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Posts Tagged ‘manufactured home lending’

Foundation for Action as Fannie Mae CEO Put on Notice for Robust Personal Property Manufactured Home Lending

April 17th, 2019 Comments off

 

FoundationForActionHughFraterCEOphotoFannieMaeLogoOnNoticeRobustPersonalPropertyManufacturedHomeLendingDailyBusinessNewsMHProNews

Congress, as part of the Housing and Economic Recovery Act of 2008 (HERA), enacted the Duty to Serve Underserved Markets (DTS), a remedial mandate which directs Fannie Mae and Freddie Mac to “develop loan products and flexible underwriting guidelines to facilitate a secondary market for mortgages on manufactured homes for very low, low and moderate-income families.” (See, 12 U.S.C. 4565(a)). In addition, to ensure that the term “mortgages” is not misconstrued to limit the scope of DTS to manufactured home real estate “mortgage” loans, the same section of HERA expressly provides that “in determining whether an Enterprise has complied” with DTS, the Federal Housing Finance Agency (FHFA) “may consider loans secured by both real and personal property.” (I.e., home-only “chattel loans”). (See, 12 U.S.C. 4565(d)(3)).”

 

 

So said Mark Weiss, JD, President and CEO of the Manufactured Housing Association for Regulatory Reform (MHARR) in a letter to Hugh R. Frater, the new Chief Executive Officer (CEO) of Fannie Mae.  As is customary for MHProNews, the quotes from the document shown herein are in bold and brown text, but the phrasing is as in the original, which is linked here as a download.  MHARR’s accompanying press release, is linked below.

 

 

Fannie Mae is one of the Government Sponsored Enterprises (GSEs).  The letter from MHARR to Fannie Mae makes several important points.  But it should also be understood as a possible predicate for other action.  The view from the Daily Business News on MHProNews on this matter is this.  With a FexEx delivered letter, there is arguably reduced ‘plausible deniability’ for a top man at Fannie Mae.

Rephrased, looking at this from a lay view with a legal lens, they appear to be on notice.

But there is more at play here, because there is a broadside shot at the Omaha-Knoxville-Arlington triangle too.

Here is how that is teed up, as MHARR has repeatedly emphasized in DTS implementation comments to FHFA, the Administration, Fannie Mae and Freddie Mac, as well as in congressional testimony, DTS, without market-significant levels of securitization and secondary market support for manufactured home chattel loans, cannot and will not achieve its remedial objectives within the manufactured housing market as mandated by law.”

Weiss’ letter for MHARR goes on to say, that the GSE’s failure “continues to unduly restrict and constrain the market for inherently affordable, non-subsidized manufactured homes (which again, in 2018, failed to reach its historical production benchmark of 100,000 homes per year), while forcing consumers to pay higher-cost interest rates for manufactured home chattel loans due to extremely limited competition and the parallel domination of the manufactured home consumer lending market by a small number of existing lenders, which primarily are subsidiaries of the largest industry conglomerates, such as Berkshire-Hathaway-owned Clayton Homes, Inc. (Clayton).  Fannie Mae obsequiously describes this de facto stranglehold on the manufactured housing consumer lending market as lending that is “somewhat consolidated amongst a small group of prominent chattel lenders.”

 

 

Harm to Consumers and Independent Businesses Caused by Government Sponsored Enterprises

MHARR argues that Fannie Mae – and by inference, Freddie Mac – having failed to follow their Duty to Serve legal mandate harms home owners, prospective buyers, and independent manufactured home industry businesses.

Fannie Mae’s failure to implement DTS in a market-significant manner, with respect to the vast bulk of manufactured home consumer loans, more than ten (10) years after the enactment of that mandate, has caused and continues to cause significant harm to both American consumers of affordable housing and the manufactured housing industry. In particular, this failure has disproportionately impacted – and continues to have its greatest negative impact – on smaller, independent manufactured housing businesses, which, unlike the industry’s largest conglomerates, do not have the luxury or advantage of controlling captive consumer financing subsidiaries or affiliates.”

Readers may recall an applicable quote from Weiss, shown below.

 

MHARRMarkWeissIfCongressHadMeanttheDutytoServeToBeOptionItWouldNotHaveCalledItADutyDefintionofDutyIsMandatoryResponsibilityDailyBusinessNewsMHProNews

 

Meaningless Meetings, the “Illusion of Motion”

The “illusion of motion” is a phrase used from a recent analysis by MHARR that is linked in the quoted phrase above.

It should be noted that Fannie and Freddie are both paying the Manufactured Housing Institute (MHI) to co-sponsor their events.  That raises ethical and conflict of interest questions.  But it also raises questions such as those that follow.

 

  • If MHI has so much clout, as they claim to their members, industry professionals, and prospective members, why is there so little progress toward full DTS implementation?
  • Is Fannie and Freddie paying MHI not to make waves for them, while they slow walk implementation?
  • Cui bono? Who benefits from slow walking the full implementation of DTS?

 

It must be recalled the point that Weiss makes above, namely that the: “extremely limited competition and the parallel domination of the manufactured home consumer lending market by a small number of existing lenders, which primarily are subsidiaries of the largest industry conglomerates, such as Berkshire-Hathaway-owned Clayton Homes, Inc. (Clayton).”

In science, logic, or journalism, one looks at the evidence and applies certain logical ‘tests.’  One of the possible conclusions one can come to is that Fannie, Freddie, MHI and their ‘big boy’ firms have worked to limit lending, to the benefit of Berkshire Hathaway owned finance firms.

By contrast, sources at Credit Human and Triad Financial Services have worked to advance lending by the GSEs, because it would be good for the industry. As a high-level source told MHProNews, it isn’t more profitable for their firm to get the GSEs to do robust chattel and other lending on all manufactured homes, not just the openly Clayton-backed ‘new class of homes.’

Rephrased, it would be misleading to say that everyone in MHI is essentially slow-walking or foiling GSE lending.  There are those working for ‘big boy’ companies that privately oppose the alleged rigging of the system against the interests of consumers and independent companies.

Time will tell what Fannie Mae – or for that matter, Freddie Mac – will do.  We have sources with ties to MHI that say that they expect some modest personal property or chattel lending activity sometime this summer.  But what MHARR is pushing for – as are some others in MHVille – is market significant lending.

The higher rates are often the focus of attacks on the industry by groups such as MHAction, or in that viral video by John Oliver misnamed “Mobile Homes” are often linked back to the lack of lending options that keep rates lower.

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Note that MHProNews continues to periodically reach out to the GSEs or the Omaha-Knoxville-Arlington axis leaders or spokespeople to correct or confirm concerns like those raised.  They’ve maintained their constitutional right to remain silent, which is to be respected, but that also leaves these concerns unchallenged to serious researchers and thinkers.

 

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FHFA Comments on Duty to Serve Manufactured Home Lending due by Midnight Tonight, with MHProNews Regulatory Comments

November 2nd, 2018 Comments off

 

FHFAlogoCommentsDutytoServeManufacturedHousingFannieMaeDailyBusinessNewsMHProNews

As a reminder to readers, the Federal Housing Finance Agency (FHFA) said the following last month about a request by Fannie Mae to modify their Duty to Serve (DTS) manufactured housing plan.

Here’s the release below, which will be followed by the MHProNews attached comments and related links.

 

FHFANewsReleaseDailyBusinessNewsMHproNews

 

Washington, D.C. – The Federal Housing Finance Agency (FHFA) has announced that it is requesting public input as part of the Agency’s consideration of proposed modifications to Fannie Mae and Freddie Mac’s (the Enterprises) 2018-2020 Underserved Markets Plans (Plans) under the Duty to Serve program. 

The Duty to Serve regulation allows an Enterprise to request to modify its Plan at any time.  However, FHFA must provide a non-objection to a proposed modification for them to become part of an Enterprise’s Plan.  FHFA has determined that public input would be helpful in considering four of Fannie Mae’s twenty-two proposed modifications that would each make a substantial change to the content of its Plan.  Freddie Mac has submitted one modification that FHFA considers to be a modest correction and, as a result, FHFA is not seeking public input on this proposal.  Enterprise technical edits are not subject to public input or FHFA’s Non-Objection.

