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Editorial: Resident Opposes Sale to Hometown America

March 23rd, 2017 Comments off
MHCWeighsAcquisitionOfferUnderStrangeCircumstancescreditBriarcrestEstates2-postedtothedailybusinessnewsmhpronewsmhlivingnews

Credit: Briarcrest Estates.

In a contentious story that the Daily Business News covered here, the alleged on and off discussions to sell Laconia, New Hampshire- based Briarcrest Estates to Hometown America has one resident choosing to utilize the power of the media to make their point.

According to the Laconia Daily Sun, the story dates back to July 2013, when community owners Mark and Ruth Mooney tentatively agreed to sell the Briarcrest Estates to Hometown America for $10 million.

In compliance with state law, the terms of the transaction were disclosed to the tenants, who had 60 days to make a counteroffer by presenting a purchase-and-sales agreement. The law requires the community owner to bargain in good faith with the residents or their organization.

Residents of Briarcrest Estates then formed The Lakemont Cooperative Inc. and, with assistance from the New Hampshire Community Loan Fund, matched the offer from Hometown America Corporation.

After initial resistance, Mark and Ruth Mooney agreed to sell the 183 acre, 241 home site community to the cooperative, which has owned and managed it since April 2014.

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Credit: Briarcrest Estates.

Fast forward to January 17th of this year.

Doug Minahan of Hometown America Corporation wrote a letter to cooperative President Don Vachon.

Doug Minahan. Credit: LinkedIn.

It was an offer to buy Briarcrest Estates.

It’s an unsolicited offer, period. A fire-from-the hip” proposal, said Vachon at the time.

The Hometown America deal reportedly included retiring the outstanding balances on a $8 million loan from TD Bank and $2 million loan from the New Hampshire Community Loan Fund as well as covering the prepayment penalty of $873,000 on the bank loan, closing costs and real estate transfer taxes associated with the transaction.

But for some residents, they claim that the timing was “convenient.

Although the board has claimed the offer was not solicited, the letter from Hometown America Corporation outlining its terms begins ‘per our discussions,’ indicating that board members have been communicating with Hometown America for some time,” said Katherine Carlson, who also was among the first officers of the cooperative.

 

A Letter to the Editor

MHCWeighsAcquisitionOfferUnderStrangeCircumstancescreditZillowBriarcrestEstates-postedtothedailybusinessnewsmhpronewsmhlivingnews

A home in Briarcrest Estates. Credit: Zillow.

Earlier this week, resident Barbara Patterson decided to take matters into her own hands, with a letter to the editor.

Everyone has heard of Briarcrest. It’s a manufactured housing park [sic] consisting of 240 very well maintained homes on the side of Prescott Hill, within a hop, skip and jump of Laconia and Winnisquam, Paugus, Opechee and Lake Winnipesaukee,” said Patterson, in her letter to the Laconia Daily Sun.

We are very proud of our community and three and a half years ago, Mark and Ruth Mooney put it up for sale for $10 million.

Patterson then spoke to the process that residents went through.

During our formation, our very hardworking resident investment banker, our resident Merrrimack County administrator and many, many other hardworking, talented individuals — joined eventually by our resident paralegal — worked closely with ROC and formed a co-op to govern ourselves. ROC USA is a New Hampshire social venture working to make quality ownership viable for homeowners in manufactured home parks [sic],” said Patterson, who then provided her view on Hometown America.

Now our co-op is threatened by the same buyer from Chicago who originally made an offer to buy Briarcrest: Hometown America. Our second board of directors has been negotiating with Hometown since November, unbeknownst to the majority of the 230 resident owners not on the board. Originally, we were assured that we would never be sold again and I, for one, believed it,” said Patterson.

But the current board of directors has been in direct contact and providing financial information to Hometown America without our knowledge or the membership’s authorization to do so. We believe this is a breach of trust. The board is attempting to limit our discussions and have made a date for Hometown America to make a presentation to the membership and a date for a special membership meeting, although they have yet to tell us what we will be voting for.

EditorialResidentOpposesSaletoHometownAmericacreditGoogle-postedtothedailybusinessnewsmhpronewsmhlivingnews

Credit: Google.

