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Posts Tagged ‘Freddie Mac’

Warren Buffett, Charlie Munger, Fannie Mae, Freddie Mac, Berkshire Hathaway Backstory

September 26th, 2018 Comments off

 

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Arguably at the heart of the affordable housing crisis is an access to lending for the most affordable homes built in America, manufactured homes.The Enterprises” of Fannie Mae and Freddie Mac are mandated by the Housing and Economic Recovery Act (HERA 2008) to support manufactured home lending under the ‘Duty to Serve,’ or DTS for short.

 

The “Federal Home Loan Mortgage Corp. (FMCC) (Freddie Mac), a government-sponsored home mortgage lender, was delivering 23% returns on equity and trading for less than eight times estimated earnings when Buffett touted the investment to Fortune Magazine in 1988,” writes Holly LaFon, an editor for GuruFocus.

You’ve got a low price/earnings ratio on a company with a terrific record,” Buffett told the magazine. “You’ve got growing earnings. And you have a stock that is bound to become much better known to equity investors.”

The Fortune article cited factors why Berkshire Hathaway Chairman Buffett and Charlie Munger, the Vice Chairman of Berkshire, were particularly attracted to Freddie Mac. ”I can’t think of a more tangible compliment to the stock than to buy every damn share we are allowed to,” Munger said.

By 2000, Berkshire was the largest shareholder of Freddie Mac, said LaFon, explaining that the “stock had soared to between $41 and $64 per share, for a sizable gain. His view on it changed, though, and he unloaded nearly all of his Freddie Mac and Fannie Mae shares that year, according to his testimony to the U.S. Financial Crisis Inquiry Commission in May 2010.”

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Brad Bondi, deputy general counselor of the commission, asked if Buffett if he sold because the stocks were no longer good investments.  Per GuruFocus, Buffett responded that he “didn’t know they weren’t going to be good investments” but became “concerned” about their management.

The Motley Fool, another investment-focused operation, said that Buffett colorfully said: I figure if you see just one cockroach, there’s probably a lot.”

They were trying to -– and proclaiming that they could increase earnings per share in some low double-digit range or something of the sort,” Buffett reportedly said. “And any time a large financial institution starts promising regular earnings increases, you’re going to have trouble, you know?”

Now, they are dealing essentially with government-guaranteed credit, so we know about that and we had it ratified subsequently about what has happened,” Buffett said. “So, here was an institution that was trying to serve two masters: Wall Street and their investors, and Congress.”

And the truth was that they were arbitraging the government’s credit, and for something that the government really didn’t intend for them to do,” the Berkshire chairman told the commission. “And, you know, there is seldom just one cockroach in the kitchen. You know, you turn on the light and, all of sudden, they all start scurrying around. And I couldn’t find the light switch, but I had seen one.”

The Daily Business News reported recently on a related commentary by Forbes contributor, David Marotta, who said that in 2012, that the entire presidential race should come down to a single question. “Who caused the financial crisis of 2008?” By the sounds of Buffett’s testimony, he didn’t cause it, but he did apparently believe that there was a crisis coming.

That crash, combined with other maneuvers linked below, led to a historic drop in manufactured housing shipments.

Figure1MobileManufacturedHomeSalesSHipmentsVsExistingingNewHouseSalesManufacturedHousingiinudstryDataMHProNews

Freddie Mac and Fannie Mae’s stock prices did not begin to crash until seven years later in 2007 when mounting home foreclosures led to unsustainable losses. In 2008, Buffett passed when Freddie Mac approached him about participating in a capital infusion. See that related report later, at the link below.

President Jimmy Carter Blasts Trump Administration on Affordable Housing, Carter’s Manufactured Home Ties

They’re [the GSEs, Fannie and Freddie] looking for help, obviously. And the scale of help is such that I don’t think it can come from the private sector,” Buffett told CNBC. Fannie and Freddie are still under the supervision of the Federal Housing Finance Agency (FHFA).

As regular Daily Business News readers know, there’s been a swirl of controversies around Mel Watt, FHFA, the GSEs, and the tepid way that the GSEs are meeting the decade old required Duty to Serve (DTS) manufactured housing. See related reports, further below.

Recall too that earlier this year, GuruFocus and Seattle Times, both did reports on Clayton Home and allegations of how Buffett’s manufactured housing brands engaged in monopolistic practices.

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

There is no questioning the overall Buffett and Munger success at operating Berkshire’s investments. But does this once more spotlight some of the ways that success has occurred.  Upcoming related reports will be forthcoming in the days ahead. Stay tuned, and sign up for our emailed updates, further below at the right. That’s this evening’s “News through the lens of manufactured homes, and factory-built housing” © where “We Provide, You Decide.” © ## (News, analysis, and commentary.)

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The Rich, Famous, PreFab Homes, Manufactured Housing, Hypocrisy, and You

 

Freddie Mac’s Manufactured Housing, Myths vs Facts – Your Professional Thoughts?

August 10th, 2018 Comments off


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We’ll weigh in on this Freddie Mac handout promoting manufactured housing another time, but would value that of the readers of Daily Business News on MHProNews.

 

Here it is, below. We just have this suggestion, as you look at this handout from Freddie Mac, meant to promote manufactured housing.  Please consider it from all angles.

  • What do you like?
  • What do you think could have been different?
ManufacturedHousingMythVsFactFreddieMacDutyToServeManufacturedHousingIndustryDailyBusinessNewsMHProNews

Download the full size document, at this link here.

  • What might have made this handout intended for home-shopping consumers better?
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Your Comments, Feedback, or Tips email at this link. Or Connect via LinkedIn and comment.

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

May 30th, 2018 Comments off

The Manufactured Housing Association for Regulatory Reform (MHARR) in written comments filed on May 30, 2018, has called on the Federal Housing Finance Agency (FHFA) — the federal regulator of mortgage giants Fannie Mae and Freddie Mac — to significantly revise and amend the final rule that it issued on December 29, 2016 to implement the Duty to Serve Underserved Markets (DTS) mandate incorporated by Congress in the Housing and Economic Recovery Act of 2008 (HERA) and related FHFA “guidance” for evaluating the Government Sponsored Enterprises’ supposed DTS compliance plans that became effective on January 1, 2018,” the Washington, D.C. based trade group told the Daily Business News via a news release.

 

MHARR’s comments were submitted to FHFA pursuant to a “Notice of Regulatory Review” published in the Federal Register on April 5, 2018, seeking comments on FHFA regulations that “should be modified, streamlined, expanded, or repealed to make [FHFA’s] regulatory program more effective or less burdensome in achieving its objectives” in accordance with a 2012 Regulatory Review Plan developed under Executive Order 13579 (“Regulation and Independent Regulatory Agencies,” issued July 11, 2011),” with emphasis added, per the MHARR release.

Based on this request – and in order to bring both Fannie Mae and Freddie Mac into full compliance with DTS — MHARR’s comments call for substantial amendments to: (1) FHFA’s final DTS implementation rule; (2) FHFA’s DTS plan “Evaluation Guidance;” and (3) Fannie Mae and Freddie Mac’s DTS implementation plans themselves, given the patent failure and inability of these regulatory actions to effectively implement the DTS mandate in a market-significant and timely manner,” per MHARR.

In part, MHARR’s comments stress that a supposed “lack of information” regarding the performance of manufactured home chattel loans – which comprise upwards of 80% of the HUD Code market) – more than a decade after the enactment of DTS is both disingenuous and evidence of the type of continuing bias against manufactured housing and manufactured homebuyers at Fannie Mae and Freddie Mac that DTS was meant to remedy in the first place,” according to their statement.

There is no similar known effort being made by the Manufactured Housing Institute (MHI), which sources say has postured a push for DTS, but whose prior chairman, Tim Williams, has said in published comments was a “waste of time.”

