesTrailersIndustryResearchReportsDataMHProNews

Credits, MHI, Cavco.

State of the Manufactured Home Industry, Comparing RV vs. MH Data

RVAnnuaShipments2011to2016RVIALogoDataCompareManufacturedHousingIndustryDataDailyBusNewsMHProNews

As industry professionals and investors say, the industry’s realities are both simple, and complex.

What is easy to grasp is this reality. The primary regulator for manufactured housing is the Department of Housing and Urban Development (HUD).

 

The first common-sense “ask” ought to be is that the steps needed to bring to HUD’s jurisdiction back over those regulatory functions sent to the Department of Energy (DOE) ought to be taken. There is no logic to having more than one federal regulator that deals with construction, safety, and energy efficiency.

 

The second ask is related to the simple-yet-complex realities of our unique industry.

 

Wikipedia says that in 2014, over 14,000 people were employed by HUD. Consider this. Pick 10 of those 14,000 employees, none of whom should have ever worked in HUD’s manufactured housing program office. Only one of those ten should have any first-hand experience with modern Manufactured Housing (a ratio roughly equal to the national average).

Once selected, have those ten HUD staffers enter a 2-to-4-week guided immersion into the MH Industry, and its realities.

Then have those ten do a questionnaire before they begin their immersion, and then once more immediately after they finish. That will establish a snapshot of their perceptions before and after their educational/research experience.

If they are like so many others we’ve introduced to the industry, odds are good that those proposed HUD staffers will have an epiphany.

With the proper guidance, those ten will discover that perhaps the single best resource of solving the affordable housing crisis is being regulated by HUD, i.e.: HUD Code Manufactured Housing.

Those ten should then participate in a meeting with you – HUD Secretary, Dr. Ben Carson – along with others in the agency’s MH program chain of command.

HUD will then have ten team members who could become a valuable resource for your agency in shedding light on just how billions of dollars could be saved annually at the federal, state and local levels by properly applying existing laws.

Enforcing existing federal laws, and by leveraging mostly private enterprise, could solving the bulk of the affordable housing crisis. Doing so would save taxpayers, create about half-a-million jobs (+/-), and would establish a ladder for wealth-creation to those who become the owners of those manufactured homes.

HUDPD7RReportGraphicManufacturedHomeLivingNewsDailyBusinessNewsMHProNews

RegulatoryBarrierstoManufacturedHousingPlacementinUrbanCommunitiesHUDPDR-postedManufacturedHomeLivingNews595x357 (1)

What the HUD PD&R screen capture reflects is a lack of understanding about how enhanced preemption could solve the affordable housing crisis, using mostly private capital. The research is useful, and shows that manufactured homes appreciate in value side-by-side with conventional housing. But adding in the missing ingredient of enhanced preemption would make this priceless to millions of Americans looking to start, grow, or downsize. Click here to downlaod the report, which is part of my comments submission.

HUD’s leadership could – through this process – have an understanding that has never before been attempted or achieved by the regulators of HUD Code manufactured homes.

That suggested process could yield a report by the 10 proposed HUD staffers. It should ideally be followed up by having you – Secretary Carson, top HUD management, and other key staffers – spend 2 days in a similar immersion process.  Doing this would transform HUD and affordable housing in America, based upon facts.

Congress had a vision for HUD Code manufactured housing when they passed the legislation in 1974 that resulted in the creation of manufactured housing, starting on June 15, 1976.  That act was designed to specifically address the problems that existed in the industry during the mobile home era, while providing a dependable private sector resource for largely unsubsidized, safe, durable, and economical housing.

TrailerHouseMobileHomeManufacturedHomeFactoryBuiltHousingEvolution101MHProNews-MHLivingNews

Until regulators understand what the modern manufactured home realities and potential are, the program will never achieve the potential that the GAO and other third party researchers have believed is possible.

The report below was published on 12.14.2014, and is as relevant now as it was then.  It includes the GAO study, and the Manufactured Housing Improvement Act as downloads, which along with other linked material, ought to be considered as part of my comments letter.

14 Years – Time to Revisit the Manufactured Housing Improvement Act of 2000?

We reported on major publications and media outlets, that have touted manufactured homes as part of the solution for the affordable housing crisis.

Bloomberg, HousingWire, Realtor and Fox all suggest Manufactured Homes as Important Solution for Affordable Housing in America

On MHLivingNews.com we take mainstream reports, and often highlight how the information they produce ought to be understood through the lens of manufactured housing.

mhlivingnews-improvedlivingforle-logo

How Can You Avoid the “Hidden Costs” of Buying A House? Just the Facts!

 

Background

I came to America by way of Hungary from Iran. My father was involved in housing and construction most of my life.  My educational background is in medicine, which is to say, science. As HUD Secretary Dr. Carson understands, science is about evidence, testing, and facts. Had the complex medical issues of our son Tamas not existed before his birth and for the years since, I’d be practicing medicine in the U.S., where I passed my medical examinations.

My degree from a European university in Hungary came “cum laude,” “with honors.”

I speak 3 languages and can read Arabic to a reasonable extent.

My article in support of then candidate Donald J. Trump was posted for several months on the president’s campaign website. It was picked up by thousands of others too.

12ReasonsEducatedIranianAmericanWomanSupportsDonaldTrumpPostedMastheadBlogMHProNews954x846

While the Manufactured Housing Institute (MHI) paid for two pro-Clinton speakers in the closing days before the 2016 election.  By contrast, Soheyla Kovach and her family supported Donald J. Trump’s candidacy as the best for the industry, small business and hundreds of millions of Americans. One of those stories ended up on the president’s campaign website, and hundreds of conservative and pro-Trump websites.

 

My husband, L. A. “Tony” Kovach, has spent over 25 years in the Manufactured Housing Industry. I began working with him in various ways in this industry over a dozen years ago. We’ve lived in several manufactured homes, typically in a land-lease community setting.  We’ve worked together for many years in this industry, and have been to retail centers, communities and manufactured home production centers from coast-to-coast and border-to-border.  .  So, unlike many in Washington, we have true first-hand knowledge and understanding about manufactured homes today.

UMHPropertiesGoshenIndianaMHLivingNews

A UMH Property near Goshen, IN, where MHLivingNews was involved in a video project.

Over 9 years ago, we began publishing what is now known as MHProNews. About 6 years ago, we began publishing MHLivingNews.com.  Both are widely considered to be the top resources of their kind in the industry, each enjoying millions of page views and visits annually.

SunshineHomesRedBayALManufacturedHousingIndustryDailyBusinessNewsMHProNews

One of several manufacturing centers we’ve done work at, with the still above from drone footage captured by a member of our team. Sunshine Homes, Red Bay, AL. 