FHFA requests public input on the proposed modifications to the 2018-2020 Underserved Markets Plan by Nov. 2, 2018 via the dedicated Duty to Serve page on FHFA’s website at www.FHFA.gov/DTS or via mail to FHFA Division of Housing Mission and Goals, Seventh Floor, 400 Seventh Street SW, Washington D.C. 20219. 

About Duty to Serve

FHFA issued a final rule on Dec. 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 investments and improving the distribution of investment capital available for mortgage financing for very low-, low-, and moderate-income families in these markets. 

The rule requires each Enterprise to adopt a three-year Underserved Markets Plan detailing the specific objectives and activities they plan to implement to fulfill this mandate.  The activities proposed by the Enterprises will continue to be subject to FHFA review and non-objection to ensure compliance with the Enterprises’ charter acts, safety and soundness standards, and other conservatorship and regulatory requirements.  These Plans went into effect on Jan. 1, 2018. 

Submit Input

##

Our publisher’s regulatory comments on AFFH are linked here, and are to be considered as part of our submission to the FHFA.

Our publishers comments on DTS are linked here.  It includes what should be headline news.

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Chairman Hensarling, Fannie Mae’s Latest “Backdoor Schemes,” Illegalities? MH Connections, Implications

 

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

 

Triad Financial Services Recent Reporting on Manufactured Home Lending

October 26th, 2018 Comments off

 

TriadFinacialServicesRecentReportingOnManufacturedHomeLendingTriadLogoECNCapitalLogoMHProNews

Triad Financial Service (TFS or Triad) formally closed on their acquired by ECN Capital on December 29, 2017.  For nearly 60 years, Triad has served the manufactured home industry, and other lenders.

 

Our prior reports on that are linked further below, under related reports.

 

TriadFinacialServicesLogoSecuredConsumerLoanPortfoliosSnapshotManufacturedHomeLendingKeyHighlightsTriadLogoECNCapitalLogoMHProNews

 

The screen captures that follow are from Triad’s second quarter reports, part of the larger ECN Capital quarterly reporting.

 

TriadFinacialServicesRecentReportingOnManufacturedHomeLendingKeyHighlightsTriadLogoECNCapitalLogoMHProNews

 

ECN has been part of the Daily Business News on MHProNews’ evening market report since the Triad acquisition, along with other manufactured housing industry connected publicly traded operations.

 

TriadFinacialServicesRecentReportingOnManufacturedHomeLendingOriginationsTriadLogoECNCapitalLogoMHProNews

 

Last night’s evening manufactured home industry stocks and market report is linked here.  The full ECN Capital 2nd quarter report – which includes the slides shown, but others as well – is linked here as a download.

Note that their loan performance data should a good reason for others – including, but not limited to, the Government Sponsored Enterprises – examining the manufactured home lending market to go beyond looking. “We Provide, You Decide.” © ## (News, analysis, and commentary.)

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President Trump – “Bigger than Watergate,” “We Need Accountability” – National, MH Industry Impacts

May 18th, 2018 Comments off

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Imagine if during the 2008 campaign, if someone in the Bush Administration had planted one or more FBI informants in then Senator Barack Obama’s campaign. Then further imagine, that federal investigations were started, based in part on information paid for by opposition to then-candidate, Senator Obama.

 

Then envisage that word of that hypothetical attempt to illegally influence a presidential election had leaked out, or if the story was broken by news media. That would have been a huge scandal, and rightly so.  Part of the bedrock of the American political system are free and fair elections.

To have the power of the federal government weaponized for political opposition purposes would debatably be “worse than Watergate.”  That wouldn’t be a partisan issue, its a question of integrity and the rule of law to protect the rights of all.

There is no evidence that the above hypothetical ever occurred during the Bush years.  But there is mounting evidence that federal taxpayer funded resources were used to influence a presidential election.

That in brief is what President Donald J. Trump’s Thursday tweet means with respect to Obama-Clinton operatives.

That has sparked political pundits, media outlets, and public reaction.

Wow, word seems to be coming out that the Obama FBI ‘SPIED ON THE TRUMP CAMPAIGN WITH AN IMBEDDED INFORMANT,‘” the president tweeted in reference to a National Review report published last week, said the Hill, a news source based in the nation’s capital.

FBISpiedOnTrumpCampaignTweetBiggerthanWatergateHillManufacturedHousingIndustryDailyBusinessNewsMHProNews

For those who may not recall, the Watergate scandal occurred when President Richard Nixon, a Republican, was tied to the attempted coverup of a crime, in which former FBI and CIA agents broke into the offices of the Democratic Party and George McGovern (that year’s Democratic Presidential candidate).

Watergate was the location for the DNC offices at that time.  The Watergate break-in was an illegal political spying effort, designed as part of an illicit plot to help defeat McGovern.  It was no doubt a dark, ugly chapter in our nation’s history.

WatergateScandalWikiSummaryManufacturedHousingIndustryDailyBusinessNewsMHProNews

The photo above at the left is an aerial view of the Watergate complex, the buildings which at the time were the office of the Democratic National Committee (DNC). That’s what gave rise to the name of the break-in and cover-up scandal, called, Watergate.

But today, we’re not talking about former federal agents.

Rather, the concern is that active, paid FBI and other federal agency staffers have illicitly been involved in derailing a political campaign – and post-election – of attempting to unseat a duly elected president.

If the leak yesterday – that the above concerns are part of what an upcoming inspector general report will allegedly reveal – that would be a bombshell.

Andrew McCarthy says, ‘There’s probably no doubt that they had at least one confidential informant in the [Trump] campaign.’ If so, this is bigger than Watergate!

There are now numerous reports that allege that Obama-era led agencies used their surveillance powers to monitor and attempt to disrupt the Trump campaign.

This is not the first time that the Obama administration has been accused of spying on the Trump campaign.

Last year, President Trump accused the former president of wiretapping Trump Tower shortly before the 2016 election.

Terrible! Just found out that Obama had my ‘wires tapped,’ in Trump Tower just before victory. Nothing found. This is McCarthyism!” the president tweeted in March 2017.  Then White House Press Secretary Sean Spicer later clarified the tweet to mean that the Trump campaign had spied upon, not a literal wiretap.

Terrible!POTUSObamaWireTappedTrumpCampaignTrumpTowerNothingFoundMccarthyismManufacturedHousingIndustryDailyBusinessNewsMHproNews

Attorney, Author, Talk Radio Mark Levin Calls for Accountability

 

MHVille – First Look

The Daily Business News has for over a year made the case held by thousands of manufactured housing professionals, from coast-to-coast. Namely, that the current Trump administration has been far more business-friendly than former President of the United States (POTUS) Barack Obama’s Administration was.

The National Federation of Independent Business (NFIB) and others have praised President Donald Trump for his pro-growth, pro-business policies.  The NFIB has hundreds of manufactured housing industry members.

POTUS Trump has also been more business-friendly than the Bush or Clinton Administrations were. That’s according to the National Association of Manufacturers (NAM) survey, NFIB surveys, and statements from the Manufactured Housing Association for Regulatory Reform (MHARR).

The regulatory freeze that has given the industry relief from several pending regulations did not occur under Barack Obama.

Rather, President Trump is undoing many of the costly and burdensome regulations of prior administrations.  These points aren’t a matter of posturing, they are all a matter of record.

Accurate Trump Administration Predictions

Based upon the Trump Administration’s policy stances, statements made over a year ago from MHARR’s top officials predicted that President Trump would be pro-business, and that others in the industry needed to rally around his efforts.

Proof?  See the focused 2 minute 20 second video, posted above. Note that foresightful MH industry leadership.

By contrast, Democratic presidential candidate, Secretary Hillary Clinton pledged very similar policies on regulations as Barack Obama had initiated with Congress.

Secretary Clinton named Dodd-Frank as an example.  She pledged to keep those onerous regulations as they had been during the POTUS Obama years, suggesting that she may also strengthen them.