Patterson also points to her opinion that some new owners, or seasonal residents, may not completely understand the impact of a vote for new ownership.

Some of our new owners are not aware of the serious consequences of a vote for a private owner such as Hometown America and their ability to raise our rents hundreds of dollars to help pay its own considerable debt, or to sell us to another buyer. We lose all control over our rents, rules and management,” said Patterson.

Hometown America’s reputation is less than stellar and squeaky clean. Numerous lawsuits have been filed against Hometown in states in which they own parks [sic]. We, as a co-op, want to maintain our low rents, our own governorship, and our beautiful community.”

The Daily Business News will continue to watch this story closely and provide updates. ##

 

(Image credits are as shown above.)

 

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RC Williams, for Daily Business News, MHProNews.

Submitted by RC Williams to the Daily Business News for MHProNews.

Dodd-Frank: Clintons, Buffett, Trump and What it all Means

December 5th, 2016 Comments off
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President Obama signs Dodd-Frank into law. Credit: The White House.

With President-elect Donald Trump set to take office in a few weeks, one of the issues front and center is Dodd-Frank and what will happen to the legislation, which Senators Elizabeth Warren (D. MA.) and Bernie Sanders (I. VT.) have vowed to defend.

The issues, opinions, perspectives and points of reference abound.

Patrick J. Richard provided his take in American Banker, making the case that dumping Dodd-Frank could restore executive accountability to the financial sector.

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Patrick Richard. Credit: American Banker.

Absent from the debate over rolling back Dodd-Frank,” wrote Richard, “is recognition of how a regulatory recalibration – restoring balance between risk and rules – would also restore more personal responsibility on the part of financiers.

Richard used Warren Buffet and Berkshire Hathaway as an example of risk/rule balance in action, including Buffet’s line from his 2004 annual letter to shareholders that said “After all, who ever washes a rental car?

The ‘rental car’ in the oft-used expression could be a metaphor for the current financial services industry,” wrote Richard. “It has been so influenced by government regulation since the crisis that executives and boards of directors perhaps feel less ownership and accountability for its performance. Good governance recognizes that executives should treat the bank’s investments at least as carefully as their own money – or car.

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Parady of CFPB logo – credit, Plus 1 Properties. Cartoon collage credit, MHProNews.

Buffett referred to the importance of aligning executive and director incentives with shareholder interests in his 2004 letter.  In it, he made clear that all Berkshire Hathaway directors purchased their holdings in the markets just as normal shareholders did and that Berkshire Hathaway does not carry Directors & Officers liability insurance.

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Warren Buffett, President Obama, credit – Motely Fool.

Buffett’s approach here is simple but far-reaching,” wrote Richard. “Directors and officers put ‘skin in the game’ and hold the same economic upside and downside as shareholders. They also face personal liability and full accountability for the legal ramifications of any misdeeds. Directors and officers do the right thing in part because it is in their personal interest to do so.

Richard also shared how this equation is more complicated for banks, as they treat shareholders and depositors as key stakeholders, even though their interests can be at odds. In part, this ties into the “why we need it” narrative of Dodd-Frank regulation. 

In reaction to the financial crisis, Dodd-Frank produced a blizzard of regulations to proscribe a litany of behaviors. But this approach has proven costly, complicated, stifling to innovation and susceptible to gaming,” wrote Richard. “Worse, it may have actually undermined executive accountability: The CEO in effect becomes a compliance manager rather than driver of key business decisions, often left to rely on the secondary assurances from risk managers and other mid-level managers.

Richard sums up his take by stating that massive regulation offers the opposite of the Warren Buffett approach. “By creating a system of highly detailed regulations that no CEO or board could recite, let alone master, Dodd-Frank and other regulatory schemes empower specialists, lawyers and bureaucrats,” wrote Richard.

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Hilary Clinton. Credit: AP. 

Understanding the Clinton Connection

A recent editorial from Investor’s Business Daily (IBD) highlights comments from Hillary Clinton at a September Presidential debate, and shows how the Clinton Administration – not the tax cuts during the Bush 43 Administration – set the stage for Dodd-Frank.

