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“Challenges to Obtaining Manufactured Home Financing,” Urban Institute Report Fact Check, Analysis

July 4th, 2018 Comments off

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Is the Urban Institute (UI) attempting to use their “research” to blunt the manufactured housing industry’s steady yet modest recovery?  If so, why?

 

It’s a debatable point that could be made after a close analysis of the UI nonprofits’ most recent – and once again, problematic – manufactured home industry related research.  The prior report and analysis on manufactured housing, linked below, can be read later for greater depth of understanding on their latest research.

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

In the Urban Institute’s (UI) latest report, attached below, Laurie Goodman and Bhargavi Ganesh are the only two researchers with bylines in their June 2018 document.

Both Goodman and Ganesh were part of a quartet of co-authors who in January 2018 signed onto a report entitled, “Manufactured homes could ease the affordable housing crisis. So why are so few being made?” Edward Golding and Alanna McCargo were not named in the UI’s latest June report. More on that prior research will be touched on later, below.

 

The two 2018 UI reports are similar in this respect. It isn’t so much the UI statements, but rather:

  • what they didn’t say, which is significant,
  • and how what they did say is phrased in troubling ways, starting with the headline.

Those sum up the issues for manufactured housing professionals, many investors, and intelligent prospective buyers. The one clear positive that should be noted is that they writers used the industry’s homes correct terminology.

Beyond that…? Let’s look at specifics.

 

Imagine that You’re a Home Buyer, Considering a Manufactured Home…

In the single-family housing market, most homeowners take out a real estate loan or mortgage to finance their home. But in the manufactured housing market, most consumers rely on chattel loans, or property loans, which typically have less favorable loan terms and fewer consumer protections than mortgages. The high costs of chattel financing can dissuade people from purchasing a manufactured home, contributing to the relatively small number of homes shipped,” stated Goodman and Ganesh in their opening few lines.

There were 240,000 homes shipped each year from 1977 to 1995, but only 93,000 homes shipped in 2017. This report examines the challenges to obtaining affordable financing for a new manufactured home,” concludes their opening paragraph.

Rephrased, they are telling media, other researchers, and those savvy shoppers that might read such a report:

  • Manufactured home sales have declined dramatically;
  • Buyers are being dissuaded by high cost chattel loans;
  • Starting with the headline, they make financing a manufactured home sound like “Challenges;”
  • admit to not considering the mitigation of closing costs in their evaluation, saying “Moreover, we have not accounted for differences in closing costs. The up-front costs of a chattel loan might be lower.”

Nor do they mention the hassles that retailers report when a significant percentage of real estate loans may not meet appraisal. The causes? Because appraisers may be ignorant about manufactured housing, or are otherwise hamstrung by guidance which relies on a lack of “comps,” plus other factors that keep manufactured homes in mortgage deals from getting a fair appraisal.

UrbanInstituteChallengestoManufacturedHomelendingDailyBusinessNewsMHproNews

While some 80 percent of mortgage loans make appraisal, said an FHA lender to MHProNews, that still  means that 20 percent don’t.

That appraisal hassle – that ‘roll of the dice’ that may cause a lost sale – causes some retailers to shy away from mortgage loans. Having lost sales for that reason, say some retailers to MHProNews, they are not as enthusiastic about that potential outcome.

Are those factors for the decline in land home mortgages made in manufactured housing since the early 2000s? That’s the kind of question that serious, dispassionate “evidence based” researcher might do.

But UI’s Goodman and Ganesh don’t even raise those issue, nor others.

Who did they interview for this? It’s another unanswered question.

That said, in the prior UI report in January, sources at the nonprofit indicated that Berkshire Hathaway brands, and the Manufactured Housing Institute (NHI) were consulted. If that occurred again this time, what did those sources say? With a week now elapsed since this UI report, why aren’t Berkshire brands, or MHI, raising concerns like those noted herein publicly?

UrbanInstituteLogoChallengestoManufacturedHousingFinancingReportJune2018ManufacturedHousingIndustryDailyBusinessNewsMHproNews

 

More UI Report Wrinkles

It isn’t until page 4 of their report that the pair from UI mention another reason why buyers may legitimately want a personal property – home only, or chattel loan. That prudential reason? “Moreover, some states have a lower property tax on personal property than on real property.”

  • don’t consider the potential savings in real estate taxes vs. personal property taxes found
  • and they even failed to clearly link to their somewhat more positive, but still problematic report published in January.