The Manufactured Housing Institute (MHI) is officially hoping that next week the House will vote to pass their version of S. 2155.  That bill includes a roll back of the CFPB’s so-called MLO rule, that effectively gagged unlicensed personnel from speaking to consumers about lenders and loan terms.

It must be noted that this Congressional effort would not be taking place with any hope of enactment under a hypothetical Hillary Clinton presidency.

Who says?

That’s the application of the logic of former MHI government relations vice president, Jason Boehlert.

President Obama opposed a similar MHI backed bill, threatening to veto it. Secretary Clinton said she agreed with Mr. Obama, pledging to do the same or ‘strengthening’ Dodd-Frank.  Now, look again at the video with MHARR posted above, and ask, what were MHI and those who rule that association thinking?

2012 Election Results and Coming Lame Duck Session

 

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The Special Counsel Robert Mueller investigation of the so-called “Trump campaign-Russian collusion” allegations has now turned one year old.

Even as third-party analysts claim that 90 percent of mainstream media reports have been anti-Trump, public opinion has nevertheless shifted away from Mueller.

In a recent survey, just over half the country now believes that Mueller’s so-called probe into alleged Russian collusion with the Trump campaign is – as the 45th president has often called it – “a witch hunt.”

It’s worse than most realize, because there was never a predicate crime being alleged.  

Democratic attorney Alan Dershowitz argued over a year ago that there is no federal crime of collusion.

Had collusion between the Russians and the Trump campaign existed, said Dershowitz – noting that there is no evidence of any collusion – it would have looked bad.  But the Harvard law professor Dershowitz said that even if the alleged collusion existed, it would not have been illegal.

Then what was the Mueller investigation all about?

Recall that President Obama said days before the election, that the Russians were unable to interfere in the American elections.  There is no evidence that a single vote was changed by Russian attempts to hack.

Recall that MHProNews advised readers last year that even a CNN producer admitted to undercover investigators a year ago that the Russia-Trump stories were “bullsh-t.”

An underreported aspect of the specious ‘Russia’ story is that governments around the world, including the U.S. government, attempt to influence each other’s elections all-too-often.

Recall that Barack Obama attempted to interfere with Israel’s elections, and with the Brexit vote in England. Arguably worse, is that POTUS Obama – following calls from the Clinton State Department – invaded Libya.  For what?  The Libyan nation – as a result of that Obama-Clinton action – has since been destabilized. As but one tragic result, America later lost diplomats in Benghazi, Libya.  That’s been one of many consequences from that outrageous Obama-Clinton military plan to attack Libya’s leadership. The previously pacified Libyan people now are suffering a civil war.

The Russian efforts to interfere in the 2016 U.S. election, per sources, is their “payback” for Secretary Clinton’s alleged interference in the Russian elections.

Ironically, every scandalous effort to weaponize federal resources are boomeranging back onto Democrats and their anti-Trump allies.

The U.S. ought to be vigilant and protect the election process, against foreign and domestic manipulation and interference.

U.S. policy ought to respect the rights of foreign nations.   Furthermore, U.S. policy ought to pro-actively protect our own nation’s borders, and then it can call upon others to act similarly.

For years, America has been living in a topsy-turvy world.  So much so, that Barack Obama candidly and accurately said not long ago that there are two ways that the nation looks at the facts.  That’s sad, but true.  Isn’t he, Secretary Clinton, and their allies part of the reason that claim is accurate?

Facts Matter – Mr. Obama’s “Alternative Universe,” Trump Admin, Investors & Politicized Manufactured Housing Data

Plausible allegations of officials – starting during the Obama era – using:

  • federal agents,
  • taxpayer dollars,
  • and illicitly applying federal legal procedures to stop or unseat a campaign – or a duly elected president – are all indeed worse than Watergate.
  • Aren’t these an apt description for an attempted coup?

DefineCoupD'EtatWikiManufacturedHousingIndustryDailyBusinessNewsMHProNews

 

Simplified Summaries of Threads

Former DNC Chair Donna Brazile said that the Hillary Clinton campaign rigged the primaries, to prevent Bernie Sanders from becoming the Democratic Party’s candidate.

“Hacks” – Explosive 2016 Campaign Claims by Former DNC Chair, Donna Brazile

It is now clear that the Clinton campaign paid millions for the so-called “Steele Dossier,” which used foreign intelligence assets – British and Russian sources – to try to paint then candidate Trump in an unfavorable light.

That bogus politically-motivated ‘fake dossier’ – along with leaks of one or more FBI memo(s) – were in turn used by then FBI director James Comey to spark the Mueller probe.

If that isn’t outrageous enough, Special Counsel Robert Mueller has a staff packed with Clinton campaign donors.

Millions of taxpayer dollars have been spent on what looks to be a political effort initially designed derail candidate Trump, and later used to spark a stir they apparently hoped would lead to a duly elected president’s impeachment.  All on totally spurious – faked! – grounds.

If this is so, it’s not just outrageous, its criminal.

 

Why This Matters to MHVille, Next Week

Next week, the House will vote on their version of S. 2155, which includes a provision that would remove the MLO rule.  The mortgage loan originator (MLO) rule that is widely seen as harmful to manufactured housing industry retailers, communities, lenders, and others.

GovTrack tells MHProNews the odds of passage for S. 2155 stands at 56 percent.

Under President Obama, such a measure would have been vetoed.

Under a hypothetical Hillary Clinton Presidency – based upon her campaign promises – a bill like S. 2155 that will change Dodd-Frank would have been vetoed.

If S.2155 bill passes – and MHProNews’ publisher has editorially supported a similar such pro-business, pro-consumer change like this for years – it will be a Trump Administration accomplishment.

It would be entirely spurious for MHI to claim any legitimate bragging points.

Why?

MHProNews reported that days before the 2016 election that MHI had not one, but two paid pro-Clinton speakers on their stage in Chicago.

Warren Buffett was pro-Barack Obama and pro-Secretary Hillary Clinton.

Buffett is the Chairman of Berkshire Hathaway.  Berkshire is the parent to Clayton Homes, 21st Mortgage, Vanderbilt Mortgage, and has interests in a raft of other suppliers, lending, and services entities that intersect with manufactured housing.  Berkshire’s brands are widely seen as dominating MHI.

Based upon feedback from industry sources, there is a growing realization that MHI has been slow-walking or stonewalling reforms that hurt the industry, rather than championing them.

The Washington Post’s recent report on HUD, Pam Danner and manufactured housing underscored those concerns.

MHI Lender Shakes Up DTS and MLO Rule Discussions

As a result of years of MHI failures and allegedly weaponized reports, there is also a growing interest in creating a new post-production association, one that truly represents the independent retailers, communities, lenders and others.

 

Manufactured Housing is Non-Partisan

Manufactured housing – because it is affordable housing – ought to be viewed as a non-partisan issue.  It has long enjoyed the support of Democrats and Republicans alike for that reason.

But during end of the ‘Bush 43’ years, and during the eight years of the Obama presidency, anti-business policies often harmed our industry.

By contrast, President Trump – and cabinet members such as Secretary Ben Carson – have been working to undue those harms, pledging a new era of cooperation.  Would that have taken place under madam Clinton’s leadership?

 

Developing News on More Manufactured Home Lending

There is a developing story on financing that you may not hear from MHI or their echo-chamber surrogates. They will certainly not reveal it unless and until MHProNews hereby and in upcoming reports spotlights it.

When you see that upcoming report, you’ll see why.

Watch for that pending finance focused report from the MH Industry’s leading independent news source.

For almost a decade, MHProNews has brought you the most popular “Industry News, Tips and Views that Pros Can Use.” ©

With facts, evidence, and sound analysis in hand, then readers can apply the next tag line: “We Provide, You Decide.” ©

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PS: Our thanks to those who have taken the time to mention that they see that MHProNews reports, analysis and projections have proven to be accurate, time and again.

PSS: Watch for an exclusive report on a non-profit group that is attempting to harm manufactured housing industry businesses.

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

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

May 9th, 2018 Comments off

WarrenBuffettKevinClaytonTimWilliamsClaytonHomes21stMortgageBerkshireHathawayManufacturedHomeLoansMonopolisticConcernsLogoMHProNews

During a crisis, when people are desperately trying to swim for shore, details can often get lost in the fog of panic and pressure.