For a relatively small industry, that high level of engagement by the public and professionals alike should speak volumes.

ArrowheadHomesParisTNManufacturedHomeLivingNewsDailyBusinessNewsMHproNews

A retail center in Paris, TN. This is one of several that that we’ve conducted video interviews, including the one linked from this report.

We’ve been doing video interviews for about 4 years, and written interviews for about 8 years.

SamPicannaHancockHomeOwnersLATonyKovachDailyBusinessNewsMHProNews

The video still is from a video posted at this link here. It quickly shows what a true trailer house, and mobile home are, , and what a modern manufactured home is, as part of our public education efforts.

Perhaps no one in the industry today has interviewed more:

  • professionals,
  • actual manufactured home owners,
  • and informed experts,

about manufactured housing than our operation has.

MostMenAppearnNeverConsideredWhatHouseIsNeedlesslyPoorAllTheirLivesHenryDavidThoreauManufacturedHomeLivingNews

Every one of these are photos of a HUD Code manufactured home. Millions would not believe these were built in a factory. The two-level Cape Cod with the staircase is one of several upscale projects we’ve been involved in over the years.

 

I’m a co-founder and managing member of LifeStyle Factory Homes, LLC, with my husband Tony as the other co-founder and managing member.

While we are pro-industry, we have never turned a blind eye to the cases of failures, fumbles, frustrations, and fears found in our industry.  So, in our trade publishing, we’ve covered the good, bad, and ugly.  Again, as a scientist one does not advance based upon mere wishes, advancement depends upon evidence based understanding, followed by appropriate action.

Frank Rolfe, MHU/RV Horizons Protest by MHAction; Nathan Smith/SSK/MHI Flashbacks?

We also do consulting and business development services for the industry, and also for those who are entering or researching the MH Industry.

All of that and more gives our work – and hopefully these comments to you – credibility.

We routinely hear from – and engage with – the industry’s professionals, from operations of all sizes. While I’m not anywhere nearly as active on LinkedIn as my husband is, Tony has had more recommendations and endorsements – over 1,000 – than perhaps most anyone in the industry.  He likes to say that should be considered a reflection on our team’s work.

The first points to make against that backdrop are the following.

 

If Manufactured Homes Today are Such a Good Value, Why Isn’t the Industry Doing Better?

I) When newcomers and researchers (investors, non-factory built housing pros, media, others) begin to grasp the amazing value found in manufactured housing today – as opposed to the outdated myths – they often ask a variation of the following. ‘Why isn’t the industry doing much better than it is?

It’s a question we’ve dealt with at various times and ways, including our report on a powerful insight by Harvard researcher, Eric Belsky, who said this.

MultipleReasonsExpectManufacturedHousingDoBetterThanSiteBuiltHousingEricBelskyEecDirJointCenterHousingStudiesHarvardUnivDailyBusinessNewsMHProNews

At the time Belsky made this prediction, manufactured homes were selling over 250,000 new units per year. in 2017, the industry failed to reach 93,000 new homes sold. What happened?

So, we’ve explored that issue several times before.  But most recently we did so in doing our analysis and fact-checks about the Urban Institute report on manufactured housing.

Those Urban Institute reports need to be read, please see those linked below, which we hope you will consider as part of this request for comment.

Urban Institute Ask for Correction in Analysis of their Manufactured Housing Research, “Follow the Facts,” “Follow the Money”

“Follow the Money” – Controversial Urban Institute Report on Manufactured Housing

Note that the Urban Institute (UI) specifically mentions the comprehensive review that HUD is undertaking, and to which my comments are responding. It is therefore reasonable to presume that UI wished to influence HUD with its controversial analysis.

It must be noted what the U.S. Census Bureau and others have documented, namely, that manufactured homes cost about half of what conventional on-site built house does to build. While some believe that is because of the use of cheap materials, HUD above all ought to know better.  There are entry level manufactured homes, that do use lower cost materials, such as ‘wrapped cabinets’, which are also found in apartments and entry-level conventional housing.

“The Solution to the Affordable Housing Crisis is Hiding in Plain Sight”

Then there is also residential style manufactured homes.  The interview and video linked below walks a newcomer through a better understanding of those distinctions between ‘shade and shelter’ homes,, and those that rival far more costly manufactured homes.  Note that among the videos on the page linked below are professionals who opted for manufactured homes. They could have purchased conventional housing, but saw the wisdom of manufactured homes.  The other video on that page is with Stan Dye of Star Homes in Culman, AL.  Dye specifically addresses the issue of enhanced preemption, and expresses that thought to HUD Secretary Carson.

Rapid Acceptance of Energy Star Rated, Residential-Style Manufactured Homes Proves Need, Value as Affordable Housing Solution

Manufactured Housing’s “Trojan Horse”

  • II) Facts, Frustration, Fumbles, and Fear

The typical channels of industry communications have in many cases been influenced, corrupted and undermined, as the links below reflect. That’s a bold claim that merits evidence.  We will use the word “allege” to refer to any and all references that involve third parties, because MHI connected attorneys, and MHI surrogates, have directly and indirectly threatened MHProNews in writing with litigation over our investigative reports. That said, we have always offered evidence to back up any allegation, and they have not to date filed any actions.  Why?  We believe it is because our evidence backs up the alleged concerns.

Since the report below was published, more state association executives confirmed what the initial state executives who tipped MHProNews said that sparked that account.

Even some who are not MHI members fear making a public comment about the harmful direct-or-indirect impacts allegedly caused by Berkshire Hathaway owned operations and the Manufactured Institute (MHI) that they dominate.  See one of several possible examples in the “Sparks Fly” report linked above.

Another example.

Negative media accounts, for instance, are often unrelated to MHI, though some may involve a member company.

But MHI – that Arlington, VA based MH Industry Trade Association’s – failures to engage with media, researchers, or others leaves a problematic view of manufactured housing largely unaddressed. So, while MHI don’t necessarily cause an issue, they allow it to go routinely unaddressed.

The REAL Truth, vs. Fake News, About Modern Manufactured Homes

Even when we were members of MHI, they typically gave little or no support for our pro-industry, pro-growth efforts. Why? The balance of this letter and links report help answer that question.  But the link immediately below sheds light on that ‘why.’

What Tim Williams, Dick Jennison, Rick Robinson, Lesli Gooch, et al, Taught Me About the Manufactured Housing Institute

Typical associations will promote any good news about its products or services, regardless of the source.  So why has MHI not spotlighted “good news” about manufactured home reports, such as those linked below?