MHARR has previously noted that every day that DTS isn’t fully implemented is a “gift” to the Berkshire Hathaway lenders.

Industry veteran and MHI award-winner, Marty Lavin, JD, has recently told MHProNews that MHI works forthe big boys,” and only works for smaller companies when that aligns with the interests of larger firms.

MartyLavinTataroAwardWinnerManufacturedHousingInstituteSpySeaFollowtheMoneyPayMoreAttentionToWhatPeopleDoThanWhatTheySayMHProNews

Further,” said MHARR, “the comments note that the supposed chattel loan “pilot programs” included in the Enterprises’ DTS “implementation” plans, are little more than token efforts that would serve slightly more than 1% of the manufactured housing market with no assurance whatsoever of expanded secondary market or securitization support for manufactured housing chattel loans at any time in the foreseeable future. As such, the supposed DTS compliance plans – and the final DTS rule and Evaluation Guidance that they are based on – are wholly inadequate to “effectively” implement DTS and must be revised in accordance with FHFA’s 2012 Regulatory Review process.”

MHARRMarkWeissIfCongressHadMeanttheDutytoServeToBeOptionItWouldNotHaveCalledItADutyDefintionofDutyIsMandatoryResponsibilityDailyBusinessNewsMHProNews

In Washington, D.C. MHARR President and CEO Mark Weiss said: “The continuing failure of FHFA, Fannie Mae and Freddie Mac – more than a decade after the enactment of DTS — to take concrete and market-significant steps to increase the availability of chattel loans for lower and moderate-income manufactured homebuyers is inexcusable and in defiance of the law and the will of Congress.

Weiss elaborated.

 Using the alleged lack of chattel loan “data” as a risible excuse, FHFA, Fannie Mae and Freddie Mac are standing in the way of greater competition in the manufactured housing finance market and lower,” he said, “more competitive interest rates for consumers that would allow many more Americans to purchase a truly affordable home of their own. Conversely, the failure to implement DTS as written and intended by Congress, will have the negative consequence of driving more consumers into the arms of the current industry-dominant lenders and their higher-cost loans. DTS is far too important to allow it to be emasculated by Fannie Mae and Freddie Mac and their enablers within and outside the industry.”

 

About MHARR

The Manufactured Housing Association for Regulatory Reform is a Washington, D.C.-based national trade association representing the views and interests of independent producers of federally-regulated manufactured housing. ## (News, analysis, and expert commentary.)

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GSE Asked: Will Manufactured Housing Overtake Conventional Homebuilding?

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

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

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

 

GSE Asked: Will Manufactured Housing Overtake Conventional Homebuilding?

May 26th, 2018 Comments off

GSEAskFreddieMacWillManufacturedHousingOvertakeConventionalHomebuilding

HISTORICALLY PLAGUED BY THE image of a tin box on wheels, manufactured housing finally is winning some of the mainstream acceptability that this housing segment has long sought. Today, manufactured housing—also mistakenly known as mobile homes, a colloquial but technically inaccurate name sometimes used to describe the housing product broader homeowning audience.”

–        Donald S. Bradley,

senior economist in Freddie Mac’s housing economics department.

 

It was a dramatically different time, and to be blunt, short term thinking back then in manufactured housing doubtlessly cost the industry tens of billions annually in new factory-built home sales.

The year was 1998, and the bust from the easy-credit go-go days of liar loans and questionable documentation was getting ready to bust. So, the researchers of that era did not yet know what we know today.

ManufacturedHousingIndustry1997FutureManufacturedHOusingHarvardUniversityJointCenterHousingStudies1997The chart below that reflects the nose dive in shipments from 1998 to 2009 are the only reminder that prudent, honest, long-term strategists need to realize that credit must be sustainable, or that promising future can vaporize like rainwater in the desert once the clouds pass.

MobileHomeShipmentsManufacturedHomeShipmentChartMHIAShipmentsMHIndustryChampionSkylineHUDCodeDailyBusinessNewsMHProNews

That said, the praise from third-party researchers then was plentiful. And Fannie Mae seriously asked the following question in a research document:

Will Manufactured Housing Become Housing of First Choice?

Before you think that the report and headline were a one-off, recall that Eric Belsky made the statements in the graphic shown below. He did so a few years later, knowing about the repossessions, foreclosures and the constricting of lending that were occurring by that time.

–        Harvard,

–        a GSE,

–        the Ford Foundation,

–        and others were seeing the future of American Housing as coming out of a HUD Code manufactured home factory.

EricBelksyManufacturedHousingIndustryManufacuredHomeManufacturedHousingInstituteResearchDataAffordbleHousingMHProNewsDailyBuisnessNews575

The Urban Institute, a HUD PD&R, and other reports reflect that manufactured homes (MH) can appreciate side-by-side with conventional housing. The law of supply and demand applies to MH and conventional housing too. When the GSEs, FHA, VA, USDA, and others realize that fixing appraisals through education, and leveling the playing field in lending will boost the value of the majority of manufactured homes, that in turn will fuel the financing for the millions of new manufactured homes needed in America today.

The proverbial table could be set for that type of future again, where manufactured and factory-built housing might be poised to overtake convention building, because the demand for housing is so great.

LawrenceYunNARShort8.3MillionHousingUnitsRisingRentsHousingPricesCuredOnlyByMoreBuilding

And the gap between what site builders can do and what is needed is so wide that among the tech giants are those who believe that only factory building will accomplish the closing of the gap.

This article will only reference briefly as related reports at the end what the Urban Institute failed to note in an otherwise largely useful report that published on manufactured housing in January 2018.

But some of the takeaways found in these reports from the late 90s and early 2000s are still valid today. and ought to be required reading for industry professionals, investors, public officials, policy and housing advocates.  The research we need today is research that’s already been done, time and again.

The excuses – pardon the bluntness – that the GSEs give today find their answer in some of their own research documents from the past, along side that of other third parties that praise the manufactured housing industry’s product.

What about today?

In fact, a recent report by the Manufactured Housing Association for Regulatory Reform (MHARR) makes it clear the quality of manufactured housing is – as HUD Secretary Ben Carson said, “Amazing!” is proven by federal data that proves that only a tiny fraction of a single percent of the homes produced ever go to dispute resolution.  Keep in mind that the feds under Pam Danner’s watch at HUD started essentially advertising for complaints, because there were so few of them.

MostMenAppearnNeverConsideredWhatHouseIsNeedlesslyPoorAllTheirLivesHenryDavidThoreauManufacturedHomeLivingNews

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

The extended quotes that follow are from a Ford Foundation report.  The entire document will be linked as a download at the end.

The opening quotes above are from a Freddie Mac report, which will also be linked at the end as a download.

The closing thought for this is simple.  For at least 2 decades, the manufactured housing industry has allowed itself to be defined by others.  The industry has built a fine product for decades. The foundation for having the industry defining itself has been set.

The industry has the laws that it needs, now what is needed is to see those laws be fully enforced.

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

Back then, or more recently, there are media and researchers who discover that the solution to the affordable housing crisis is hiding in plain sight.

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

It is up to the individual businesses, or through a collective effort, to redefine in the public mind the myths vs. the realities. Please don’t take this as hubris, but we helped set the foundation for getting to the heart of what bothers consumers, media, researchers, and others when we launched – thanks to the support of others – MHLivingNews.com.

Surprised by the Truth, While Shopping for a New Home

MobileHomeShipmentsManufacturedHomeShipmentChartMHIAShipmentsMHIndustryChampionSkylineHUDCodeDailyBusinessNewsMHProNews

When conventional housing starts dwarf manufactured housing, the industry must scratch its head, and candidly ask why? When existing home resales can’t – per the NAR’s Lawrence Yun – ever close the needs gap, manufactured housing pros and investors with guts and vision must step up and say, “We can do this.”