Thus, some issues only come into focus after a crisis – like the 2008 housing/mortgage meltdown – has come and gone.

When the Urban Institute or others study the manufactured home industry, and they ask why it is at such relatively low ebb, these two documents ought to be among the top exhibits examined.

When federal officials, investors and others wonder why manufactured homes haven’t done better, given the affordable housing crisis, these two documents are an important starting point.

And when independent manufactured home retailers are wondering about the future – as in which supplier(s) and service providers they should use – an adage ought to be applied.  Namely, that a reasonable predictor of future behavior is past behavior.

This Smoking Gun 3 report and analysis will look at two historic documents:

  • an annual letter from Warren Buffett to his shareholders,
  • married up against the letter from Tim Williams, 21st Mortgage Corp President and CEO, which is a Berkshire Hathaway owned unit, and a ‘sister’ company to Clayton Homes.

 

Quotes from Buffett’s Letter

WarrenBuffettBerkshireHathawayChairmanManufacrturedHOusingINdustryDailyBusinessNewsMHProNewsOur gain in net worth during 2009 was $21.8 billion, which increased the per-share book value of both our Class A and Class B stock by 19.8%. Over the last 45 years (that is, since present management took over) book value has grown from $19 to $84,487, a rate of 20.3% compounded annually,” said Warren Buffett, Chairman of Berkshire Hathaway, in his 2009 annual letter to shareholders.

Here are a few examples of how we apply Charlie’s [Munger, Berkshire Vice-Chairman] thinking at Berkshire: Charlie and I avoid businesses whose futures we can’t evaluate.”

In manufactured housing, that meant that Buffett and Munger had no doubt about the future of the industry.  Investors, take note.

When the financial system went into cardiac arrest in September 2008, Berkshire was a supplier of liquidity and capital to the system, not a supplicant. At the very peak of the crisis, we poured $15.5 billion into a business world that could otherwise look only to the federal government for help,” said that same 2009 annual letter. What did that mean for manufactured housing professionals?

Simply this.

That the 21st Mortgage Corporation letter to independent retailers includes claims that were at best a mistaken, misleading – or even false – assertions.

21stMortgageCorpLogoLetterheadJan302009TimWilliamsRetailersBrokersCutSpecifiedLendingMonopolisticPloyConcernManufacturedHomeDailyBusinessNewsMHProNews

This document was provided as a news tip to MHProNews. To see the PDF of this document, click here or above.

Berkshire made money that year.

Buffett’s conglomerate lent billions that year, his letter said. Yet, 21st had the chutzpah to claim they couldn’t lend to manufactured housing retailers that didn’t carry Clayton product?

Buffett’s own words – plus Tim Williams letter to retailers – seem to be in conflict on claims and/or facts.

Wouldn’t a reasonable person be led to believe that Williams was widening the Berkshire moat by choking off lending to independents?

Indeed, many of those companies later sold off to others – including Clayton – for less than they would in a more normal economic circumstance.

Scores of manufactured home connected companies of all sizes, slid into oblivion. Among those firms were those that had years of prior success, and good service to their customers.

How many retailers failed?  How many communities lost the benefits of having retailers sell homes into their properties?  How many factories supporting those retailers sold out for less, or failed as a result of the above?

 

What Buffett Said – Who’s Responsible?

We tend to let our many subsidiaries operate on their own, without our supervising and monitoring them to any degree…Most of our managers, however, use the independence we grant them magnificently, rewarding our confidence by maintaining an owner-oriented attitude that is invaluable and too seldom found in huge organizations,” said Buffett that year.

But it should also be recalled that Buffett preaches about widening the moat.   See all of the Buffett videos on the key Kevin Clayton videos on the page, linked here, or watch the two videos posted below.

Buffett referenced this from his 2008 annual letter, “We are certain, for example, that the economy will be in shambles throughout 2009 – and probably well beyond – but that conclusion does not tell us whether the market will rise or fall.”  He chastised many in media for sensationalism, in quoting only have of that, and added: “Any investors who were misled by the sensationalists paid a big price: The Dow closed the day of the letter at 7,063 and finished the year at 10,428.”

Skipping deeper into that 2009 Buffet annual letter to Berkshire shareholders, we find the section that deals with Clayton Homes, and manufactured housing.

 

Smoking Gun 3…”

“Finance and Financial Products

Our largest operation in this sector is Clayton Homes, the country’s leading producer of modular and manufactured homes. Clayton was not always number one: A decade ago the three leading manufacturers were Fleetwood, Champion and Oakwood, which together accounted for 44% of the output of the industry. All have since gone bankrupt. Total industry output, meanwhile, has fallen from 382,000 units in 1999 to 60,000 units in 2009.”

By the way, the industry shipped 372,000+ in 1998 – not 1999. And in 2009, the total shipments were under 50,000 homes  So that last sentence above has two fact errors.

The collapse of so many companies in manufactured housing has several causes.  But cutting off capital – in the form of lending – has to be high on the list, if not on top.

After all, Harvard’s Eric Belksy said credit is the lifeblood of housing.  At the very time – post 2008 – when hundreds of thousands were walking away from site-built housing due to mortgages they couldn’t afford, why didn’t manufactured housing spike?  Does this choking off of lending and capital – reflected in the 21st letter above – explain why?

But why would Berkshire Hathaway units choke off business for the industry, some ask?

Answer – Buffett routinely says, grow the moat, per Kevin Clayton in the video posted below.  Indeed, the Berkshire/Clayton Homes “moat” grew rapidly from 2009 to 2017.

Kevin Clayton says in the video below that in 2011, Clayton Homes was 25 percent of the industry’s production. By the end of 2017, per Berkshire’s data, it was about 50 percent of the industry’s production. Doesn’t cutting off lending explain that rapid growth in market share? Isn’t that a monopolistic ploy – a market share grab – hiding in plain sight?

What Buffett next describes in his annual letter as an overhang – meaning overproduction – of new housing in the U.S.  He said that the severe drop in new housing starts “Paradoxically, this is good news.”

The second reason that manufactured housing is troubled is specific to the industry: the punitive differential in mortgage rates between factory-built homes and site-built homes,” said Buffett, and he gave a disclaimer that the 21st letter did not phrase in a similar way.  “Before you read further, let me underscore the obvious: Berkshire has a dog in this fight, and you should therefore assess the commentary that follows with special care. That warning made, however, let me explain why the rate differential causes problems for both large numbers of lower-income Americans and Clayton.”

The residential mortgage market is shaped by government rules that are expressed by FHA, Freddie Mac and Fannie Mae. Their lending standards are all-powerful because the mortgages they insure can typically be securitized and turned into what, in effect, is an obligation of the U.S. government. Currently buyers of conventional site-built homes who qualify for these guarantees can obtain a 30-year loan at about 5 1⁄4%. In addition, these are mortgages that have recently been purchased in massive amounts by the Federal Reserve, an action that also helped to keep rates at bargain-basement levels.

In contrast, very few factory-built homes qualify for agency-insured mortgages. Therefore, a meritorious buyer of a factory-built home must pay about 9% on his loan. For the all-cash buyer, Clayton’s homes offer terrific value. If the buyer needs mortgage financing, however – and, of course, most buyers do – the difference in financing costs too often negates the attractive price of a factory-built home.

This was another odd statement, as the more accurate phrasing would be “…negates [some of] the attractive price of a factory-built home,” as the Fannie Mae graphic below from 2011 reflects.

fanniemae-2011-chart1-affordable-manufactured-housing-posted-daily-business-news-mhpronews-

The price difference between much of conventional and new manufactured housing is so great, that even with higher interest rates, the manufactured home remains the bargain in both price and monthly payments.

So both Buffett and Williams made several questionable statements, and some outright fact errors.  But the key is that Buffett’s letter reveals that 21st could have had the money they told their retailers they didn’t have.  The result, was a contraction of credit that killed off businesses or forced many to sell out for less.  Isn’t that monopoly power at work?