 

Weather Expert’s Surprising, Bombshell Statement on Tornado Deaths and Affordable Manufactured Homes

 

Researchers Shake Up American Dream? Rent vs. Buy, Ken Johnson, Florida Atlantic University, Exclusive to ManufacturedHomeLivingNews

 

Hurricane Irma Florida Survivor Relates First-Hand Manufactured Home Safety, Durability Experience

 

Elected Official Explains Surprising Modern Manufactured Homes, Video Interview

Now these and dozens of other points are significant for HUD’s understanding and review of the manufactured housing program.

Why? Because MHI postures advocacy for the industry, but fails to take some of the most common-sense steps to make advocacy or lobbying for effective. Who says?  Often, it is award winning MHI members.

Marty Lavin Lashes the Manufactured Housing Institute’s (MHI) Latest Initiative

Logic demands that one answer the questions, why would MHI fail to do their best for the industry at large?  To what end or purpose?

Answer?  So that thousands of MH Industry Independent retailers, communities and producers can increasingly be consolidated by a handful of large and/or well-connected companies.

Killing Off 100s of Independent Manufactured Home Retailers, Production Companies – Tim Williams/21st Mortgage “Smoking Gun” Document 2

21stMortgageCorpTimWillamsJune112009LetterBerkshireHathawayWarrenBuffettClaytonHomesManufacturedHousingIndustryDailyBusinessNewsMHProNews

Duty To Serve, “Complete Waste of Time” per Tim Williams, CEO/21st Mortgage; POTUS Trump, Warren Buffett Insight$

This isn’t just conjecture or incendiary claims, as the document above and the linked reports reflect. It is the obvious reality to any who study Warren Buffett’s own words, or what Kevin Clayton said in the video interview, found in the linked reports below. Again, as with other links, I’m requesting that the linked material be considered as part of this report.

WarrenBuffettTheMoatQuoteMemeManufacturedHousingIndustryDailyBusinessNEwsMHProNEws

Kevin Clayton Interview-Warren Buffett’s Berkshire Hathaway, Clayton Homes CEO

Warren Buffett, “the Moat,” Manufactured Housing, Berkshire Hathaway, Clayton Homes, 21st Mortgage, Vanderbilt, Wells Fargo, NAI…

WarrenBuffettQuotesPeverseEasyThingsDifficultChainsHabitLearnFromHistoryPeopleDontLearnFromHistoryManufacturedHousingMHI-MHProNews-768x342

“Perverse”–Warren Buffett-Dodd-Frank, CFPB, Manufactured Housing, Loans, Independent Businesses Fact Check$

Stating the obvious for clarity.

It must be noted that there are those who agree with these assessments, those who disagree, and others who are on the fence.  That said, sources within MHI, Berkshire Hathaway owned companies, independents and others follow such reports carefully.  They do so by the thousands, in a small industry. MHI and Berkshire Hathaway owned brands have been given numerous opportunities to respond or debate these claims.

GusRodriguezTejasHomesConroeTXIndustryVoicesDailyBusinessNewsMHProNews

MHI and Berkshire Hathaway connected firms have not accepted those offers, why not?  If these concerns would be easily disproven, why wouldn’t they reply or debate?

RickRobinsonManufacturedHousingInstituteMHIDailyBuisnessNewsMHProNews

Again, the reason this is important is that the Trump Administration, Dr. Carson and others must understand that while they are not responsible for what MHI does or does not do,

  • the regulatory burdens that the industry has operated under,
  • combined with the other aspects of the Buffett/Clayton “Moat” principles,
  • have led to a significant consolidation of the industry since Clayton was acquired by Berkshire Hathaway in 2003.

For proof, see the MHI graphic, below.

That same pattern of regulatory, finance and other forces have caused thousands of independent retailers to fail or sell out to larger companies. All of that has contributed to the affordable housing crisis.

IBISWorldAtlanticManufacturedHousingIndustryDailyBusinessNewsResearchReportsMHProNews

 

These are examples of why my “third ask” of HUD is important. Namely, that a referral be made to the Department of Justice (DOJ) and to the Federal Trade Commission (FTC) to investigate the numerous claims of monopolistic practices by us and others that Berkshire Hathaway owned units involved in manufactured housing be investigated for anti-trust violations.  The same principle that tonight’s market report video reported, applied to Berkshire Hathaway, points out why the Trump Administration ought to pursue a breakup of Berkshire Hathaway, one that HUD could support by a referral.

Analogies That Teach Manufactured Housing Investors, Owners – Plus MHMarket UPdate$

 

What Can HUD Do and Consider About Regulatory Reforms?

Part 1 – Begin with Understanding

The foundation of regulatory reform must begin with an honest understanding of manufactured housing and the industry’s realities.  The links in this article would be just the start of such an understanding.

Common sense alone demands that a reality-based understanding of the what is vs. the outdated misconceptions regarding manufactured housing.

Then, HUD must grasp how Berkshire Hathaway owned units and their MHI non-profit are utilized to minimize the industry’s production. Why?

Because there is evidence that Pam Danner was helped by one or more MHI staff members to get and keep her job as head of the manufactured housing program as a result their influence.  While she is now removed from the program, understanding what happened, and why is critical to avoid it occurring again.

George Gunnell, WVMHI, Citing FMHA’s Jim Ayotte, Says HUD’s Pam Danner Must Go

MH Pros List “ABUSES” by Pam Danner, Current HUD Manufactured Housing Program Administrator

HUD’s Pam Danner Announces former MHI VP Lois Starkey Joining HUD

 

While MHARR, some MHI members, and others have voiced concerns about Clayton Homes and other BH owned units oversized influence over MHI, similar concerns have been expressed by

 

  • Maxine Watters (D-CA),
  • other Democratic legislators,
  • the Center for Accountability,
  • CFED rebranded as Prosperity Now,

among others.

Maxine Waters Statement, Preserving Access Manufactured Housing Act 2017, Warren Buffett, Clayton Homes

DougRyanAmericanBankerManufacturedHousingMonopoly-postedDailyBusinessNewsManufacturedHousingIndustryProNews

ManufacturedHousingIndustryMonopoly-Oligarchy-GeorgeAllen-PostedDailyBusinessNewsManufacturedHousingIndustryMHProNews-

 

Warren Buffett is widely seen as a shrewd investor. He is wise enough to allow heavy regulations to continue unabated by the association he dominates, as part of a broader plan to “widen the moat” of Clayton Homes, 21st Mortgage, Vanderbilt, et al  within the manufactured home industry.

For that MHI charade to work, they arguably must have enough ‘efforts’ that appear to busy, smaller industry players that MHI are trying to mitigate regulations.

MHARR vs. MHI on DOE Energy Rule, Pushback Pay$ Off?