What is self-evident from the new home shipment levels is that the industry’s ‘leadership’ failed terribly at protecting, educating and promoting the true value of our product.

IfPrettyPicturesVideosAloneWereEnoughMHIndustryWillOnlyAchieveItsGoalsByResovingItsCoreIssuesLATonyKovachMHProNews1

We must educate ourselves, and then we must educate others. James McGee and Chet Murphree said it, ‘its all about education.’ more about the above, linked here. John Bostick said it, “Easy doesn’t pay well.”  But with discipline and grit, the difficult becomes easy, and that proven system pays very well.

  • Evidenced-based education must be first to each other as professionals.
  • Then, education must then go out to our home owners and the rest of the general public.
  • We must not fear the truth.  Our product doesn’t have to be perfect, it just has to be a prudent option.  Site built housing is demonstrably not perfect, ours doesn’t have to be either.
  • There has to be some bold and courageous enough to stand up in their own respective field and do what a group of communities are doing, forge a new association that will address the needs that decades of history reveal hasn’t been solved by current leadership.

The proof of our quality and the reality of what holds us back are what MHProNews and MHLivingNews, with the support of others, has been documenting for years.  Those focus group videos are evidence of what happy manufactured home owners look like.

Affordable Housing Focus Group – Comparing Housing Options – Conventional Houses, Condo, Rentals, and Manufactured Homes – Up for Growth, National Association of Realtor, Studies

The solution for the affordable housing crisis has been hiding in plain sight.

Since we’ve said those words, others in media have picked it up, time and again.  That too is part of the proof of what is needed. Honest engagement with the media, researchers, advocates, home-shoppers, and public officials.

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

These reports from third parties from the glory days not so long past point the way foreword, for those willing to make common sense changes that bring new, more profitable and sustainable results.

TheFirstStepInSolvingAProblemIsToRecognizethatItDoesExistZigZiglarDailyBusinessNewsMHProNews

That said, let’s dive into the powerful opening to the Ford Foundation, in the extended quotes below.

ManufacturedHousingCommunityAssetBuildingStrategyFordFoundationDailyBusinessNewsMHProNews

 

ABSTRACT OF FINDINGS

“An increasing share of lower-income families, the same population targeted by community-development organizations, are opting to live in housing that was built off-site in a factory to meet the performance standards of the national HUD manufactured-housing code. However, most community-development practitioners are just beginning to come to terms with the implications of manufactured housing for their work.

ManufacturingTransportReportToFordFoundationManufacturedHousingIndustryDailyBusinessNewsMHProNewsThis paper explores advantages and disadvantages of manufactured housing for those entities whose mission is community development and asset building. Several challenges are presented for practitioners: First, working to educate consumers while also creating financing processes that ensure manufacturedhome buyers obtain credit on the best terms for which they can qualify. Second, using the increased scrutiny under the Manufactured Housing Improvement Act of 2000 to advocate for states to enforce more rigorous installation standards and increased accountability. Third, working to overcome land-use controls which prevent manufactured homes from being placed in communities in need of affordable housing, as well as areas with more potential for appreciation. Fourth, working with designers and planners to develop innovative designs and housing developments, while maintaining manufactured housing’s affordability advantages. Finally, equal effort must be devoted to address the difficult conditions of many lower-income people—owners and renters alike—living in older, and often deteriorating, mobile homes. While a few of these families and individuals could be relocated to new and better quality homes with the help of subsidies, resource limitations suggest the need to create cost-effective methods to eliminate health and safety problems by upgrading or rehabilitating this extremely affordable element of the nation’s housing inventory.

As a companion to this paper, an exhaustive literature review has been compiled.

INTRODUCTION

There are over eight million manufactured, HUDcode homes in the United States today, representing two-thirds of affordable units added to the stock in recent years and a growing portion of all new housing. In fact, buyers of manufactured homes contributed to a substantial share of the growth in low-income home ownership evidenced in the 1990s. These statistics send a message to all who seek to promote home ownership for low-income families, as well as promote safe, affordable housing opportunities in disenfranchised communities. An increasing share of the people whom community-development organizations serve are opting to live in housing that was built offsite in a factory to meet the performance standards of the national HUD manufactured-housing code. Many community-development practitioners are just beginning to come to terms with the implications of this for their work.

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This report and the “Developing Community Assets with Manufactured Housing: Barriers and Opportunities” symposium held in Atlanta in February 2002 by the Neighborhood Reinvestment Corporation are part of an effort to better understand the implications and opportunities of manufactured housing for the community-development field. The goal of this project is to increase education and awareness about manufactured housing among practitioners. Similar to other markets, community-based organizations have the potential to help ensure that consumers make informed choices regarding manufactured housing, and to use programmatic and policy tools to make a positive impact on communities.

To supplement the quantitative findings of research conducted by staff of the Joint Center for Housing Studies of Harvard University, anecdotal information was collected from the national NeighborWorks® network of nonprofit community-development organizations, and model program profiles were developed to provide a more complete picture of the opportunities and challenges of manufactured housing. In addition, focus groups with community-development practitioners, lenders, manufactured-housing retailers, homebuyer-education specialists and actual clients and consumers were convened to assess perceptions, knowledge and experience with manufactured housing. Guiding this research were questions related to the community-development field, namely, what—if anything—should community-development entities be doing about manufactured housing? How can this field begin to discern what improvements in public policy are needed and what programs might be successful?

This report provides a unique overview of manufactured housing, including a thorough analysis of historic trends, household demographics and the characteristics of manufactured stock, as well case studies that highlight innovative programs and developments. As a companion to this report, an exhaustive review of existing literature has also been summarized (beginning on page 49).

  1. MANUFACTURED HOUSING CONTINUES TO EVOLVE

What is Manufactured Housing?

Manufactured housing began as an offshoot of the recreational-vehicle industry in the 1930s, providing shelter for households with mobile lifestyles as well as temporary housing needs. Following World War II, housing shortages induced many households to turn to mobile homes for permanent shelter. Recognizing an opportunity, during the 1950s the industry began designing and constructing units intended to be permanent shelters. This development engendered some quality improvements, but industrywide standards remained uneven.

Within a few decades, concerns over the quality, durability, health and safety of manufactured homes led to federal action. In 1974 Congress passed the Federal Manufactured Housing Construction and Safety Standards Act, which led to the creation of a national manufactured-housing code (the “HUD code”). Unlike site-built homes, modular housing and other types of factory-produced homes, which are built to a variety of state and local building codes, HUD-code manufactured homes are built to a single, national quality and safety standard. This standard is generally based on the performance of the design and materials, rather than prescribing a specific material type or dimension must be used. Therefore, HUD-code units may use engineered lumber or alternative materials not commonly permitted under local building codes.

Homes built to the HUD code are still built on a permanent chassis like mobile homes built prior to 1976, but HUD-code units are of a higher quality, safer, and more durable than earlier models. Importantly, the HUD code pre-empts state and local building regulations, allowing manufacturers to use standardized building materials and components and avoiding the delays associated with local building inspection procedures.

Because of these streamlined codes, reduced delays and other efficiencies, one of manufactured housing’s most distinctive features is its affordability. These cost advantages do not stem from inherently inferior quality standards in the HUD code as compared to site-built homes. Detailed studies by the University of Michigan and others suggest that quality differences of the local site-built codes compared to the HUD code is minimal (Warner and Johnson 1993, Gordon and Rose 1998). In fact, manufactured housing’s affordability stems largely from cost savings from production processes.

Five factors primarily drive these efficiencies:

  1. economies of scale in high-volume materials purchase,
  2. ability to better coordinate production using assembly-line techniques,
  3. a controlled environment devoid of weather or other delays,
  4. standardized design and materials, and
  5. reduced costs (primarily time) of securing approval from local code officials.