 

Two Sides of the Story

It is important to note, that we’ve given several voices with Berkshire Hathaway brands and the Manufactured Housing Institute (MHI) numerous opportunities to explain these seemingly contradictory matters, in writing and/or on stage and by video.

Is there is another explanation that what’s shown in this analysis?  If so, please, let MHI – which has been viewed by voices inside and outside of manufactured housing as dominated by Berkshire Hathaway for years – Mr. Buffett, or leaders of any of Berkshire owned manufactured home brands explain it.

They’ve repeatedly demurred, and we’ve documented several of those outreaches.

So, quoting directly from Berkshire Hathaway or Manufactured Housing Institute (MHI) source documents is the next best thing to presenting “both sides” of the story.  Facts, balance, evidence all matters.

 

Back to the Buffett 2009 Annual Letter

Last year I told you why our [manufactured home] buyers – generally people with low incomes – performed so well as credit risks. Their attitude was all-important: They signed up to live in the home, not resell or refinance it. Consequently, our buyers usually took out loans with payments geared to their verified incomes (we weren’t making “liar’s loans”) and looked forward to the day they could burn their mortgage. If they lost their jobs, had health problems or got divorced, we could of course expect defaults. But they seldom walked away simply because house values had fallen. Even today, though job-loss troubles have grown, Clayton’s delinquencies and defaults remain reasonable and will not cause us significant problems.”

We have tried to qualify more of our customers’ loans for treatment similar to those available on the site-built product. So far we have had only token success. Many families with modest incomes but responsible habits have therefore had to forego home ownership simply because the financing differential attached to the factory-built product makes monthly payments too expensive. If qualifications aren’t broadened, so as to open low-cost financing to all who meet down-payment and income standards, the manufactured-home industry seems destined to struggle and dwindle.”

Once more, by way of analysis, Fannie Mae’s data is different.  But the Government Accountability Office (GAO) also had similar statistics, which demonstrated that even with a somewhat higher finance rate, because of the far lower home price, monthly payments on manufactured homes are still typically considerably less.

But there’s another problem with Buffett’s statement above. The manufactured home (MH) industry has experienced prior shipment levels far higher then – or now – and MH did it with higher interest rates than conventional housing. Pardon me, sir, but shouldn’t that paragraph be rephrased?

TimWilliams21stMortgageCEOMHProNews

Tim Williams, CEO, 21st Mortgage Corp. Photo credit, MHProNews.com

Furthermore, Tim Williams of 21st Mortgage took steps that several sources indicated would contribute to the Government Sponsored Enterprises (GSEs) not making an earlier, and more robust entry, into the manufactured housing marketplace. 

That report, which quotes from Williams and others, is linked below.

In other words, there are several third parties and multiple sources – including Williams – that made it clear that Berkshire operatives took steps that could predictably cause the GSEs not to enter manufactured housing earlier, or more robustly.

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

As Mark Weiss, president and CEO of the Manufactured Housing Association for Regulatory Reform (MHARR) has said, every day that the GSEs don’t robustly provide chattel and other lending for manufactured housing is a gift to Berkshire Hathaway.

Bingo.

Continuing from the Buffett 2009 annual letter:

Even under these conditions, I believe Clayton will operate profitably in coming years, though well below its potential. We couldn’t have a better manager than CEO Kevin Clayton, who treats Berkshire’s interests as if they were his own. Our product is first-class, inexpensive and constantly being improved. Moreover, we will continue to use Berkshire’s credit to support Clayton’s mortgage program, convinced as we are of its soundness. Even so, Berkshire can’t borrow at a rate approaching that available to government agencies. This handicap will limit sales, hurting both Clayton and a multitude of worthy families who long for a low-cost home. In the following table, Clayton’s earnings are net of the company’s payment to Berkshire for the use of its credit. Offsetting this cost to Clayton is an identical amount of income credited to Berkshire’s finance operation and included in “Other Income.” The cost and income amount was $116 million in 2009 and $92 million in 2008.

 

Summing Up “Smoking Gun 3”

Tim Williams claimed in the letter sent to retailers that 21st didn’t have sufficient access to money.

Yet, Warren Buffett said that money was being provided to Clayton and affiliates.

Buffett also said that same year, that they loaned money to others.  If they loaned it to others, then why not to 21st and through them, to independents? ## (News, analysis, and commentary.)

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

Related Reports:

Manufactured Housing – Regulatory, Other Roadblocks and Potential Solutions, Up for Growth Research, plus Urban Institute Report Revisited

 

LATonyKovachMHProNews-com-

L. A. ‘Tony’ Kovach addressing industry professionals in an educational session.

By L.A. “Tony” Kovach – Masthead commentary, for MHProNews.com.

Tony is the multiple award-winning managing member of LifeStyle Factory Homes, LLC, the parent company to MHProNews, and MHLivingNews.com.

Office 863-213-4090 |Connect on LinkedIn:
http://www.linkedin.com/in/latonykovach

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Click here to sign up in 5 seconds for the manufactured home industry’s leading – and still growing – emailed headline news updates.

 

Sunday Morning Weekly Recap Manufactured Housing Industry News, October 22 to October 29, 2017

October 29th, 2017 Comments off
SundayMorningWeeklyRecapSept4toSept10ManufacturedHousingIndustryDailyBusinessNewsMHProNews-1

Featured image credit, MHProNews.

Tony, every week there is so much that happens, this [The Sunday Morning Headline News Recap] is an easy way for me to review the news, thank you for this [feature] and your team’s coverage of factory-built housing.

Our featured articles for September are available on the MHProNews.com home page.

FYI – and ICYMI if you aren’t already on our twice-weekly emailed headline news update, click here to sign up in seconds.

Thousands get our emails, and the open and click through rates – per MailChimp – blow away others in media and publishing.  The reason?  “Relevant!” said a regular on MHProNews.

To see the line-up of over 2-dozen featured articles for the month of September, along with the headline commentary, please click this link here.

Manufactured, modular and prefabricated home professionals know that how a home got to its location should not define a person or their dwelling.

What the Daily Business News spotlights day-by-day are the tragedies, triumphs and struggles for acceptance of the obvious solution for millions for the growing affordable housing crisis in the U.S. and beyond.

When you read the lineup for the month found on the home page, you can reflect on another motto as you chart your own professional path ahead: “We Provide, You Decide.”  ©

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What’s New On MHLivingNews

 

October 28th, 2017

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October 27th, 2017

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October 26th, 2017

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October 25th, 2017

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October 24th, 2017

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October 23rd, 2017

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That’s $36,000 plus shipping. While HUD Code homes are still a better cost per square foot, will growing demand reduce the price of such competitors? Isn’t that the lesson of production – more demand, more production, costs decline – with all products?

October 22nd, 2017

SoheylaKovachManufacturedHomeLivingNewsManufacturedHousingIndustryDailyBusinessNewsMHProNews-(Image credits are as shown above, and when provided by third parties, are shared under fair use guidelines.)
Submitted by Soheyla Kovach to the Daily Business News for MHProNews.com.

Jana Kasperkevic, Tiny Houses, Manufactured Homes & Financing

June 22nd, 2017 Comments off

JanaKasperkevicGuardianMarketplaceTinyHouseManufacturedHomeAnalysisCommentaryReportDailyBusinessNewsMHProNews400A little knowledge is a dangerous thing,” said Alexander Pope, about 208 years ago, and it is as true today as it was then.

An early version of the saying, “the road to hell is paved with good intentions,” is attributed to Saint Bernard of Clairvaux,  (1091-1153), and that too remains true.

Jana Kasperkevic is a good writer who recently published an article for the Marketplace.org about tiny houses, and manufactured homes. The headline said, “Tiny homes seem perfect for most millennials, except for one big problem.”

In a catchy opening, Kasperkevic states, “Tiny homes seem like a perfect answer to most of millennials’ problems. They are affordable. They are minimalistic. The[y] [sic] are trendy. Except there’s one problem: Tiny homes are not considered homes when it comes to bank loans, making it hard for potential owners to find financing.”