The Top Twelve Questions for Manufactured Housing Institute (MHI) CEO, Richard “Dick” Jennison

Manufactured Housing Institute (MHI) Shifts on DOE Regulatory Rule, Report, Analysis

NAHB Report – High Cost of Regulations Impact Housing – and Manufactured Housing

Manufactured Housing Institute Outgoing Chair Tim William’s Remarks vs. MHI CEO Richard “Dick” Jennison Comments, Fact Checks

 

But the reality is that it is often only after months of spotlighting the flawed positions of MHI that they finally pivot to the position they logically ought to have taken in the first place.  The question is how can professionals so routinely make year after year of the same kinds of errors, and be rewarded for it, unless acceptable failure to mitigate regulations was part of the Buffett/Clayton goal?

If MHI actually wanted to mitigate regulatory burdens, they would more routinely work with MHARR to achieve the kinds of common sense reforms that would benefit consumers, still protect buyers, and give a level-playing field for players of all sizes.

The Pam Danner drama is a case in point, see those articles, linked above, plus this one.

Andy Gallagher, “Ousting” Pam Danner, MHI, Clayton’s RVP, WVHI – “Transparency”

There were many voices calling for months – in some cases, for years –  to have Danner removed from her role as the administrator of the HUD Code manufactured home program. MHI said and did many things, except ask for Danner’s removal. When others saw the wisdom of Danner being replaced, why not MHI?  Why were they (once more) so late to the proverbial dance?

It fits with what Warren Buffett and Kevin Clayton have said about their use of nonprofits, foundations or other all resources necessary to expand their influence, control and power over the industry. It is a method for widening the Clayton moat.

See the links and videos from this page for more details, which again, I’m requesting be considered as part of my comments.

Then, consider what Alan Amy said about billionaires buying up the industry.


Or what the current and past president of MHARR had to say.

People and organizations are certainly within their rights to support whatever candidates they want. But where was the logic in Warren Buffett supporting first Barack Obama, and then Hillary Clinton, when the positions they took on issues such as Dodd-Frank were the opposite of what MHI claimed they wanted in terms of regulatory relief?

 

TimWilliamsCreditLinkedIn21stMortCorpCEOManufacturedHousingIndustryMHIChairmanWarrenBuffettBerkshireHathawayChairman

Warren Buffett, right, credit Wikipedia. Tim Williams, right, credit, LinkedIn. Collage credit, MHProNews. http://www.mhpronews.com/industry-news/industry-in-focus/is-tim-williams-21st-mortgage-ceo-mhi-chair-at-odds-with-berkshire-hathaway-chairman-warren-buffett

That only makes sense in the light of the premise that Berkshire Hathaway was willing to let heavy regulations help drive others out of business, or to cause them to sell out for less than their fair market value would dictate.

Manufactured Housing Institute VP Revealed Important Truths on MHI’s Lobbying, Agenda

 

Part 2 – Once Understanding Exists, Then the Actual Solutions Become Easy

First, enhanced preemption must become the lived reality of the industry.  That single step would dramatically change the industry’s realities, and would open up affordable housing opportunities in cities and towns from coast to coast and border to border.

Two Great Laws Already on the Books NOW,  Can Unlock Billion$ Annually for Manufactured Housing Industry Businesse$, Investor$

 

 

Meet Donald Tye, The Flashback Fast-Forward Face of Factory-Built Homes?!

RevDonaldTyeJr.ManufacturedHousingNotT-railerNotNword_001

Anecdotal evidence suggests that the wrong terminology impacts price. But it also impacts people’s emotions, see the poet who rejected the use of the t-word with regard to her home, by clicking the image above.

RevDonaldTyeJrBusinessmanManufacturedHousingAdvocateDailyBusinessNewsMHProNews

Tye explained that public housing – an entitlement – often yields addiction. Ownership vs. renting or living in “projects” leads to integrity, a view he likens to those of Dr. Martin Luther King, Jr.

 

Two. The HUD Code is supposed to be performance based. See the video interview with prior program director, Bill Matchneer, in the report linked below.  Any efforts to move the industry towards prescribed building standards as opposed to performance based standards is a misunderstanding and abuse of what the HUD Code is supposed to do.

Three. The 10/10 rule for FHA Title I loans ought to be immediately removed, and authority for making such loans be given to responsible, proven, industry lenders.  The iron grip of Berkshire Hathaway over industry lending must be broken, if the industry is to thrive again.

There are also FHA Title II reforms needed, specifically that force a proper appraisal of manufactured homes on land-home or lease-hold scenarios.  The Title II rules for use in leaseholds also need a modest tweak that ends the need for selling a community to resident ownership within 5 years.  Doing so would open up market-rate lending to qualified buyers in lease-hold situations.  Safeguards have already been tested more than a decade ago that demonstrate that can be done in a fashion that yields performing loans.

Entry Level v Residential Style Manufactured Homes, Modular Homes and MH Appraisals – Tom Papszycki, Arrowhead Homes – Inside MH Video Interview

Four.  Removable chassis.  There is no logic for mandating that the frame and running gear must stay with the home.  The industry has asked for this common-sense reform for about 20 years.  It would save home buyers money, allow for a lower profile and more residential installation, plus is more environmentally conscious.

Five.  There are comments already posted, and linked below, on topics such as on-site completion, frost free foundations, and other examples of HUD overreach that I’d like you to consider as part of my own comments.

Federal Manufactured Housing Program Review Comments Due Next Week, 2.26.2018

Six.  The next administrator ought to be Vic DeRose, whom MHI and MHARR both agreed upon formally 4 years ago.  He, or any other person selected for this role, ought to be a non-career appointee, as the law calls for in the Manufactured Housing Improvement Act of 2000.

Seven.  Concepts were envisioned some years ago for the use of HUD Code homes in multi-story construction. In certain urban and suburban settings, these kinds of designs ought to be analyzed and put to work.

MobileHomesMultiStoryDailyBusinessNewsMHProNews

MultiStoryMobileManufacturedHomesSteelFrameDailyBusinessNewsMHProNews

The Bottom Line

Vice President Mike Pence, who sources say is well informed on manufactured housing because he was governor in a HUD Code manufactured home producing state, said several times last year that the Trump Administration should be in the promise keeping business and should enforce the law.

If the Manufactured Housing Improvement Act of 2000, enhanced preemption and the points noted above are put to work, the cost for housing programs would come down naturally in the years ahead, because private enterprise would be free to create more affordable housing by using manufactured homes.

Thank you for your consideration of these thoughts and suggestions.  Please consider our operation for any further needs that HUD may have in making these reforms a reality.

Respectfully,

Soheyla Kovach, MD.

Note: again, the above is a reflection of comments from this writer to HUD. Industry members and all others interested in manufactured homes can submit comments via the link below.

https://www.regulations.gov/comment?D=HUD-2018-0006-0001

For more details about submitting your own comments, click the article linked below.