Overall these advantages can generate significant cost savings, as indicated by a recent HUD study showing that building a 2,000-square-foot manufactured unit costs just 61 percent as much as a comparable sitebuilt home (HUD 1998)…”

— end of extended quotes —

UnbelievableHowMuchYouDontKnowAboutGameYouvePlayingAllYourLifeMickeyMantleBaseballManufacturedHousingMHProNews

Freddie Mac Report on Manufactured Housing Poised to Overtake Conventional Housing, download linked here.

Report to the Ford Foundation, download linked here.

DontGetCookedInASquatZigZiglarManufacturedHousingIndustryCommentaryDont-LetOthersSelfLimitYouByActionInactionThinkingMHPro

Let’s not let self-limiting thinking rob us, and the nation, of what could be a much brighter, richer future for all. The report linked below demonstrates how our industry could help grow the economy by some two trillion dollars annually.

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

Make no mistake.  The headline question is why Warren Buffett and other billionaires and multi-billion dollar operations are in this industry.

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

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

HUD’s New Man, Officials Statements, with Insider Info Beyond the Media Releases

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

MHI Lender Shakes Up DTS and MLO Rule Discussions

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

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

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L. A. “Tony” Kovach, photo by Mark Simon, shows Kovach engaging with SAAs in NY.

By L. A. Tony’ Kovach, publisher of MHProNews.com.
Tony is the award-winning managing member of LifeStyle Factory Homes, LLC, the parent company to MHProNews, and MHLivingNews.com.

 

 

“Kevin…the Problem of Your Industry…”

March 31st, 2018 Comments off

FootOnBrakePedalManufacturedHousingIndustryDailyBusinessNewsMHProNews

In the video interview with Kevin Clayton, the son of Jim Clayton says what Warren Buffett, Chairman of Berkshire Hathaway says is what’s wrong with the manufactured home industry.

 

Per Clayton, Buffett says it’s resale.

Kevin, it seems to me that the problem of your industry is resale.” – Warren Buffett said to Kevin Clayton, per Clayton’s video interview.

That may seem simple. But it is profound.

In the same video interview posted below, Clayton says that he can see the day when their company’s manufactured homes may also be sold via the Berkshire Hathaway real estate arm.

Another source tells the Daily Business News that Kevin – speaking at an Illinois state association event – said, Resale is the key. As Warren Buffett says ‘the MH industry is not going to grow until we expand the market by improving resale’s” – said Joanne Stevens, whose community brokerage operation is also part of Berkshire Hathaway.

Speaking of real estate, in Buffett’s recent annual letter, he says they now have 3 percent of the real estate agents in the country. ‘Just 97 percent to go,’ Buffett said.

The above begs a question.  Realtors weren’t necessary for the industry to hit is previous highs.  So why are the necessary now?

But setting that question aside for now, with respect to the broader housing market, resale and realtors are important topics. Buffett and Clayton are correct in saying its an issue, as what follows will reveal.

 

Realtors and Manufactured Housing

Among the consulting projects this writer has done in manufactured housing over the years is to successfully get real estate agents to engage with manufactured homes being sold in land-lease communities.

The following observation is neither a defense, nor a hit, on the Government Sponsored Enterprises (GSEs) of Fannie Mae and Freddie Mac, and their toe-in-the-water approach to manufactured home lending – especially home only, chattel lending.

If more:

  • realtors were engaged in resale’s of manufactured homes in communities,
  • if the exit strategy for manufactured housing on leased or owned land were easier,
  • it would logically be a game changer for the industry.

Why?  Because it would be a game-changer for lenders, as it could cut hold time and losses on homes that repossess or foreclose.

It would also be appealing for manufactured home owners too, because they would know that they’ve got an obvious exit strategy when the time comes to sell their personal home.

Buffett and Clayton are logically correct.

 

Realtors and Resales of Manufactured Homes

Don’t misread. There are already real estate pros listing and selling manufactured homes.  There are realtors who sell new as well as pre-owned, “existing” manufactured homes.

But a little like the GSEs, for most real estate agents, that engagement is at toe-in-the-water level.

Law Allows Real Estate Personnel to Sell Homes in Your Manufactured Home Community

 

The End of the First Quarter of 2018 in Manufactured Housing

As the first quarter of manufactured housing in 2018 is about to hit the history books, what the past tells us is that the industry’s still at levels far below historic norms.  The chart below is an example.

ManufacturedHomeShipmentTrendsPercentageNewHomeStartsSkylineChampionPowerPointMastheadBlogDailyBusinessNewsMHProNews

 

A combination of factors causes those relatively low levels of new HUD Code manufactured home sales.  HUD and third party data reveal that quality isn’t an issue, so what is?

Federal Data Spotlights Manufactured Home Industry Quality, Regulatory Questions

Among them is a scarcity of independent retailers.

Who says?  Producers of HUD Code manufactured homes, all of whom – including those who are members in the Manufactured Housing Institute (MHI) and the Manufactured Housing Association for Regulatory Reform (MHARR) that were asked about this – confirmed that a lack of independent retailers is as an issue.

As was previously noted in the Daily Business News, some are attempting to address the problem by ‘giving vertical.’ Others told MHProNews that they are considering going vertical. A few have made strong commitments to their independent retailers, and said they would never go into competition with their dealer base.

Beyond the lack of intendent retailers, what else holds the industry back?  Stop and consider these bullets.

  • Berkshire could bridge the gap between real estate (RE) agents and manufactured housing with ease. Why hasn’t that RE agent switch – which Kevin imagined coming in 2011 – been more broadly turned on?

 

  • Berkshire has its own array of newsmaper/media outlets. Why don’t their media outlets do a steady stream of fact-based articles on the wonders of modern manufactured homes?

 

  • Several other challenges facing the industry could readily be addressed by a snap of a finger in Omaha.

 

  • Why haven’t those industry growth steps already occurred? What could be the logical motivation for Berkshire Hathaway keeping a foot on the break peddle of the industry’s growth?  Isn’t that counter-intuitive?

 KevinItSeemsToMeThatTheProblemOfYourIndustryisResaleWarrenBuffettToKevinClaytonHomesManufacturedHousingIndustryDailyBuisnessNewsMHProNews

 

The Answer to those BH Questions…?

Are the same reasons Buffett’s Berkshire brands not boosting manufactured housing, as the bullets above suggest they could be, similar to why Buffett supported POTUS Obama, and then Secretary Hillary Clinton for president?

Both Clinton and Obama opposed changes to Dodd-Frank.  Those changes in CFPB regulations, that Tim Williams, President and CEO of Berkshire Hathaway owned 21st Mortgage said he wanted those regulations modified by MHI’s multi-year – and still unsuccessful – pursuit the Preserving Access to Manufactured Housing Act.

Given the sheer size of Berkshire Hathaway, if one imagines a foot on a brake pedal, artificially slowing the growth of the industry, whose foot’s on that brake? And why?

Is it because the greater percentage of the industry will fall into Berkshire’s hands?  Buffett has said that he loves a bargain.  Buffett has also said that he tells his managers to fight competitors, including by expanding their “moat.”

In that context, isn’t it worth noting that MHI President Richard ‘Dick’ Jennison touted on video his desire for slow growth for manufactured housing? Who did that slow growth serve?

HUD Secreatary Carson was so enthusiastic about manufactured housing’s “Amazing” progress and quality, that he is almost gushing about it in the video posted below.


The professionals working for the GSEs this writer has privately spoken with are impressed with the quality and value of today’s manufactured homes.

When professionals from outside of our industry are properly exposed to manufactured homes, they are routinely blown away by the value.  At a recent trade show, a senior vice president for an international operation told MHProNews that he was shocked that manufactured housing sales levels were so low, given their quality and value.


What did the Urban Institute miss?

Is it what was went undisclosed in their report on manufactured homes?