For a report that is supposed to examine manufactured home financing, they don’t mention:

  • FHA Title 1,
  • the USDA’s Rural Development program,
  • VA loans,
  • or the role Government Sponsored Enterprises (GSEs) could be making to lower rates via their Duty to Serve (DTS) mandate.

Manufactured Housing Association for Regulatory Reform (MHARR) Pressing Fannie Mae, Freddie Mac to Fully Engage on Duty To Serve (DTS)

Nor did UI mention that the:

  • Government Accountability Office (GAO),
  • Fannie Mae,
  • and other researchers found that even with higher interest rates, manufactured homes are generally still lower in cost than rent, and significantly lower than conventional housing.
ManufacturedHomesGAO2014ReprotCompareApartmentsSingleFamilySiteBuiltHousingManufacturedHomesMHLivingNews

Any serious researcher could find this information, which is from the GAO report on manufactured housing, and is found on MHLivingNews . https://www.manufacturedhomelivingnews.com/researchers-shake-up-american-dream-rent-vs-buy-ken-johnson-florida-atlantic-university-exclusive-to-manufacturedhomelivingnews/ So why didn’t the UI researchers find and report on this in their latest report?

Interviews with educated, savvy homeowners on MHLivingNews indicated that when they did their own math, they found that manufactured homes made good sense. Again, UI fails to mention any such favorable companions.

 

UI Acknowledgement – A Head Fake?

Longtime, devoted Daily Business News readers will recall that MHProNews took the Urban Institute to task for not disclosing their funders, trustee, and other apparent conflicts of interest in their January, 2018 report.

Was the Urban Institute Misled, Duped, or Part of a Manufactured Housing Industry Scam?

Perhaps for that reason, UI added an acknowledgement in this report, and used the following disclaimers, shown in brown text below.

Acknowledgments

The Housing Finance Policy Center (HFPC) was launched with generous support at the leadership level from the Citi Foundation and John D. and Catherine T. MacArthur Foundation. Additional support was provided by The Ford Foundation and The Open Society Foundations.

Ongoing support for HFPC is also provided by the Housing Finance Innovation Forum, a group of organizations and individuals that support high-quality independent research that informs evidence- based policy development. Funds raised through the forum provide flexible resources, allowing HFPC to anticipate and respond to emerging policy issues with timely analysis. This funding supports HFPC’s research, outreach and engagement, and general operating activities.

This brief was funded by these combined sources. We are grateful to them and to all our funders, who make it possible for Urban to advance its mission. 

The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders…”

Convenient? Coincidence?

First. Money is fungible, as an industry attorney noted to MHProNews. To say that prior Berkshire Hathaway or Gates Foundation money has no impact on UI is debatable, or perhaps even laughable.

But equally noteworthy is the presence of the George Soros backed Open Foundation Money in this project. How many other intersections are there between Soros, Buffett, Gates and their interests?

 

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Summary

Summed up, the oversights and omissions by UI are stunning.

The issue of lending falls in the post-production sphere in the association world.

So arguably it is equally stunning that MHI, if they were serious about growing sales or financing options – or the Berkshire brands – haven’t weighed in – per Google search at this date and time – to publicly correct the misleading narrative forged by these ‘researchers.’

Pray tell, why not? Are they serious about promoting accurate facts about the manufactured home industry?

The Urban Institute’s full June 2018 report is linked here as a download.  “We Provide, You Decide.” ## (News, commentary, and analysis.)

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Related Reports:

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

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

February 2nd, 2018 Comments off

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Warren Buffett gave billions to the Bill and Melinda Gates Foundation.

 

WarrnBuffettDonatesBillMelindaGatesFoundationDailyBusinessNewsMHProNews

 

Accordng to the Bill and Melinda Gates Foundation website, that organzation in turn gave millions of dollars to the Urban Institute.

The Urban Institute (UI) recently published a report on manufactured housing.

 

The Urban Institute (UI) study on is manufactured homes (MH) is nuanced. It contains a mix of:

  • accurate,
  • debatable,
  • inaccurate information, and
  • missing information.  It is a fair question to ask, does this UI report leave readers – which may include investors, policy advocates, and public officials – with questions, and concerns about manufactured housing?
CFEDLogoSidebarBillMelindaGatesFoundationManufacturedHousingIndustryDailyBusinessNewsMHProNews354

Is MHI and Berkshire Hathaway involved in pattern of shadow boxing with the industry? It is worth noting that Housing and Urban Development (HUD) grant was also an important source for funding the UI last year, per their website donor list.  That funding may have originated during the Obama Administration. CFPB funding to CFED took place during the Obama era.

 

The UI report features a Clayton Homes manufactured home.