We Provide, You Decide.” © ### (News, analysis, and commentary.)

ConfidentialNewsTipsOKTipsIreportMHNews@MHMSM-comGraphic

Weekly news tips, often the personal insights and experiences of readers sparked by a report you are reading, are how many stories begin or develop. Sources can be on or off he record. To report a news tip, click the image above or send an email to iReportMHNewsTips@mhmsm.com – To help us spot your message in our volume of email, please put the words NEWS TIP in the subject line.

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Soheyla is a managing member of LifeStyle Factory Homes, LLC, the parent company to MHProNews, and MHLivingNews.com.

Sparks Fly – MHI, HUD Allegations Do “Not Comport with HUD Policy”

February 15th, 2018 Comments off

MarlaYMcAfeeTnManufacturedHousingAssocMattKerlin21stMorgageBrianSullivanHUDPublicAffairsDailyBusinessNewsMHProNewsLogo550

In a statement to MHProNews, a representative of the Department of Housing and Urban Development (HUD) gave their reactions to allegations flowing from a discussion among industry members in Tennessee, discussing the recent Manufactured Housing Institute (MHI) winter meeting.

 

Part of those allegations are that a ‘representative of HUD’ spoke with one or more ‘representative(s) of MHI.’ In that discussion, an MHI source claimed that HUD told them that they would not be very cooperative with the industry, ‘until the industry spoke “with one voice.”’

Rephrasing, that claim by the Manufactured Housing Institute (MHI) to members at their recent winter meeting means that other voices, i.e. the Manufactured Housing Association for Regulatory Reform (MHARR), et al, had to go.

If followed to its logical conclusion, it would de facto silence other voices. Per sources as reported, it is yet another example of an alleged bold, semi-public monopolistic maneuver.  It arguably violates MHI’s own anti-trust guidelines.

 

Given the gravity of the claim and impact for thousands of MH industry independent companies – retailers, communities, producers, and others – MHProNews reached out first to the person who reportedly gave that briefing to members of the Tennessee Manufactured Housing Association (TMHA, TnMHA) board of directors, James McGee.

JamesMcGeeDeerValleyHomeBuildersTnManufacturedHousingAssocTMHATnMHADailyBusinessNewsMHProNews

Shortly after MHProNews’ email outreach to McGee, the following message was circulated to the Tennessee association’s board members.

 

———- Forwarded message (note: brown text used for quote, added) ———-

From: Marla McAfee <marla@tnmha.org>
Date: Tue, Feb 13, 2018 at 11:25 AM
Subject: THA – Board Code of Conduct Reminder
To:

THA Board of Directors:

This morning I received a call from one of our Board of Directors, who has been approached by a representative of the press.  The press inquiry was relative to specific conversations/updates given during our February 8, 2019, Board of Director’s conference call.

As a professional reminder, discussions held and conversations or statements made by your fellow Board members, within the context of Board meetings or conference calls, are not to be shared outside of the Board, in general, but especially with members of the press.

Sharing of information or providing specific names and content of commentators, is prohibited under your Code of Conduct agreement, as a Board member, as well as some provisions within the Anti-Trust Guidelines.

Respectfully,

Marla
Marla Y. McAfee
Executive Director
Tennessee Housing Association (THA)
Tennessee Manufactured Housing Foundation (TMHF)
Tennessee Manufactured Housing Political Action Committee (PAC)
1002 Meb Court, Suite B, Mt Juliet, TN 37122
615/256-4733, ofc; 615/255-8869, fax
Home:  https://www.tnmha.org<https://www.tnmha.org/>;

— end of forwarded message —

 

The Daily Business News took the emailed statement above, which came in as news tips to MHProNews, and shared it with others for feedback, insights, and reaction.  Among them, was McGee.

McGee’s employer DVLY – per sources – effectively barred McGee from speaking to MHProNews.  In fairness, given that DVLY reportedly sells millions of dollars of product to various Clayton Homes retail locations, perhaps DVLY wanted arm’s length, in part out of fear that they might lose those millions in sales?

Another source, a member of the TnMHA association that wasn’t the first to send the tip to MHProNews, made the following, very succinct statement.

They think they own us.”

The Tennessee Housing Association then sent out yet another, more strongly worded statement, that specifically named L. A. “Tony” Kovach – referencing this pro-MH Industry trade media.

That second TnMHA message, which sources say was designed to intimidate members, was then reported to MHProNews by only one TnMHA member-source as a news tip.  As noted, it contained what some believe is yet another veiled threat to their own association’s members.  Thus, the comment from another member, noted above, They think they own us.”  

Federal officials, legal minds, and some among the manufactured home (MH) industry’s independent (non-major corporation) members may or may not grasp just how chilling these kinds of intimidation tactics could be.

MHEC-logo-ManufacturedHousingExecutivesCouncil-postedMHProNews600x204-com-

The Manufactured Housing Executives Council (MHEC) logo used under fair use guidelines. MHEC is made up of MH state and MH Community associations, MHARR and MHI representatives.  The association member in noted below was a state association.

 

Another MHI ‘affiliated’ state association executive was asked about the above message.  Part of a longer reply said in part as follows:

I’ve always believed MHI does the bidding of the big manufacturers and now REIT communities.

The answer is for the states to rebel.  But they won’t for reasons I’ve only lately understood.”

 

Asking Marla McAfee, TnMHA Executive Director

Following the second email to TnMHA board members, MHProNews promptly contacted Marla Y. McAfee, who sent out both messages.  The MHProNews message read as follows:

——- emailed message to Marla McAfee, TMHA ——-

Marla,

I’m told that you’ve sent out yet another email, and this one specifically names me and our organization.

I’m hereby requesting that you send that to me, asap.  Also, that you retain all of your records on this subject.

Please forward asap any and all emails or other documents regarding communications with media, MHProNews or that names myself or anything associated with our enterprises.

Thank you.

Tony

L. A. ‘Tony’ Kovach
MHLivingNews.com | MHProNews.com | Office 863-213-4090 |

 

——-  end of emailed message ——-

 

With no response from McAfee after 3 hours and 20 minutes, a message like the following was sent to her and to Matt Kerlln, with 21st Mortgage Corp, a Berkshire Hathaway owned company, based in TN, with Kerlin as an association board member.

——- emailed message to Marla McAfee, TMHA & Matt Kerlin, 21st Mortgage (brown color added)  ——-

date:    Wed, Feb 14, 2018 at 2:49 PM

 

Marla and Matt,

I’ve not yet heard from Marla, so I’m going to address you both in this message.  I’m also bcc’ing several people, to document the ask.

While I’m not an attorney, it is my understanding of the law that when a public official speaks or meets in an official capacity with someone or the representative of some group, that’s not privileged or confidential information.