If you have a long Easter weekend, this may be a good chance to catch up on the study of your own industry. “Warren” – says Kevin Clayton – has studied manufactured housing.

Perhaps it’s time for more industry pros to do the same?  See the linked resources and reports, including the Warren Buffett and Kevin Clayton videos, found below. “We Provide, You Decide.” © (News, analysis, and commentary.)

Related Reports – some with videos – to the above.

DUTYtoServePaulBarrettoFannieMaeManufacturedHousingIndustryDailyBusinessNewsMHProNews550

http://www.mhpronews.com/blogs/daily-business-news/fannie-maes-paul-barretto-news-making-remarks-in-tunica/

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

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

NAR’s Yun – No Quick Fixes Spell$ Manufactured Housing Opportunitie$

Documented Results from Manufactured Housing Industry Leadership

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

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

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MHLivingNews.com | MHProNews.com | Office 863-213-4090 |

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Manufactured Housing Association for Regulatory Reform Demands Clarification on “New Class” of HUD Code Manufactured Home

March 9th, 2018 Comments off

FreddieMacLogoManufacturedHousingInstituteLogoManufacturedHousingAssocRegulatoryReformLogoProblemAnalysisSolutionDailyBusinessNewsMHProNews

The Manufactured Housing Association for Regulatory Reform (MHARR), in a February 27, 2018 communication to the Chief Executive Officer of Freddie Mac (linked below), demanded clarification of that organization’s implementation of the “Duty to Serve Underserved Markets” (DTS) in relation to a so-called “new class” of “manufactured home being developed on a secretive/proprietary basis within the Manufactured Housing Institute (MHI) by the manufactured housing industry’s largest corporate conglomerates,” MHARR said in a release do the Daily Business News.

The Manufactured Housing Institute (MHI), in their “recent news releases and published articles, has boasted that the concept for this “new class” of manufactured home, with a cost as high as $220,000.00, had already been presented to the two housing finance giants, Fannie Mae and Freddie Mac, and had been “well received,” said MHARR.

They noted that “…during a February 26, 2018 conference call meeting of Freddie Mac’s “Manufactured Housing Initiative Task Force” (MHIT), a Freddie Mac official, in the context of a discussion of  current and prospective implementation of DTS, referred to an impending “new class of home” pilot project — never before addressed or even mentioned by Freddie Mac — to be implemented as early as the Summer of 2018, for a type of high-cost manufactured home that has not previously been built or marketed, let alone mass produced.”

Wisconsin Housing Alliance – an MHI ‘Affiliate’ – Amy Bliss’ Messages Raise New Anti-Trust Issue

MHI was asked to comment on this topic, and declined.  One of their so-called “affiliates” sounded off in their defense, but actually raised new concerns in the process. For more on that, and now retired Ross Kinzler’s statements on the issue, see the links above and below.

‘Over Target’ Reactions, WHA Exec (ret) Ross Kinzler, Won’t Defend MHI Policies & Points to Prior MHI Failure

MHARR blasted the FHFA’s approval of the DTS plan, saying, “In the wake of the late-2017 approval by the Federal Housing Finance Agency (FHFA) of the grossly deficient and wholly inadequate DTS final implementation plans submitted by both Fannie Mae and Freddie Mac, there has been major confusion, both within and outside the HUD Code manufactured housing industry, regarding the relationship – or lack thereof – between DTS and the erstwhile “new class” of manufactured home being developed and touted by MHI and the industry conglomerates. Fueled by misleading “analyses,” strategically-targeted “leaks” and related commentary, this confusion has proliferated, particularly with respect to the harm that a nexus between a proprietary “new class” of manufactured homes and DTS would cause for smaller industry businesses and for consumers of affordable housing, by, among other things, relegating traditional, affordable manufactured housing to the second-class, “trailer” status that the industry has fought for decades to overcome.”

Going No Where

An MHI board member told MHProNews in an email, “DTS seems to be going nowhere.”

As MHARR has advised Freddie Mac, there is no legitimate or valid basis for diverting any aspect of DTS – which was enacted by Congress ten years ago to promote and advance the availability of traditional, inherently affordable, non-subsidized manufactured housing for lower and moderate-income homebuyers – to a “new class” of homes that, at a price-point reaching up to $220,000, would not be “affordable,”  stated their release.

They pointed to an apparent logical flaw, noting they weren’t doing more loans for a lack of data, and now were getting ready – per reports – to make loans on this ‘new class’ of homes, on which no data exists, because the homes haven’t been created.

 

MHARR Itemizes their Concerns

To start with, no such “new class” of homes have ever been produced.  As a result, there is no conceivable “loan performance” data – the absence of which Fannie Mae and Freddie Mac have used for decades, and continue to use, despite DTS — as an excuse for failing to provide any level of market-significant chattel financing support for the existing “class” of manufactured homes.  By diverting any portion of DTS to this “new class” of manufactured home, the Government Sponsored Enterprises (GSEs) would simply be continuing their long-established pattern and practice of discrimination against traditional manufactured housing and manufactured homebuyers. 

Second, no such program, involving a “new class” of manufactured home was included in the 2018-2020 DTS implementation plan submitted by Freddie Mac — and approved by FHFA.  As a result, any such program under DTS would be unauthorized by Freddie Mac’s federal regulator and, therefore, unlawful under the GSEs’ conservatorship.

Third, diverting any portion whatsoever of DTS support to a proprietary product developed and manufactured on an exclusive or exclusionary basis by one group of competitors and not generally available or accessible to other industry producers, would be a blatantly anti-competitive action by Freddie Mac. 

Fourth, the diversion of any portion whatsoever of DTS support to a “new class” of homes with a reported retail cost as high as $220,000.00 instead of existing types of manufactured housing, which are inherently affordable for very low-, low- and moderate-income American families without the need for costly government subsidies, would violate the letter, intent and fundamental purpose of DTS, with entirely predictable anti-competitive impacts.

In part, this activity appears to be a larger-scale, updated version of the ill-fated “MH Select” program floated by Fannie Mae more than a decade ago.  That program, which reportedly resulted in zero loans, sought to deflect from the GSEs’ near-total failure to support the manufactured housing market (and low-, lower- moderate-income manufactured homebuyers) by conditioning securitization and secondary market support for manufactured homes on mandatory features that exceeded the HUD Code standards and undermined the affordability of those homes.  Apparently, with the GSEs having failed to learn any lessons from the MH Select fiasco, Freddie Mac now appears to be following a similar course to evade fulfilling its statutory DTS obligation to provide market support for the existing class of affordable manufactured homes, thus continuing the GSEs’ 40-year habit of talking about providing market-significant support for HUD Code consumer financing, but, in actuality,doing virtually nothing.

MHARR, on the other hand, will continue to press for the full, complete and robust implementation of DTS with respect to the existing class of affordable manufactured homes, without any diversion, deferral, or further delay of the Duty to Serve Underserved Markets involving any alleged, secretive, “new class” of homes.”

MHARR’s prior report and the copy of their letter to Freddie Mac CEO, is linked from the report below.

Plot Twist – Duty to Serve – Freddie Mac CEO Layton Called to Accountability w/Congressional, Administration Leaders Over New Manufactured Home Lending Revelations

About MHARR 

The Manufactured Housing Association for Regulatory Reform is a Washington, D.C.-based national trade association representing the views and interests of independent producers of federally-regulated manufactured housing.

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2018 Outlook-Crisis Spell$ Opportunity, Per Leonard Kiefer, Freddie Mac Data

December 28th, 2017 Comments off

LeonardKieferLinkedInChiefEconomistFreddieMacManufacturedHousingIndustryDailyBusinessNewsMHProNwsFor over two years, since at least 2015, I’ve heard one common theme: housing supply is tight. It’s difficult to find a home, particularly for first time homebuyers,” said Leonard Kiefer, Deputy Chief Economist at Freddie Mac, in a post on LinkedIn.