In 1995, using the powers of the presidency, Bill Clinton turned the 1977 Community Reinvestment Act into an aggressive program that basically forced banks to lend money to ‘underserved’ communities,” the article said.

Credit: IBD.

Credit: IBD.

That meant those with low incomes who couldn’t necessarily repay a loan.

This is where The Department for Housing and Urban Development (HUD) comes in.

Under HUD Secretary Andrew Cuomo, the agency became particularly aggressive, in 2000 making a goal of over $1 trillion in new loans to low-income minority households,” the article said. Fannie Mae and Freddie Mac were told to make at least half of their loans to low- and moderate-income borrowers, mainly minorities.

Banks suddenly found that regulators had the power to refuse their branch expansions or reject a merger if they weren’t making enough loans to otherwise unqualified minority borrowers. So they played along.

They made the loans, and Freddie and Fannie bought the loans right back. It was like a game of musical chairs, and the Fed kept the game going in the early 2000s by cutting interest rates. Every time Republicans in Congress or President Bush talked about reforming housing programs, Democrats like Rep. Barney Frank of Massachusetts and Sen. Chris Dodd of Connecticut threw fits, threatening to gum up Congress and implying that GOP lawmakers were racists. The Republicans backed off.

And the connection is made.

Tax cuts had nothing to do with this whatsoever. Nor did the minor tinkering to the 1930s-era Glass-Steagall law in 1999, which was implicated in none of the major Wall Street insolvencies or subsequent bailouts during the crisis,” the article said.

It’s another die-hard Democratic myth,” IBD stated, “intended to absolve themselves of blame for the crisis. And the economy-killing Dodd-Frank financial regulations passed in 2010 were based on these Democratic myths — which is why we’re now having the worst economic expansion in modern history.

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Credit: Wikipedia, CFPB, HubPages.

MH Connections

Among the overlooked causes for the big slide of manufactured housing from the 372,000+ shipments hit in 1998 to the low ebb of the mid-to-late 2000s was loose lending standards of conventional housing lenders.  Buyers that once would have turned to manufactured homes for their housing, instead used so called “no doc” “liar loans” that boosted conventional housing at the expense of manufactured and modular home production.

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The initial nose-dive of manufactured housing that came after 1998 was due to a large volume of repossessions from poorly underwritten loans.  But the next bite out of the industry’s proverbial apple was equally poor – and far costlier to the U.S. economy and millions of conventional housing owners – loans made on houses that were too risky, and failed. Graphic image credit, Patrick.

As Daily Business News readers are aware, we have followed Dodd-Frank, the Consumer Finance Protection Bureau (CFPB) and its effect on the MH industry closely, including both being in the Trump Administration crosshairs, the CFPB being ruled unconstitutional, and who the Feds and the CFPB are working for on a practical level.

paulbradleycredtimhpronewsstanthonycasehighlightsbattleovercommunityownersrightsvsresidentsrights-dailybusinessnewsThe issue brings a common divide.  Paul Bradley stated his concerns about bringing Dodd-Frank to an end in a new article, linked here, concerned that ending those standards could mean a return to “predatory lending.”

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Manufactured homes ready for shipment. Image credit – Wikipedia.

On the other side are those – such as award-winning retailer, Alan Amy – who told Inside MH that he believes that CFPB regulations are costing around 30% to 35% more sales of manufactured homes a year. If Amy is correct, that would mean some 25,000 (+/-) new manufactured homes a year. So this issue is front and center for manufactured housing professionals.

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Award winning manufactured home retailer Alan Amy estimated in the video linked above that Dodd-Frank is costing the MH industry – and prospective home buyers – 30% + more sales every year. Credits – Inside MH – MHLivingNews – Sunshine Homes and ManufacturedHomes.com.

We will continue to follow developments regarding Dodd-Frank and the CFPB closely as they unfold. ##

(Image credits are as shown above.)

rcwilliams-writer75x75manufacturedhousingindustrymhpronews

RC Williams, for Daily Business News, MHProNews.

Submitted by RC Williams to the Daily Business News for MHProNews.