Thus, that communication is a matter of public interest, as it is reflective of public policy.  It can’t be confidential.

Frankly, I was skeptical about the claim being made, which is why I reached out to James McGee in the first place, to determine its accuracy, and to understand the purported source of said briefing statement between HUD, MHI that was conveyed to your board members.

McGee in turn reached out to you, and you sent 2 different messages I’m aware of to date on this topic. Matt is in that cc loop, we know each other, and he clearly carries weight with 21st.

The logic of the law is that your members can’t be barred from speaking about an item of this nature, as it reflects an alleged public policy position. 

As a heads up, we intend to dig into this with appropriate federal authorities. 

Before we publish a report on this topic, I’m giving you an opportunity to:

1)  Encourage James [McGee] to tell me what he told the members of your board,

2) Encourage your other board members to do the same, as a matter of transparency, 

3)    Provide me with any and all emails or other materials that mentions communications with the media, myself, or with industry trade media, etc.

4)    That as a matter of law – again, as I understand it – you can’t bar a member from speaking about this, given that it is a claimed public policy position that ought to be – public!

Let me state the obvious. The fact that TN MHA is trying to squelch this discussion is disturbing.

As a pro-industry trade media, it seems obvious and logical that you’d encourage the sharing of information, if in fact it is relevant and important to the industry.

To say that TN MHA are discouraging communications, with what might be construed as a veiled threat to your members, ought to be a wake-up call to all, if in fact you fail to do the four steps noted above.

Thank you for your prompt attention to this matter.

Respectfully,

Tony

Managing Member,
LifeStyle Factory Homes, LLC
Parent company to MHProNews.com, MHLivingNews.com, et al.

 

——-  end of emailed message ——-

 

Cover Up” Plus “Command and Control

Tony, this smacks of yet another cover up by MHI and their puppet masters,” said a source asked by the Daily Business News to comment about the TnMHA issue.

Another legal source told the Daily Business News,The fact that they are using fear and intimidation tactics could suggest that one or more of these associations are behaving more like a protection racket, than a traditional association,” which according to what legal sources have told MHProNews, could make MHI and all who behave in such a fashion, subject to a claim under federal and/or state RICO laws.

Readers are reminded of the “Command and Control” comment from an attorney studying the manufactured housing industry controversies, notably over anti-trust concerns, as has been reported.

 

MHProNews Asks HUD for Reaction to MHI’s Claim

MHProNews reached out to several sources at HUD.  HUD was provided with the emailed message shown above, from TnMHA to their board, along with some background information.  They were then asked the following emailed questions for HUD’s comments, clarification on the claims by MHI, and their reactions.

 

——- except from longer emailed message to HUD (brown color added for quote) ——-

 

…That said, my questions to you.

1) What do you know about any such meeting between HUD and MHI where such a statement may have been conveyed by a HUD rep to MHI?

2) As a matter of policy, is HUD in fact seeking only one association to deal with?

TNMHA is trying to stifle this discussion, as the below and another like message reflects.  For some inside MH baseball, the TN association is the home state of Clayton Homes and 21st Mortgage.  To say that they influence that board would be accurate.

Your reply can be on or off the record, but it would help us to sort this out if we could get to the bottom of:

  • IF such a statement was made, 
  • who at HUD might have made it, 
  • and if dealing with a single MH association is a HUD goal?

Thank you so much,

Respectfully,

Tony

L. A. ‘Tony’ Kovach
MHLivingNews.comMHProNews.com| Office 863-213-4090 |

 

——-  end of emailed message ——-

A call from HUD to MHProNews rapidly followed the email, shown above.

 

The MHI Claim Would “Not Comport With HUD Policy”

During that call from Washington, D.C., a HUD representative told MHProNews that the alleged claim of a HUD staffer ‘expecting the industry to speak with one voice’ would ‘not comport with HUD policy.’

Further, the HUD source said that the reason they have asked for public comments about the manufactured housing program is precisely to hear from ‘the widest possibly array of voices’ – mentioning manufactured home owners, industry members, and others interested in manufactured housing and affordable housing.  Both MHI and MHARR were named by HUD official as among those they want to hear from.

When the Daily Business News asked during that call if Pam Danner may have made such a statement, MHProNews was reminded of the obvious by that federal official; that Danner was no longer in the role of HUD Code manufactured housing program administrator.

Shake Up at HUD Manufactured Housing Program May Stop Industry Overregulation, per MH State Association

A HUD official acknowledged that ‘at some time in the past,’ such a statement ‘might have been made in a very unique circumstance.’ However, as a matter of policy, HUD ‘does not believe it is even possible‘ for the manufactured home (MH) ‘industry to all be on the same page,’ must less, ‘to speak via any one industry association with a single voice.’

That was part of a longer discussion with that HUD source.

Within an hour of the discussion with said HUD official, the call was followed up by the following emailed formal statement, which was requested by MHProNews.

——- emailed from HUD to MHProNews (brown text color added) ——-

Tony,

HUD is keeping an open mind as we seek the public’s comments about our manufactured housing rules.  Right now, our only interest is to hear from anyone and everyone who has an opinion to share.

 

Brian Sullivan

HUD’s Office of Public Affairs

——-  some information following the title has been edited out, end of emailed message ——-

 

MH Industry Monopoly Concerns, Impact

As a feature in tonight’s market report reflected, manufactured housing is far from the only industry that is being harmed by the problem of monopolistic dominance.

Such dominance – and how political, non-profit, and other forces are aligned by monopolistic powers – are seen as stifling in their effects by economists and others as harmful to the economy, jobs and society.  Those points and others are made by the experts in the video feature posted on the market recap report, linked above.

That’s precisely why anti-trust laws exist.

 

What That State Exec Believes

The solution, said that MHI connected state association executive cited above and linked below, is for the states to rebel.  See the report that was originally cited in, below, which explains that exec’s point on why quitting MHI is so difficult for most state associations.

How Many MH Independents, Retailers Have Been Lost Recently? “They Think They Own Us”

There may be one or more states that eventually quit supporting MHI – as the ones linked below did.  But arguably, most states are no in a position to quit MHI, given the domination by Berkshire Hathaway, as the association executive in the story linked above detailed.

 

State Associations, Companies Quit Membership in Manufactured Housing Institute, (MHI), One Explains in Writing, ‘Why?’

 

What Options Remain for MH Industry Independents?

Every state, every company, and any professional – including those currently or previously working for Berkshire Hathaway firms, and/or their competitors –  have the ability to supply information to MHProNews with news tips, which is how so many of these news stories originate.

What has already been noted in other reports is that MHI – after sufficient and ongoing public pressure – tends to pivot.