DefiningSICinJournalismDailyBusinessNewsMHProNews-comThen comes one of several problem areas in her column, “Because tiny homes are portable and their owners could just pack up, get in and move somewhere else, the U.S. financial system does not consider them houses. Instead, they fall into a category with recreational vehicles and mobile homes called manufactured homes — homes that can be made in factory and then moved as needed. Often, they are paid for upfront or bought with funds obtained through a personal loan.”

TinyHousesSeemPerfectforMostMillennialsOneBigProblemManufacturedHomeDailyBusinessNewsAnalysisReprotsMHProNews

Credit, Marketplace.org, from Kasperkevic’s article.  To see her full commentary, click here.

While the portion of the paragraph quoted above following the “– homes…” is accurate, the first part of that paragraph is problematic.

Perhaps more troublesome to those who believe that facts matter are the two paragraphs she writes, as follows.

But that could change next year.

The Federal Housing Finance Agency has proposed a pilot program that would allow Fannie Mae and Freddie Mac to provide financing for buyers of manufactured homes. According to Bloomberg, the program could go into effect as early as January. And when it does, it could transform the tiny home industry.”

What the above does is represent that a tiny house is a manufactured home.  While it is true that some manufactured home producers are building what they label as a ‘tiny house,’ it is not accurate to say that every tiny house is a manufactured home.  There are other errors and oversights in the above, but let’s focus on mixing the terms, manufactured home and tiny house.

To be a manufactured home, a home must be certified by HUD, and have a HUD red, metal label.

RedHUDCodeMetalLabel=ManufacturedHomeNOTMobileHomeNOTTinyHouseNOTrv-CreditsManufactruredHomeLivingNewsDailyBusinessNewsMHProNews

Why Routine Media Engagement is Necessary for Industry Growth

MHI/NCC member Frank Rolfe has said that even since the Manufactured Housing Institute (MHI) has brought on first one, then another full time public relations professionals, he is still getting phone calls from media outlets who tell him that MHI will not speak to them by phone.

That, says Rolfe and others, creates an ongoing series of problems.

FrankRolfeMHFundRVHorizonsMobileHomeUniversityDailyBusinessNewsManufacturedHomeIndustryResearchReportsDataAnalysisMHProNews595

A source within MHI told MHProNews that some researchers call, when asked about certain topics, are told that they need to do a Google search for that, MHI couldn’t (wouldn’t) help them.

So, while several producers in the industry are seeking to tap into the tiny house movement, MHI has been less than fully engaged in addressing incorrect information, such as the article by Kasperkevic.

Lindsey Bostick, who is a millennial, works in the industry and owns a residential-style manufactured home, has explained why she believes the homes are a good fit for her generation, as well as others.

ChrisGalushaTinyHouseTalkDailyBusinessNewsResearchReportsAnalysisManufacturedHomesMHProNews298x527Had Kasperkevic carefully read the draft of her own article, some of the discrepancies between what she wrote and the facts might have popped out at her, or her editor(s).

For example, she wrote that, “They make it look easy,” said Chris Galusha, president of the American Tiny House Association. “They are like, ‘Ta-da! We’re putting a tiny home here.’ Nobody realizes that behind those shows, there’s a lot of time spent with people negotiating or checking with building officials or taxing authority and stuff like that…”

…“I’m always in favor of having guidelines like building codes and regulations, because that protects everybody,” Galusha said.”

Manufactured homes are built to federally preemptive standards, the nation’s first and still only national building code for housing. Tiny houses aren’t necessarily built to any standard, as Galusha’s words imply.

 

What a Google Search Could Have Revealed

Had Kasperkevic done the Google search shown below, she would have found this article by RC Williams on MHLivingNews.  Williams’ article pointed out that financing isn’t the only problem; zoning is another big hurdle for tiny houses.

TinyHouseBigLegalTroubleToledoBladeManufacturedHomeLivingNewsIndustryResearchDataReportsAnalysisDailyBusinessNewsMHProNews

Original photo credit, Toledo Blade. To see article, click the image above.

MHI member, Credit Human’s regional manager, Barry Noffsinger said, “Tiny houses are cute and popular to watch on TV.”

BarryNoffsingerCreditMHProNews-

Barry Noffsinger, photo credit, MHProNews.

It obviously holds appeals to some,” Noffsinger stated, “but they aren’t built to a code, so placement can be a nightmare.”

As a manufactured home lender, Noffsinger added, “And since there is no building code, how do you finance one? By contrast, modem manufactured homes can be very residential, they too can have amazingly appealing features, and placement and lending is easier, because they are built to a federally preemptive building code.”

Tiny houses have received favorable media attention in recent years. But not enough attention has been focused on the fact that many, if not most, are not built to a building code, with some jurisdictions raising safety concerns,” said Mark Weiss, an attorney who is president and CEO of the Manufactured Housing Association for Regulatory Reform (MHARR).

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Mark Weiss, JD, President, CEO of MHARR.

MHARR’s president noted that tiny houses aren’t manufactured homes, as some may incorrectly think. He also lamented the difference in media attention the two housing types tend to bring.

By comparison,” says Weiss, “manufactured homes are built to a federal code which provides not only a safe, quality home, but multiple layers of protection for consumers — all at much lower price per square foot.  Which makes more sense?  And where is the favorable media attention for HUD Code homes?”

In fairness, Kasperkevic isn’t alone in the problems with conflating the various terminologies involved.  But journalists are supposed to be focused on getting the facts, and reporting accurately and without bias. RC Williams’ recent report on schooling the media is thus of value.

The Road Ahead

While several manufactured home companies are investing in providing solid information for customers and shoppers – including the one linked or others shown in the video above – there is still more work to be done. What should be apparent from those who study the issues is that those who invest in getting the facts straight are growing at a more rapid pace than the industry at large currently is, as seen linked here.

StillRoundTheCornderThereMayWaitNewRoadSecretGateJRRTolkeinRoadAheadManufacturedHousingDailyBusinessNewsMHProNews507Within a trillion dollar a year housing industry, where major players are dancing around – and in – the HUD Code manufactured home industry’s appeal, will more industry professionals leave their comfort zones to routinely get and keep the record straight when media and researchers make mistakes? ## (For Jana Kasperkevic’s full story, click here. “We Provide, You Decide.”©   News, analysis, commentary).

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

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

“An Elephant Ass,” Understanding GSEs, Duty to Serve, Manufactured Home Lending

January 28th, 2017 Comments off

PimpleOnElephantsAssGSE-FHFA-ManufacturedHomeLending-MHProNewsThe manufactured homes chattel lending market poses challenges and risks for the enterprises

– FHFA statement in its request for comments on the Government Sponsored Enterprises (GSEs) Duty to Serve Manufactured Housing.

 

This is a great opportunity for consumers of affordable housing to have additional lending options…”

– Cody Pearce, President, Cascade Financial Services.

 

Mark my words, it will get dismissed by some as small and insignificant….”

– Paul Bradley, President, ROC USA.

 

Mammoth losses incurred by the GSEs and other mortgage lenders in the 2008 housing/mortgage crisis made the losses on manufactured housing in the early 2000s look like “…a pimple on an elephant’s ass.

– Manufactured housing industry veteran’s off-the-record remark to MHProNews.

 

Systematic controls in the 2000s” by remaining manufactured home industry lenders
resulted in much better loan quality and benefited consumers as well.”

 – Marty Lavin, JD, MHI Totaro award winner for lifetime industry contribution in MH lending,
former consultant to Fannie Mae on manufactured home lending.

 

Getting more lending into the manufactured housing space is not a simple snap of a finger and “poof!” it’s done. Getting more lending starts…with the three prongs of needed Education. It relies too on the 4S’ of good lendingSafe, Sound, Sanitary and Sustainable.”

– Titus Dare, SVP, Eagle One Financial and factory-built housing industry veteran.

 

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Brian Collins, credit, National Mortgage News.

The recent column by Brian Collins in National Mortgage News entitled Why FHFA Is Seeking More Data on Chattel Loans resulted in a range of responses from manufactured housing industry professionals.

The quote from Fannie is illuminating,” said M. Mark Weiss, President, and CEO of the Manufactured Housing Association for Regulatory Reform (MHARR).