Kiefer quips, “…if you think housing markets are tight this year, wait until next year. The market is likely to be even tighter next year, and the year after tighter still. What’s going on?”

Besides crunching numbers and analyzing data, Kiefer says he naturally speaks to housing and mortgage professionals. Working at mortgage giant Freddie Mac, that’s no surprise.

 

HousingCompletoinsRunningBelowLongTermDemandFreddieMacManufactruredHousingAnalysisDailyBusinessNewsMHProNews

The U.S. population and housing stock are slow moving. Houses are durable; lasting decades, more than a century in some cases. People too. It takes a while for things to change,” said Kiefer, noting, “The United States is a vast nation, with over 300 million people, 125 million households, and 130 million housing units.”

NumberUSHousingUnitsStatista2017ManufacturedHousingIndustryDailyBusinessNewsMHProNewsCiting the National Association of Home Builders (NAHB), he then notes that “it takes about seven months to build a single-family home. An apartment takes longer, around a year.”

That’s significant to manufactured housing pros on several levels, including, but not limited to the fact that with lead-times on a factory order hovering around 4 months in a number of cases, plus the time needed for arranging financing, and installation, there are markets in the U.S. where HUD Code home builders are starting to lose the time advantage.

FreddieMacUSHousingForecast2018ManufacturedHousingIndustryAnalysisDailyBusinessNewsMHProNews

Kiefer doesn’t mention the sexual revolution per se, but he does obliquely, by citing some statistics.

One of the key differences between young adults today and prior generations is delayed marriage. Per the report, in the 1970s 8 in 10 people were married by the time they turned 30, today it’s not until the age of 45 that 8 in 10 have married,” he said, using Census Bureau data.

The deputy chief economist then says that, 1.1 million annual rate of completions is well below what we need to match long-run demand.”  The nation, he says, needs about 1.6 million units per year.

USHousingValuesTrilloinsFreddieMacManufacturedHousingIndustryDailyBusinessNewsMHProNews

The growing equity in U.S. housing is one of several signals of potential opportunities for manufactured housing, a percentage of which is purchased by those selling conventional housing, and who pay cash or make a larger down payment to buy the federally preemptive HUD Code manufactured home. Note: this chart and the others from this GSE were part of a separate analysis by Freddie Mac than the one the quotes are taken from.

Kiefer also says that completions data doesn’t account for some 200,000 housing units lost temporarily to various factors, or some 350,000 permeant demolitions, based upon 2011-2013 data.

So, when secondary house (vacation, etc.) demand (about 5.6 percent, or 100,000 plus units per year, citing the NAHB) and replacement of demolished houses (1.1 million less 350k) are factored in, the U.S. needs about 1.65 million housing units to be built annually, Kiefer stated.

GSE/MH Related…

FHFA Publishes Fannie Mae’s and Freddie Mac’s Underserved Markets Plans for Duty to Serve (DTS) Program

NAR’s Yun’s Take, Plus Manufactured Housing Analysis…

USExistingHomesSalesReachHighestLevelinNineYearscreditTheBusinessJournals-postedtothedailybusinessnewsmhpronewsmhlivingnews

Lawrence Yun. Credit: The Business Journals.

As regular Daily Business News readers know, the National Association of Realtors ® (NAR) Lawrence Yun said, “The inventory of homes for sale continues to shrink.”

This shortage of housing inventory is the principal reason why home prices have been outpacing people’s income growth for the past five consecutive years,” Yun said, adding:

  • The only way to lessen home price growth is to bring in more supply.
  • The only way to bring additional supply, therefore, is for homebuilders to get really busy.”

NAR’s Yun – No Quick Fixes Spell$ Manufactured Housing Opportunitie$

The NAHB, along with federal data that says that unemployment is dropping, and some 6 million jobs are open and waiting to be filled, all point to a need for more skilled labor.

Manufactured Housing Facts 2017, By the Numbers

Factory-builders have a similar labor lament, especially in 2017’s post-hurricane season. But there’s a difference that factory-builders could cling to, when they look at crisis, and see that it spells opportunity.

Namely, that a factory building environment lends itself better to worker training than many site-builders could achieve, unless stick builders are using production-style methods.

Why Hasn’t Manufactured Housing Taken Off?

A variety of trends have brought the manufactured home industry to this point of opportunities, but limited or blocked by various problematic perceptions, and often artificial roadblocks.

MobileManufacturedHomeAnnualShipments1959-2012CalculatedRisk-DailyBusinessNewsManufacturedHousingIndustryResearchReportsMHProNews

The pre-HUD Code industry reached well over 500,000 new units a year. The most recent peak in 1998 was over 372,000 new HUD Code homes shipped. If MHI had the solutions and leadership that that they claim, would the industry have seen the kind of slides witnessed since 1998?

Among the factors that objective thinkers can consider are the actions, and in actions, of the industry’s largest players.

ManufacturedHousingIndustryShipmentsFEMAManufacturedHomesNotMobileHomesTrailersIndustryResearchReportsDataMHProNews

Credits, MHI, Cavco.

As their own data sets show, Clayton and Cavco are growing at a slower pace than the HUD code manufactured home industry at large.

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

Yet, a Harvard University study some years back had projected manufactured housing as being poised to overtake conventional home building.  What happened?

MultipleReasonsExpectManufacturedHousingDoBetterThanSiteBuiltHousingEricBelskyEecDirJointCenterHousingStudiesHarvardUnivDailyBusinessNewsMHProNews

At the time Belsky made this prediction, manufactured homes were selling over 250,000 new units per year. This year, MH won’t reach 40,000 of that total. What happened? 

Appealing Manufactured Housing Institute (MHI) Marketing, Finance Booklet Reviewed

Meanwhile, there’s the Manufactured Housing Institute (MHI).  The Arlington, VA based industry trade association is widely seen as dominated by Warren Buffett’s Clayton Homes and related brands owned by Berkshire Hathaway.

MHI – for whatever reasons one might posit – has clearly been ineffective in aiding the industry at filling that void, or even achieving their own stated goals.

KennyLipschutzQuotePoorJobOfLobbyinginMHIndustry-postedMHProNews48thMHINCClist

FollowTheMoneyPayMoreAttentionToWhatPeopleDoThanWhatTheySayMartyLavin6MillionYachtManufacturedHousingIndustryDailyBusinessNews600

Lavin is an MHI award winner, and a success story in communities, retail and finance.

In fact, MHI’s president argued for slow growth, in response to a softball interview question.

MHI’s president urged slow growth based upon the notion of sustainability.  Meanwhile, some non-MHI companies like Sunshine Homes have demonstrated an ability to sustainably grow with high customer satisfaction at more than double the industry’s average rate. They’ve done so in part by serving the upper end of the industry’s spectrum, which Credit Human’s Barry Noffsinger has identified as the market generally served by conventional housing builders (see Noffsinger’s 16 minute video seminar, above).

Several parties are talking about a post-production association; that may or may not take shape.

Study Recommending New Manufactured Housing Association for Independent Retailers, Communities, Lenders, Others Released

Even if it should, would it be ready to rapidly impact these immediate American housing needs?

Abhorred Vacuum

The maxim that nature abhors a vacuum is playing out in factory home building. Non-HUD Code prefab builders are targeting the affordable housing space.

$58,000 PreFabs, Videos, Updates of More Hi-Tech Backers

The circumstances as they stand may leave the industry’s independents with an observation expressed by UMH President and CEO Sam Landy.  Namely, that every company and organization is ultimately responsible for its own marketing and promotion.

KYPs, and the $64 Billion Dollar Question-Monday Morning Manufactured Housing Sale$ Meeting

Given that independent communities/retailers who take the bull by the horns have seen robust growth, Landy’s point makes sense.