As a reminder, MHProNews assures anonymity to sources, unless the source wants to be acknowledged.

If a source wants to be particularly careful in how the deliver a news tip, they could create or use a private email account using gmail, yahoo, etc.

Lawsuits for Triple Damages – Anti-Trust, Anti-Monopoly Law, Manufactured Housing, and You

There are other options, of course, such as the one noted above.

For example, it is always possible that anti-trust, RICO or other legal actions may be initiated by federal and/or state(s) officials, which are among the reasons MHProNews reports such incidents. That’s another reason why tips, emails, and documents provided by industry sources is necessary for such news and analysis posts.

Ken Corbin “the 10,000 Drop,” points to Industry Woe, Causes of Manufactured Housing’s 10 & 20 Year Collapse?

But failure to act by independents is arguably the riskiest course of action of all.  MHI’s own data, or comments such as those by former Clayton manager Ken Corbin linked above, prove it. ## (News, analysis, and commentary.)

Related Topics:

Urban Institute Ask for Correction in Analysis of their Manufactured Housing Research, “Follow the Facts,” “Follow the Money”

Fiduciary Responsibility to Corp Shareholders-MH Anti-Trust Concerns; Plus MH Market UPdate$

Warren Buffett Wants an MH Shark Tank – Clayton, 21st, MHI, ‘Gift that Keeps Giving’

Extortion? RICO? Allegedly Illegal, and Dirty Side of Manufactured Housing, Exposed

Weaponized, Faked News Harms Manufactured Housing Homeowners, Professionals

Billionaire Titans Battle, Overshadowing Modest Independents – Surviving, Thriving in Manufactured Housing Industry Today, Tomorrow

“Accurate, but Misleading” MHI Preserving Access to Manufactured Housing Act Alert – ‘Weaponized New$,’ Fact Check$

Manufactured Housing Institute (MHI) Gives Written Responses – “Part of a Rigged, Corrupt System”

ConfidentialNewsTipsOKTipsIreportMHNews@MHMSM-comGraphic

Weekly news tips, often the personal insights and experiences of readers sparked by a report you are reading, are how many stories begin or develop. Sources can be on or off he record. To report a news tip, click the image above or send an email to iReportMHNewsTips@mhmsm.com – To help us spot your message in our volume of email, please put the words NEWS TIP in the subject line.

Thousands “Get It.” Sign Up Today! Click here to sign up in 5 seconds for the manufactured home industry’s leading – and still growing – emailed headline news updates. You’ll see in the first issue or two why big, medium and ‘mom-and-pop’ professionals are reading them by the thousands. These are typically delivered twice weekly to your in box.

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SoheylaKovachManufacturedHomeLivingNewsManufacturedHousingIndustryDailyBusinessNewsMHProNews-Submitted by Soheyla Kovach to the Daily Business News for MHProNews.com.

Soheyla is a managing member of LifeStyle Factory Homes, LLC, the parent company to MHProNews, and MHLivingNews.com.

How Many MH Independents, Retailers Have Been Lost Recently? “They Think They Own Us”

February 14th, 2018 Comments off

ManufacturedHomeRetailerMobileHomeDealerDailyBuisnessNewsMHProNews

I’ve always believed MHI does the bidding of the big manufacturers and now REIT communities,” said an email from a state association leader with ties to the Manufactured Housing Institute (MHI) to the Daily Business News.

 

It was a comment sent in connection to a forwarded news tip from another state association.  That message and related commentary about it from the Department of Housing and Urban Development (HUD) – in reaction to the message – will be the focus of a report planned for Thursday, 2.15.2018.

The answer is for the states to rebel [against MHI],” said the same state association source. “But they [other states, beyond those that have already quit] won’t for reasons I’ve only lately understood.”

That reason? The association leader explained.

Why does Clayton [Homes] dominate many state association? Attrition. The decline in independent retailers who used to dominate the states.  AZ has lost 60% of their retailers since….wait for it…2011.”

The message went on with more details to MHProNews, that if published may reveal the source.

 

Another Source Comments

 A state association with close ties to Clayton and MHI sent a message out to a number of board members.

One (or more…) sources connected to that board forwarded the message onto MHProNews, as news tips.

That’s what the source above was reacting to, with the comments published above.  When another independent industry operation from yet another state was shown the message, and asked to react, that company president said to MHProNews,They think they own us.”

Industry readers are reminded of what the Atlantic and IBISWorld predicted in 2011.  Note what took place in the state mentioned above since that date? A reported 60 percent additional decline in independent retailers.

IBISWorldAtlanticManufacturedHousingIndustryDailyBusinessNewsResearchReportsMHProNews

 

How Much for Selling Out to Clayton…?

 Industry retailers who have sold out to Clayton Homes, or have discussed a Clayton buyout have told MHProNews that the Knoxville metro based company “doesn’t pay much” for their business.

 

The main thing they [Clayton] do for you is if you stay and manage the sales center for them, you’ll sell more homes with VMF’s [Vanderbilt] lending.  They show you how VMF buys deals that 21st [both owned by Berkshire Hathaway] won’t.”

Zero Down Payment – not Land in Lieu – Manufactured Home Chattel Lending Program

That’s a complaint reported on previously by the Daily Business News, as the report linked above reflects.

 

“Lost Dealers,” Means Lost Independent Production Companies

 MHProNews  previously reported an MHI document, shown below, which reveals how many independent producers have been “consolidated since 2011.

MHI-21stMortgageKevinClaytonClaytonHomesManufacturedHoomeCorporationsPlantsDailyBusinessNewsMHProNews_001

Notice that the number of production centers has held pretty steady for the years the statistics reflect, but the number of independently owned producers are 1/3 lower during that same timeframe.

 

Some independents believe if “the Feds” or other legal action don’t step in with an anti-trust action against Berkshire Hathaway, even more companies will be lost in the near term.

Lawsuits for Triple Damages – Anti-Trust, Anti-Monopoly Law, Manufactured Housing, and You

One of several points missed by the recent Urban Institute report on why manufactured housing isn’t doing better is precisely because there are fewer independent retailers, and producers than even a few years ago.

Former Clayton manager Ken Corbin called it the “10,000 [retailer] drop.”

Ken Corbin “the 10,000 Drop,” points to Industry Woe, Causes of Manufactured Housing’s 10 & 20 Year Collapse?

As an independent told MHProNews today, he knew many independents that closed or sold out for “nickels on the dollar,” adding three words. “Tragic, and heartless.”

We Provide, You Decide.” ©  ## (News, analysis, and linked commentary.)

NOTICE:  Watch for a Special Report on HUD’s reaction to Claims Attributed to the Manufactured Housing Institute (MHI) , planned for Tomorrow, 2.15.2018.