It’s been nearly a decade since DTS was enacted by Congress,” Weiss told MHProNews, “and FHFA is just now seeking information on the chattel loans that comprise 80% of the market — with no assurance that there will ever be a chattel program — and that’s portrayed by some as progress?”

In a separate and related op-ed on Industry Voices, Weiss said, “If Congress had meant the “duty to serve” to be optional, it would not have called it a “duty.

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Text and image credit, MHProNews.com.  To see Weiss’ commentary, click here or the image above.

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Cody Pearce, CMB, photo credit, LinkedIn.

Cody Pearce, President of Cascade Financial Services said, “We look forward to working with the GSE’s in forming the basis for their lending objectives as they strive to meet DTS requirements.  We are hopeful that the credit box created will truly cater to lower income and lower FICO borrowers.”

I understand the desire from industry insiders to want a chattel program immediately, however, the GSE’s were burnt and burnt badly by the Conseco/Greentree debacle of the late 90’s,” said Barry Noffsinger, in a longer comment that will be posted soon on Industry Voices. “I view this as a journey to explore where their fit is in our industry.”
Concerns and Red Flags?

Its-EvolutionaryTrailerHouse-MobileHome-ManufacturedHome-modular-manufacturedhomelivingnews-comWB-660x330

Industry professionals assert that some, but not all, in the GSEs, media or in federal policy positions have little or no clue about the evolution from trailer houses, to mobile homes to modern HUD Code Manufactured Homes. Image credit, and story linked here – on MHLivingNews.  There have been no mobile homes built in the U.S. for over 40 years.

A regional manufactured home lender has told the Daily Business News that their program has worked very well.  They said that perhaps their biggest exception is when a repossession occurs in some community where the operator fails to honor their “park agreement,” to help them rapidly sell that home, and for a reasonable price.

Worse still are cases, that firm said off-the-record, when a community essentially punishes a lender by charging lot rent – or getting exorbitant amounts to do refurbishing of a home – before it goes back to market.  That lender refers to those communities they actively do business with as ‘partners.’  That partnership – or strategic ally – perspective would be common among most non-recourse, third-party lenders in manufactured housing.  The prudent and moral professional doesn’t burn a partner.

paul bradley roc usa founder fosters.com cedit

Paul Bradley. photo credit: Fosters. For an in-depth interview with Bradley, click here.

Those insights dovetail with comments from ROC USA’s Paul Bradley, who says that even when the Enterprises hopefully become active in lending on manufactured homes in communities, they will likely be selective in which communities they do business in.

Another warning flare from the vantage point of “the Enterprises” is this.

Sorry, but the GSEs and secondary market just don’t get excited about hearing “Blue Book” when it comes to valuing a home,” said Titus Dare, SVP of Eagle One Financial to MHProNews last summer.

Dare presaged the concerns implied by the words used in the National Mortgage News column, when Collins quoted the FHFA saying, “Historically, many manufactured home chattel loans have performed poorly, the collateral has generally depreciated, and many chattel loan origination and servicing practices have lacked important borrower protections.”

But Dare himself pointed out that the GSEs have some chattel loans in their portfolios.

Furthermore, the Enterprises also have successfully done mortgages in leaseholds, that mimic home-only, chattel lending, because ownership of the real estate is not involved. MHProNews has spoken with industry professionals who have asserted that those GSEs loans in their communities performed well; Dare independently made the same point.

TitusDareEagleOneFinancialLongTermLoansInLandLeaseGSE-MHProNews-

Text and image credit, MHProNews.  For Dare’s article that featued the quote above, click here.

There are numerous examples of competitive rates on manufactured home loans performing in communities; as well as of MH homes gaining as well as losing in value.

KimCapenMedvilleROC-GoffstownNH-MH-AppreciationSeniorCommunityLifestle-ManufacturedHomeLivingNews-InsideMHvideo2-600x330

So, when huge losses occurred in the conventional housing loan market just a few years ago, why is that overlooked today, while comparatively smaller losses almost 20 years ago on manufactured home (MH) loans are seen as a road block on MH lending now?

Caution, or Excuses? 

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Marty Lavin, JD.

Marty Lavin has previously told MHProNews that it is self-evident that the national manufactured home lenders active in the business are profitable.

In an upcoming video episode in the Inside MH Road Show series, officers of a credit union speak out about their experiences in making loans on manufactured housing for about 8 years. One of their executives said on-camera that they thought that the GSEs were coming late to the game.

That credit union reports that they have been doing loans profitably and sustainably.  Because they’re regulated, that claim rings true.

Not Everyone’s Cup of Tea…

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It should be noted that while most of the public comments on the FHFA and the GSEs Duty to Serve (DTS) manufactured housing favor the implementation of the law, there are those within the industry who quietly resist or oppose the GSEs ever doing chattel lending on MH.

This is one of the undercurrents that is rarely, if ever, reported by others in media. Yet it is an important factor to consider in why the pace of progress on the issue might be so slow.

The Need?  The Goal? The Impact?

Several public DickErnst-creditMHC-MD-com-postedDailyBusinessNewsMHProNews-comments at trade shows and other events by Financial Services Chairman Dick Ernst are worth noting.

Ernst said during lender panel discussion that there is no practical limit to the capacity of manufactured home lenders to make qualifying loans. When he asked those lenders on those panels about that point, they concurred.

So, if there is “no lack of capacity” to make loans that meet MH lenders current criteria, what then is the goal for the industry in pushing the GSEs for the Housing and Economic Recovery Act (HERA 2008) mandated Duty to Serve?

Borrower FICO scores in the 10th percentile have marched higher from mid 500’s in 2001 to 650 today,” said Cascade’s Pearce, “while GSE credit scores for first time borrowers is 742 and 755 for repeat borrowers.”

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Pearce’s statement was part of a longer one to be published on Industry Voices, in which he stresses his hope that the GSEs will give the lower credit score borrowers access to more affordable lending.

FICO scores are used by lenders in part to assess their risk in making a loan, the likelihood of timely repayment, and overall loan performance.  While some lenders and land-lease communities have done loans on manufactured homes to customers with lower credit scores successfully – as was previously noted – but those loans often require more servicing.

Cascade’s president’s full comments to MHProNews will be published soon on Industry Voices, as will Bradley’s, Noffsinger’s, Weiss’ and others cited in this report.

Appreciation, Depreciation and Exit Strategies

Perhaps the most problematic and troubling statement to forward-looking industry professionals in Collins’ column, Why FHFA Is Seeking More Data on Chattel Loans, has to do with the agency’s assertion that manufactured housing historically loses value.

How fair or accurate is that claim?

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Barry Noffsinger, photo credit, MHProNews. For an in-depth interview, see A Cup of Coffee with…Barry Noffsinger, at this link here.

Contemporary facts and data, says Noffsinger, demonstrate otherwise.

Manufactured housing, just like site built homes, can both appreciate and depreciate.  There are many factors such as location, market conditions, mobility, the condition of the home, etc.  that effects the home’s value,” Noffsinger told MHProNews.

MHARR’s CEO stressed a kind of discriminatory hypocrisy.

When it comes right down to it,” Weiss said of the GSE’s reluctance to loan on manufactured homes, “it’s a double-standard — they downplay the risk of large site-built mortgages despite huge losses previously, while they play-up the risk of MH chattel loans based on comparatively much smaller losses.”

In the light of developments and the range of views, Dare’s commentary last summer bear another, closer look.

Thinking in part about the reasons why profitable U.S. Bank pulled the plug on their sustainable manufactured home lending program, Dare said, There aren’t just barriers of entry, in fact there are barriers for staying in manufactured housing.”

Overlooked and under-discussed is a crux issue, summed up by Dare in this notable quote by the industry’s best known billionaire, “Kevin, it seems to me that the problem with your industry is resale,” Warren Buffett told Kevin Clayton. 

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The more real estate like the exit-strategy is for manufactured home owners and lenders, Dare says, the more attractive and sustainable the MH market becomes for consumers and investors alike.

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Dare argued in a series of columns on MHProNews that there are several factors – including education, public policy, image, media, and the need for certain systemic changes – necessary in order for manufactured housing to achieve its widely-recognized potential.