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Notice 1: Looking for our emailed MH Industry headline news updates? Click here to sign up in 5 seconds. You’ll see in the first issue or two why big, medium and ‘mom-and-pop’ professionals are reading them by the thousands, typically delivered twice weekly.

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FHFA Publishes Fannie Mae’s and Freddie Mac’s Underserved Markets Plans for Duty to Serve (DTS) Program

December 18th, 2017 Comments off

MelWattDirectorFederalHousingFinanceAgencyFHFAManufacturedHousingIndustryDailyBusinessNewsMHProNews

The Federal Housing Finance Agency (FHFA) today published Fannie Mae’s and Freddie Mac’s (the Enterprises) Underserved Markets Plans for 2018-2020 under the Duty to Serve program,” said the FHFA in a release to the Daily Business News.The Plans become effective January 1, 2018.”

FHFA issued a final rule on December 13, 2016 to implement the Duty to Serve provisions mandated by the Housing and Economic Recovery Act of 2008.  The statute requires the Enterprises to serve three specified underserved markets – manufactured housing, affordable housing preservation, and rural housing – by increasing the liquidity of mortgage financing, for very low-, low-, and moderate-income families, said their release.

The rule requires each Enterprise to adopt a three-year Underserved Markets Plan to fulfill this mandate.  The activities proposed by the Enterprises to achieve the objectives in their Plans will continue to be subject to FHFA review and approval to ensure compliance with the Enterprises’ Charter Acts, safety and soundness, and other conservatorship and regulatory requirements,” per FHFA Director Melvin L Watt’s statement.

FHFAMelWattDirectorDailyBusinessNewsMHProNews

I congratulate Fannie Mae, Freddie Mac and FHFA staff for the work they have done to reach this significant milestone.  The tough challenges associated with implementation are still ahead, however, to ensure that the Plans meet affordable housing needs in underserved markets around the country.  FHFA looks forward to working with Fannie Mae, Freddie Mac and stakeholders to ensure that the Plans serve their statutory purposes and do so in a safe and sound manner,” said Watt.

Freddie Mac’s plan is below.  Both plans are available as downloads, further below.

Disclaimers

Disclaimers in the various programs reflect that fact that changes can occur.

Quoting the Fannie Mae Disclaimer provides an example, as follows, “Implementation of the activities and objectives in Fannie Mae’s Duty to Serve Underserved Markets Plan may be subject to change based on factors including FHFA review for compliance with the Charter Act, specific FHFA approval requirements and safety and soundness standards, and market or economic conditions, as applicable.”

Fannie Mae’s DTS plan included the following statement.

Do What We Do Best:

Our commitment to affordable housing is more than just a series of regulatory requirements, it is a fundamental component of who we are as a company. What we were established to do and Duty to Serve Underserved Markets Plan for the Manufactured Housing Market Effective 1.1.2018 MH5 what we do best is to facilitate a secondary market by purchasing mortgages – and that is what we need to do in this market. In some instances – like with chattel – we have to build a scaffold to get there by conducting research, enhancing or developing loan criteria, and assessing performance before creating opportunities for mortgage acquisitions. In some instances we are already there – as reflected in a simple commitment to purchase more manufactured housing mortgages where we can safely do so.” per Fannie Mae’s published plan, which has been obtained by MHProNews, and is linked below.

Fannie Mae’s DTS plan is available as a download, linked here.

Freddie Mac’s DTS plan is available as a download, linked here.

It will be close to a decade since the Duty to Serve (DTS) was first passed into law as part of the Housing and Economic Recovery Act (HERA) 2008.

SmokingGunWarrenBuffettKevinClaytonHomesBerkshire21stMorgVanderbiltManufacturedHousingIndustryDailyBusinessNewsMHProNews816-874

See related report for the MH industry impact and the impact of constriction of credit in manufactured housing in the report linked from the image collage above.

MHARR’s Perspective

MarkWeissManufacturedHousingAssociationForRegulatoryReformMHARRPresidentCEOMHProNews

Mark Weiss, President and CEO of the Manufactured Housing Association for Regulatory Reform (MHARR).

Terrible FHFA Duty to Serve Rule Leads to Useless Fannie And Freddie DTS Chattel Plans – by Mark Weiss, JD, President and CEO of MHARR.

 

 

More DTS Related Industry Reports, and Commentaries.

New Long-Term, Market Rate Loans in Manufactured Home Communities, Report, Reactions

Duty to Serve (DTS) Manufactured Housing “Confidential Documents,” Draft and Downloads, FHFA, GSEs

Industry Should Stay the Course in Duty to Serve Efforts

MHARR’s Mark Weiss Reaction to Jim Ayotte’s GSE’s Duty to Serve Commentary

 “More of the Same,” Leader Says About Fannie Mae Duty to Serve Meeting

A few select previous Daily Business News, Industry Voices, and other published reports and commentary are found at the links above. ## (News, analysis, commentary.)

2 Week Notice. MHProNews will be on a somewhat modified publication schedule from now through January 2nd, resuming normal scheduling in 2018. More detailsclick here.

Notice 1: Looking for our emailed MH Industry headline news updates? Click here to sign up in 5 seconds. You’ll see in the first issue or two why big, medium and ‘mom-and-pop’ professionals are reading them by the thousands, typically delivered twice weekly.

Notice 2:  Want sustainable growth?  Join the Manufactured Housing Revolution team’s proven marketing and other MH Professional Services, click here.

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

Appealing Manufactured Housing Institute (MHI) Marketing, Finance Booklet Reviewed

December 4th, 2017 Comments off

ManufacturedHousingInstituteMHILogoFactCheckAnalsisDailyBusinessNewsMHProNews1000x737The image to the left and those below are from a Manufactured Housing Institute (MHI) produced booklet.

It’s good.

With nuanced exceptions, it’s accurate.

This booklet – combined with other educational materials – are precisely the kind of document that could appeal to and inform:

  • home buyers/consumers,
  • public officials,
  • policy advocates,
  • researchers,
  • and the mainstream media.

Such educational material – properly promoted – could over time bring more better qualified buyers into the manufactured home market.

ManufacturedHousingInstituteMHILogoConsumernInsideCoverManufacturedHomeLivingNewsMHProNews800

From an overall fine MHI booklet, produced circa 2002.

Is There a Catch?

Yes, and no.

ManufacturedHousingInstituteMHILogoConsumerInfoPg1FactCheckAnalsisManufacturedHomeLivingNewsMHProNews697

First, we’ll make the disclosure that this truly fine Manufactured Housing Institute (MHI) booklet is ‘outdated,’ but only in a narrow sense.

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There are doubtlessly newer manufactured home professionals in sales or leasing offices that are unaware of some of the appealing styles shown in the complete booklet that this was excerpted from. Those unique styles of HUD Code manufactured housing are, or could be, done as well or better today.

Second, while the booklet doesn’t have a date of publication, MHProNews has indications that it was produced circa 2002. That’s important, as we’ll note later.

Third, unlike documents and graphics produced in the Richard A. “Dick” Jennison era at MHI, which:

  • conflicts with other MHI data,
  • conflicts with data from other member companies,
  • has factual errors, per federal, lender, or other data,

this roughly 15-year-old ‘dated’ MHI document – after an initial read, and given some modest changes – could largely be used today.

Frank Rolfe: Pressured into Silence? Manufactured Housing Industry, and Journalism

It’s arguably better than what MHI now produces, because it is more accurate on the lending options.

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For example, this MHI-produced – largely consumer-focused document – cited a useful Harvard study.  That university research predicted that manufactured housing would take off in the years ahead.

So, on the one hand, this document is better than some items being produced by MHI today.  There were voices such as Harvard saying the era of manufactured housing was upon America.

What happened?