 

ConfidentialNewsTipsOKTipsIreportMHNews@MHMSM-comGraphic

Weekly news tips, often the personal insights and experiences of readers sparked by a report you are reading, are how many stories begin or develop. Sources can be on or off he record. To report a news tip, click the image above or send an email to iReportMHNewsTips@mhmsm.com – To help us spot your message in our volume of email, please put the words NEWS TIP in the subject line.

Thousands “Get It.” Sign Up Today! Click here to sign up in 5 seconds for the manufactured home industry’s leading – and still growing – emailed headline news updates. You’ll see in the first issue or two why big, medium and ‘mom-and-pop’ professionals are reading them by the thousands. These are typically delivered twice weekly to your in box.

Follow us on Twitter:
ManufacturedHomes
@mhmsmcom

 

SoheylaKovachManufacturedHomeLivingNewsManufacturedHousingIndustryDailyBusinessNewsMHProNews-Submitted by Soheyla Kovach to the Daily Business News for MHProNews.com.

Soheyla is a managing member of LifeStyle Factory Homes, LLC, the parent company to MHProNews, and MHLivingNews.com.

Developing – CFPB Will Fine Berkshire Hathaway Manufactured Housing Units

September 25th, 2017 Comments off

FinesPixabayDailyBusinessNewsMHProNewsAn informed and reliable source tells the Daily Business News (DBN) on MHProNews that the Consumer Financial Protection Bureau (CFPB) will be fining Warren Buffett led Berkshire-Hathaway (BH) manufactured housing units.

The sum is not yet determined, per that source, but is anticipated at being in the $1 to $5 million-dollar range.

While they [BH manufactured housing companies] don’t want to be fined, $5 million to them is like $20 for you and me,” the source explained.

It will also give them [BH manufactured housing companies] the ability to say to the industry, ‘See, we hate the CFPB too.’ When in fact, Dodd-Frank has benefited them [by suppressing competition, due to the regulatory burdens].

Congressional Lawmakers, Non-Profits, Mainstream Media Accuse Clayton, 21st and VMF of Racism, Steering and Predatory Lending

MHProNews alerted the industry last month that the “Campaign for Accountability (“CfA”) seeks records from the Consumer Financial Protection Bureau (“CFPB”) regarding consumer complaints related to Clayton Homes,” said Daniel Stevens Executive Director of CfA.

ClaytonHomesLogoFinesRefundsComplianceBugCFPBUAkronDailyBusinessNewsMHProNews

Fines and refunds to date by Clayton and their BH sister companies has been under $1 million dollars, but per our source, the coming fines could be several million dollars.

CampaignForAccountabiltyClaytonHomesLogoBerkshireHathawayVanderbiltMortgageRacismSteeringPredatoryLendingDailyBusinessNewsMHProNews720x403

The report also includes downloads of several Congressional lawmakers who have asked the CFPB to provide their research into claims of racism, steering and predatory lending. To see that more detailed report, click here.

MHProNews was told by a source with MHI connections that those allegations have been dogging Vanderbilt Mortgage and Finance (VMF) since about 2007.

Neither MHI, nor the BH units in question have responded to MHProNews about these allegations, nor have they offered even a simple statement that denounces racism.

The Daily Business News will continue to track and report on this and related developing stories that could impact the industry’s image and ongoing post-2008 recovery efforts.  ##

(Image credits are as shown above, and when provided by third parties, are shared under fair use guidelines.)

SoheylaKovachManufacturedHomeLivingNewsManufacturedHousingIndustryDailyBusinessNewsMHProNews-Submitted by Soheyla Kovach to the Daily Business News for MHProNews.com.

Dodd-Frank Act Remains a Stumbling Block to Manufactured Home Lending

May 30th, 2016 Comments off

mhi photo credit mh under productionSteve Sinovic, writing in abqjournal, says sales of manufactured home sales are up, a popular and affordable housing choice for New Mexicans, some eighteen percent of whom live in manufactured housing. However, financing costs are being driven up by the Consumer Financial Protection Bureau (CFPB) implementation of the Dodd-Frank law. Additionally, the two government sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, are reluctant to deal in manufactured home personal property loans, thereby depriving MH sales of a secondary market. This means that lenders have to maintain the loans on their books and thus have a somewhat higher interest rate than conventional housing.  

Even with that rate difference, most save money on manufactured home payments, as MHLivingNews has often documented, as in the example linked below. 

Renters’ Nation: The Dark Side of Dodd-Frank and Its Impact on Affordable Housing

Paul Stull, president and CEO of the New Mexico Credit Union Association, is joining with other credit unions in lobbying to make more low interest loans available to families of more modest means who want to purchase a manufactured home (MH). He noted a provision in the Consumer Financial Protection Bureau (CFPB) that results in closing costs on a manufactured home similar to that of a large traditional-built home.

We are trying to get the CFPB to realize that one size does not fit all,” said Stull of what he considers regulatory overreach. “The same rules that apply to million-dollar homes” apply to a new MH selling for $40,000 in New Mexico.

Dave Woodruff, president and CEO of Los Alamos-based Zia Credit Union, said affordable housing in the northern New Mexico region he serves is challenging because of lower incomes and limited available land. He lost 15 to 20 loans in the last year because they were not secured by land. It ‘s not that the applicants were especially risky, but rather because of CFPB rules.

The absence of credit unions and community banks willing to make MH loans has concentrated 90 percent of MH lending in the hands of a few specialized MH lenders: Triad Financial, Cascade, Clayton Homes/Vanderbilt Mortgage and Finance, 21st Mortgage Corp. and San Antonio Credit Union’s CU Factory Built Lending and Mountainside Financial Service, as the Manufactured Housing Institute (MHI) tells the abqjournal.   

While the thrust of Sinovic’s report was insightful, it also cites outdated and inaccurate information that has since been contradicted by Richard Cordray, U.S. Senators, consumers and MH Lenders – which will be featured in a new video report on MHLivingNews.  MHPros and investors should aquaint themselves with a timely Op-Ed by Titus Dare, on why the GSEs are not all in on Duty to Serve being applied to chattel lending.

Duran lauds the finance companies willing to take the risk for the borrowers who have less than sterling credit, but realize the advantage of a manufactured homes over apartments. “They are building their credit. They are building equity,” said Duran of buyers. “A manufactured home is a great way to get in on the ground level.”

For an interview with Triad Financial’s Don Glisson, Jr. that has insights on why MH lending rates tend to be higher, please click here. ##

(Photo credit: Manufactured Housing Institute–manufactured homes under construction)

matthew-silver-daily-business-news-mhpronews-comArticle submitted by Matthew J. Silver to Daily Business News-MHProNews.