But the report otherwise fails to disclose the Berkshire Hathaway connections of the Urban Institute to the report.

 

When the Urban Institute was initially contacted by the Daily Business News, they were warm, prompt, and quite willing to talk about their research.

After some initial communications, UI were given a link to a recently fact-checked report published by MHProNews.  Promptly following that, in their follow up to the Daily Business News, UI said they no longer had time to speak.

When UI was asked about their funding and other ties to Warren Buffett and Berkshire Hathaway, they no longer replied.

Neither the Manufactured Housing Instiute (MHI), nor officials with Clayton and 21st Mortage that were contacted about this UI report would reply to questions about this issue.

 

Select Quotes From the UI Study

 

A similar picture unfolds if we look at manufactured homes as a share of the new stock of single-family homes, which ranged from 16 to 25 percent between 1977 and 1995 but has averaged just 10 percent in recent years.”

 

Three reasons manufactured housing production remains low

  1. Restrictive zoning 
  2. Restrictive or unavailable financing
  3. Lower appreciation
NewManufacturedHousingIndustryDailyBusinessNewsMHProNews600

At this time, HUD and investors are looking more closely at the factory built home industry, including HUD Code manufactured homes.  This mixed bag UI report appears now, why? Their report is missing several points, such as those noted in the links below.

Industry capacity has shrunk dramatically since 1990, when 100 manufactured housing producers operated 250 plants, but the industry should be able to quickly ramp up from the 34 operators and 121 plants in operation today if demand picks up.”

The entire Urban Institute report is available here as a download.

 

What’s not in the UI Report on Manufactured Housing.

An informed source at the Urban Institute told MHProNews today that corporate and association sources were consulted in this report.

Those sources were promised anonymity, per that source.

The Manufactured Housing Institute (MHI), Clayton Homes, and 21st Mortgage Corp all declined comments about the Urban Institute report.

Why did MHI, Clayton, et al want to appear to be arm’s length from this controversial research?

While the UI report indicated that restive financing was a problem, what’s not mentioned in this report are important facts.

For example, that 21st Mortgage and Vanderbilt Mortgage (VMF) – Berkshire Hathaway manufactured housing finance brands that are sister companies to Clayton Homes – were among the reasons, per sources which include MHI members/officials, why Duty to Serve (DTS) was delayed for years.  Or that a lack of data from 21st and VMF were cited by the Government Sponsored Enterprises (GSEs) as reasons why they are doing only limited pilots.

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

There was no mention of Berkshire Hathaway owned 21st Mortgage.  Or the role that cutting off financing, which caused hundreds of independent manufactured home retailers to fail, which also contributed to the failure of independent manufactured home producers as well.

21stMortgageCorpTimWillamsJune112009LetterBerkshireHathawayWarrenBuffettClaytonHomesManufacturedHousingIndustryDailyBusinessNewsMHProNews

Click here to see this full sized.

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

The connections between:

  • Warren Buffett led Berkshire Hathaway,
  • the use of non-profit groups,
  • and “the Moat…

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

…are among the factors that Kevin Clayton candidly discusses in his video interview, posted below.  This Clayton interview is going to become known for researchers as the ‘gift that keeps on giving,’ because it connects so many dots as to what’s been taking place for several years with respect to the manufactured housing industry.

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

MHI’s New Orleans Meeting  – Time For Transperancy 

Manufactured housing companies and roughly 2 dozen state associations are expected to be at the Manufactured Housing Institute (MHI) winter meeting in New Orleans, which begins this weekend.

Why are they meeting on Super Bowl Sunday?  Are they trying to boost, or limit turnout?

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

There will be a special report by MHProNews planned to coincide with the MHI meeting.  Attendees should stay tuned.

In the meantime, for those in attendance at the MHI meeting who aren’t deterred – they are encouraged to be an industry citizen journalist.

Be prepared to ask the 12 questions that MHI President and CEO Richard “Dick” Jennison should be kept nearby for use during their meeting.

Busted! “Failure Bonus” Paid-Richard “Dick” Jennison, CEO Manufactured Housing Institute-per MHI Document$

Some of the research in this post is publicly available information.  But it takes time to find and sort out.  It should be noted that a community operator, and MHI member, were among those that sources that brought this UI report to the Daily Business News’ attention.

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The vast majority of the industry’s small to mid-sized companies don’t have the time or resources to do such research for themselves.

 

Is MHI engaged in a pattern of activity – some of it open, other parts hidden – that are harmful to the interests of most of the independents involved in the industry?

This is part one, a follow up to this is planned in the future. Stay tuned.

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