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Graphic provided by Ross Kinzler when he was then the executive director of the Wisconsin Housing Alliance (WHA).

Bear in mind Warren Buffett’s notable quotes, cited at the link below.  Keep in mind that the booklet was produced prior to Buffett’s manufactured housing buying spree.  Buffett believes that history is to be studied and learned from, how about you?  Do you agree with Buffett on studying and learning from history?

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

Why Does This Fine MHI Booklet Matter Today?

For several reasons, this 15-year-old MHI booklet ought to raise curiosity, praise or the prior effort, and numerous concerns for:

  • MHI members,
  • manufactured home professionals,
  • and third-party-researchers.

Some bullets why this is worth evaluating and updating could include, but are not necessarily limited to:

  • The booklet is generic, which means it did not plug specific manufactured home producing companies, as MHI’s new videos do.
  • While it names FHA, VA, USDA (Rural Housing Services, the old FmHA), Fannie Mae, Freddie Mac, etc. it doesn’t name any lenders that provide those programs. To rephrase, it’s generic on lending too.  It doesn’t name a Berkshire Hathaway (BH) lender, for example.
  • Because in those days, it couldn’t have named a BH lender, because it was only later that BH bought companies that included MH chattel loans.

To recap, this booklet had no favoritism.

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Another photo from the educational, generic marketing MHI booklet, produced circa 2002.

Almost anyone in the industry could have used this to promote a better understanding of manufactured housing, and the kind of loans that most consumers who are comparing to conventional housing would be familiar with.

  • There was no picking ‘winner’ companies that got spotlighted at the cost of all members.
  • Because there were no featured ‘winners’ companies, there are therefore no by-default, ‘loser’ companies. This is an application of what Drew (now Lippert) Chairman Leigh Abrams told MHProNews in A Cup of Coffee with Leigh J. Abrams interview linked here that the industry should be promoting. “Generic” educational/marketing material.
  • What this booklet indirectly spotlights goes to the allegation by contemporary MHI members, and others in the industry, that the Arlington, VA based trade organization now favors a few select companies. What that would imply in practice is that all others who are dues-paying members are paying to promote those few “winner” companies.

Big companies are benefiting from the dollars of the little companies.  That clearly wasn’t so when this booklet was produced 15 years ago.


Are these facts, allegations and concerns still more good reason to support a new, post-production trade association?

To learn more click the linked post above, or below. “We Provide, You Decide.” © ## (News, fact checks, analysis, commentary.)

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

Vanderbilt, 21st Mortgage, “Easy Manufactured Home Loans,” GSEs and Manufactured Home Industry Lending Updates

November 3rd, 2017 Comments off

VanderbiltMortgageFinance21stMortgageFinanceFannieMaeFreddieMacLogosManufacturedHousingNotMobileHomesLoansLendingDailyBusinessNewsMHProNewsAnother informed source with a Berkshire Hathaway unit confirmed to the Daily Business News that Vanderbilt Mortgage and Finance (VMF) does indeed offer a zero-down payment loan program.

That program is made exclusively for corporately owned Clayton Homes retailers, under their various retail outlet brands (Clayton, Oakwood, Freedom, etc.), per that source.

The program is not a ‘land in lieu’ of down payment program.  It is, per prior and recent reports, a true zero down chattel (home only) loan.

Of course the loan is for those who qualify, but per sources, it is a true zero down payment loan.  This most recent source told MHProNews that part of those qualifications are a 720 credit score or higher.  More on FICO score point, further below.

The issue is significant in a variety of ways, including the possible meaning for the;

  • Duty to Serve program – if the data were made available to the Government Sponsored Enterprises,
  • but also for reasons of competitive advantage in the marketplace.
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Screen capture of graphic from a prior MHProNews report, to see the initial news story on this issue, click the graphic above.

“Unfair Competition…”…?

NotRightVMFZeroDownPaymentChattelLoanManufacturedHousingIndustryNewsMHProNews

As the Dept. of Justice (DoJ) is reportedly considering an anti-trust action outside of the MH Industry, some observers are wondering what such a move might signal for the manufactured housing industry? The screen capture above is of a message to MHProNews from a retailer, expressing their view about the VMF Zero Down program.

The issue of the zero-down loans from Vanderbilt was first raised by another HUD Code manufactured home retail operation to the Daily Business News (see screen capture at left).

That source stated in a series of messages (only one shown at left) their belief that the VMF no down chattel loan program was an unfair competitive advantage for Berkshire Hathaway owned retailers.

Legal determinations are beyond the scope of trade publishing – they are matters for the legal system.

But the topics of lending, competition, and trade practices are of general interest to the industry; including but not limited to:

retailers,
producers,
and other industry lenders,

among others.

Is A 720 Credit Score High?

While a 720-credit score may seem like a high bar to many retailers, in the world of conventional housing, its about the norm, per sources.

AverageCreditScoreByStateOnMorgageLoansMHproNews

In fact, per the Truth About Mortgages, in September 2017, the average credit score for home buyers was now up to 745.  They cited Housing Credit Index (HCI) from CoreLogic, as the source for their data.

That raises the issue of the quality of credit scores that manufactured housing retailers and communities often, but not always, attracts.

JImNikopoulosPresidentECNCapitalCorpAgreesBuyTriadFinancialServicesDailyBusinessNewsMHproNews

Much of the industry is focused on getting low credit scores ‘bought,’ but the recently announced Triad/ECN deal reflects a different reality. People with good credit buy manufactured homes too. To learn more about the recent announcement, click the graphic above.

As professionals often stress, those with lower credit scores and lower incomes need an opportunity for home ownership too, and manufactured housing often serves as a pathway for that in the market.

However, when the manufactured home community or retail sides of the industry become too focused on those ‘entry level’ credit scores, that’s a turn-off to many lenders.  The reason low credit scores are shunned, is because they tend not to perform as well as higher ones – and lenders want loans that perform.

Representatives of the GSEs have said in public and private meetings that credit quality is a concern to them.  They might wince when they sit in a meeting room with community and retail sales people, and one of the first questions asked of a lender is how low of a credit score do you buy?”

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The recent announcement of Triad Financial Services entering into an agreement to be acquired by Canadian ECN Capital ought to be a signal for more in the industry on several levels.

One of those takeaways is that Triad – which has historically focused on more qualified credit customers – does hundreds of millions of dollars a year in well qualified manufactured home lending.  Reports say that Triad’s preferred lending space are the so called “A & B” credit customers, not the “C & D” paper that are far more commonly found among the VMF and 21st loan portfolios.

As the video below and facts about industry lenders such as Triad and Credit Human reflect, the upside market potential for the industry is found primarily in the higher credit scores, and the more qualified buyers.

Attracting those qualified bill payers would also make it easier, per lending sources, for the Enterprises to take the dive, which might include some lower quality credit scores, so long as lower credits are the minority of the loans being made, and the overall portfolio performance is sound and sustainable.

That those good loans and buyers are out there by the millions is proven by the overall totals in the U.S. housing market (see graphic below).

Manufactured homes barely scratch the surface of the total count of existing homes sold per year, and hover around 9 to 10 percent of new single family housing starts.  Given the affordable housing crisis, the manufactured home industry’s potential is enormous.

Thus the statements by award winning retailer, Alan Amy, who stated on camera the intense interest of the billionaires and multi-billion dollar operations in manufactured housing.

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21st Mortgage Competitor For Weaker Credit Scores…

In an upcoming report, MHProNews will spotlight a lender who is targeting lower credit scores.

Per our sources, they want to buy billions of dollars in paper total, much of it home only, chattel loans.

And they want to do so in just a few years, per our inside sources.

Will they be giving 21st Mortgage a run for their money?  Time will tell.

That report, and others are planned during November as part of our ongoing – and industry leading – track of finance related issues that impact the manufactured housing industry.  ## (News, context, analysis.)

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