Will the new Trump administration be helpful in this process?  It is possible, because the president and his surrogates have often said that they want to “enforce the law.”

Will industry players do what is needed to assure the support of public officials and policy advocates?

We missed this chance 10 years ago with the Freddie Mac program in land lease communities,” Paul Bradley, President of ROC USA told MHProNews.  “We’re getting a second bite at the apple.  I hope we don’t spit it out.” ##

 

Editor’s notes – Follow up reports on MHProNews and via Industry Voices commentary will dive more deeply into these and other pressing questions on MH industry lending, DTS and the GSEs.

Let us hereby note this publishing principle – “Often First; Always the Best Industry Coverage.”  ©

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With that new tag line/mantra in mind, please note that MHProNews has been pioneering something new in trade publishing; it’s new even for the news media in general.

Every writer, every editor picks and choses what they include – or leave out – of a story.  It’s a necessity, as stories would become too long and unwieldy otherwise.

That said, MHProNews has often published the full comments on Industry Voices of those we ask for or who offered their input on issues.  Then, as do others in news, we use what fits the article.  But by publishing the full quotes as shared via Industry Voices , that allows our industry readers, researchers, and others the opportunity to digest all that was said by those cited.

If you’ve seen that done elsewhere, please point it out.  We believe this a pioneering step for the best trade publishing practice. It also gives policy advocates, researchers and serious readers an opportunity to dive deeper, for a more robust understanding of each quoted person’s perspective.

In an era of low trust in journalism, MHProNews believes that is an important step in transparency, credibility, and integrity.  That allows us to honestly say this long-standing, fair-and-balanced tag line, “We Provide, You Decide.” ©  ###

(Image credits are as shown above.)

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

Discrimination? Was a Limited MH Loan Approval Legal? MHProNews Investigates

August 12th, 2016 Comments off
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Image credit, MHProNews. © 2016 All rights reserved.

A manufactured home retailer recently contacted MHProNews on condition of anonymity, with a very specific concern about the validity of a loan approval. The loan in question was made with restrictions by the lender on a manufactured home (MH) shopper. The applicant reportedly was a senior citizen, the consumer was qualified and while the (MH) loan was approved, the retailer asked the lender – why was the loan term so short?

The lender’s representative replied that they are permitted to shorten the loan term, based upon an actuarial table – a reasonable life expectancy for a prospective consumer’s loan.

First the retailer, and then another party with a related concern, contacted MHProNews, asking us to look into the issue. Their concerns were documented and forwarded. Was this age discrimination, or was this a lawful practice?  MHProNews contacted informed parties to better understand all sides of this issue.

The legal question revolves around ECOA – The Equal Credit Opportunity Act. Here’s the key part of the lender-in-question’s reply to the MH retailer. Quoting:

IRS Life Expectancy Table

We run an IRS Life Expectancy Table on all of our loans that dictates the maximum term we can offer a customer. Based on the Applicants date of birth, the max term permitted by the IRS Life Expectancy Table is 81 months.  We cannot extend the term beyond the term provided.”

 

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Screen capture of lender’s reply to the retailer who raised this issue.

Based upon the above and the age of the applicant, the documentation provided by the lender to the retailer reflected that the loan term offered was just under 7 years.

MHProNews then asked a number of manufactured home lenders not involved in the transaction about this concern over possible age discrimination, based upon a shorter than normal loan term for an otherwise qualified applicant. Here is what we learned.

An MH Compliance Officer’s Take 

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Danielle C. Howard, Vice President, Chief Compliance Officer, Triad Financial Services, photo credit, LInkedIn.

While you cannot discriminate solely on age, you can take age into consideration with respect to other underwriting criteria, for example income,” said Danielle C. Howard, Vice President, Chief Compliance Officer, Triad Financial Services.

Howard explained that If the borrower’s income were to only continue for the next 15 years you could use that to determine you did not want to extend a 30 year mortgage because they would not have the income to repay it.

Howard provided the Daily Business News  some additional information, which are linked below and here as a download. Examples of the information provided, from ECOA guidelines and third party guidance include the following.

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Screen Capture from attached download on ECOA guidance to lenders.

However, that same document, also provided the following additional insight, which a lender could apply to this or a similar case.

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Screen Capture from attached download on ECOA guidance to lenders.

Further, the ECOA guidance stated:

 

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Screen Capture from attached download on ECOA guidance to lenders.

MHProNews  hereby notes that this article doesn’t purport to give any specific legal guidance.

Some Yes, Some No…

What the documentation and replies from various lenders revealed is that there seems to be a fine line, and that a reasonable argument can be made that allows for the lender involved to do precisely what they did.

There are also one-or-more MH lenders who stated off-the-record that they would not use age in this fashion, if the customer qualified, they would make the loan under their normal underwriting terms and conditions.  An example is the quote that follows.

I treat an 85 year old just like a 21 year old. This is a touchy subject. I am told that you can take the average life expectancy and use it to deny and or shorten the terms of a loan request. I have not tested this and don’t intend too. I know some lenders do and feel comfortable with it.

In most cases these older borrowers come in with a pretty good sized down payment (normally as the result of selling a home)  and take care of their home. There is an attitude with some that want to buy a home with the minimum down knowing that they will not survive the mortgage and don’t care.”

So there are lenders that are willing to make such a loan, but a common view among professionals is that it could be done just as the lender stated to the retailer.

It should be noted too that some lenders will have a larger down payment requirement or tougher credit standards to begin with. All of these are factors involved in assessing the risk and making – limiting, or declining – a loan.

The Bigger Picture Involved

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To learn more about the U.S. Bank closure, click here. Image credit, WikiCommons, text added by MHProNews.

In the current over-regulated environment that exists since the passage of Dodd-Frank and the Consumer Financial Protection Bureau (CFPB) onerous and harmful implementation of the act, and their director’s testimony to Congress that demonstrates a remarkable ability to ignore those facts that harm consumers and lenders alike, lending has demonstrably been driven out of the marketplace.  U.S. Bank is one prime example of a lender that had a successful loan program, a profitable one.

Yet because of the

have left the marketplace due to the high costs and risks of litigation and compliance.

Given that reality, would it be wise for a retailer or community to push a discrimination argument on a relatively uncommon issue, knowing that it might create a cascade effect that would end up driving yet another HUD Code chattel (Personal property, home only) lender from the business?

No One Condemned The Practice

While some privately acknowledged that they might have approached this loan differently, without all of the facts of the file in front of them, no one would condemn or seriously question that lender’s decision.

All current “national” or even regional MH lenders today have compliance officers who are tasked with making sure that no discrimination of any type takes place.

Based upon the information available, and given the many outlined variables, it seems reasonable to give the lender in question the benefit of the doubt. ##

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Frank Griffin, Daily Business News, MHProNews.

Submitted by Frank Griffin, Daily Business News, MHProNews.

Don Glisson Jr., Triad Financial Services Chairman, Manufactured Home Lending, 2016 Louisville Show Video Interview

January 30th, 2016 Comments off

DonGlissonJrTriadFinancialServicesChairmanCEO-postedDailyBusinessNews-MHProNews-comAs some 1500 attendees know, it was cold outside, but climate controlled inside the 2016 Louisville Manufactured Housing Show.

MHProNews caught up with Don Glisson Jr., Chairman of Triad Financial Services during the show, and found a quiet room to do the exclusive video interview you see below. Triad originates some $400 million in manufactured home loans a year, including loans on privately owned home sites as well as in and for manufactured home land-lease communities.

In this episode of Inside MH Road Show, Don Glisson Jr. shares insights into successful manufactured home lending.

We learned about an increasingly popular program of theirs that is focused on CFPB compliant manufactured home community lending and servicing.

This is one of several new videos and stories that will be featured in the rapidly approaching February 2016 issue of MHProNews.com.  Don’s interview will also be part of a featured article, one of the many in the February 2016 issue of MHProNews

The new issue may go live as soon as Monday evening, February 1, but the target for the new articles to go live on the home page is by noon on February 2nd. Until then, please enjoy the 16 featured articles now on the home page, or you can learn more at this link. ##

(Image credit: Inside MH Road Show, MHProNews.com)