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Posts Tagged ‘mortgage loans’

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

May 30th, 2016 Comments off

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

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

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

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

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

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

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

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

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

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

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

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

Datacomp Announces new Valuation Tool to Comply with Higher-Priced Mortgage Loans

August 17th, 2015 Comments off

datacompDatacomp, a provider of manufactured home (MH) appraisals and MH industry market data since 1987, has informed MHProNews of its new manufactured home valuation service that enables compliance with the rules for Higher-Priced Mortgage Loans (HPML) that now cover most financed manufactured home transactions.

Datacomp MSRV (Market-Suggested Retail Value) can be easily ordered through the company website in a matter of minutes with a standard turnaround on a valuation order of 24 business hours. The Lender Final Sale Certificate provides an estimated value of an MH that complies with the new HPML appraisal regulations. The Retailer Pre-Sale Certificate is intended to assist the prospective consumer in understanding the market value of an MH.

Dan Rinzema, Datacomp’s president and CEO, said, Retailers and community owners are concerned about the valuation that the lender must now provide to the buyer three days prior to closing under the new appraisal regulations. They told us that they wanted an opportunity to be able to reinforce the value of today’s manufactured home to the consumer early on in the sales process.

Referring to compliance with the HPML appraisal rules for new manufactured homes, Rinzema said, “The only thing you can do with a basket full of lemons is to make lemonade, that’s exactly what we’ve done.

For the full story, please click here. ##

(Image credit: Datacomp)

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

H. R. 650 will Lead to More Jobs, More Quality, Affordable Housing

April 13th, 2015 Comments off

manufactured-home   archerland2005 back slash FlickrWriting in Manufactured Home Living News, MHProNews  publisher L. A. “Tony” Kovach says those opposed to the passage of the Preserving Access to Manufactured Housing Act, H. R. 650, which is scheduled to reach the House Floor for a vote this Tuesday, are fueling the mainstream media with misinformation about MH lending and the MH industry in general.

Manufactured housing does have traditional mortgage lending through the VA, FHA, USDA and other sources.  These loans perform about as well as other mortgage loans, a fact that many MH naysayers do not know.

The other form of lending for manufactured homes is personal property loans, often called “chattel loans,” unique to MH, and that is a core issue of H. R. 650. One of the reasons manufactured home loans carry a higher interest rate than a car or boat is because moving a 20 to 50+ ton home once installed is expensive and requires expertise, if repossession becomes necessary. They are no longer “mobile homes,” a term that expired when the federal government began enforcing production standards on June 15, 1976. Modern MH cannot be hooked up to a trailer hitch by a pick up truck or car and get pulled away.

Contemporary manufactured housing is stronger, safer, more energy-efficient, greener and less costly than conventional housing,” says Kovach. Models run from entry level styles of 400 square feet up to custom-made two-story residential styles, but all are durable, made to HUD Code standards, and often exceed the quality of conventional houses, per a video interview with prior federal MH program director, Bill Matchneer, JD.

Just like any other business in the U. S. economy, lenders must be paid for their service and need a profit. However, even with somewhat higher interest rates on chattel loans, monthly payments on MH are lower than site-built homes. The U. S. Census Bureau states a manufactured home costs half as much as an on-site built home. As noted and linked above, former head of HUD Code for the MH construction and safety program, Bill Matchneer, says new MH is as well-or better- built than moderately priced site built homes.

Large banks and small community banks that once made profitable loans on MH have stopped due to current federal regulations under the Consumer Financial Protection Bureau (CFPB). MH retailer Alan Amy said his business has been curtailed by 30 to 40 percent due to the regulations.

Kovach cites estimates from MHI that each new MH home built would create one additional job, so changes brought about by HR 650 could yield about 22,400 new jobs. 

One of the inadvertent effects of the Dodd-Frank Act, as later pointed out by co-author and now former U. S. Representative Barney Frank, is its limiting of MH sales. As Kovach says, “Due to regulations and processing expenses, the cost to ‘originate’ or make a $50,000 loan on a factory-built home is about the same as making a loan on a $250,000 site-built house. There are little or no closing costs on an MH home-only loan. When you factor in the tax, and other money-saving factors, MH personal property lending is more competitive to land-home than a mere interest rate makes it look.

Additionally, the SAFE ACT prevents MH retailers from even suggesting the possibilities of lending options, where to turn for lending. “Consumer protection” in this case is a misnomer. Most people who own older, low-cost MH likely do not know they cannot obtain a loan for $20,000 to $25,000 because of CFPB regulations. These are the most affordable homes, and, in many cases the most vulnerable citizens. The same “consumer protection” likewise forces lenders out of a market they want to serve.

The National Association of Realtors, the Mortgage Bankers Association and the National Association of Credit Unions have all signed on to H. R. 650. This measure will help millions, create jobs and provide for more quality, affordable housing. Don’t be misled by the misguided mainstream media. For Kovach’s full report, see this link here. ##

(Photo credit: archerland 2005/flickr–manufactured home)

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

Non-QM Loans Can Be OK

December 13th, 2013 Comments off

Federal regulators are telling their examiners to overlook non-qualified mortgage loans as long as they are underwritten well, according to what nationalmortgagenews.com tells MHProNews. The joint statement from the Federal Reserve Board, the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corp. (FDIC) and the National Credit Union Administration (NCUA) informs lenders they should consider their business strategy and risk appetite as more important than whether the loan qualifies for QM status or not. The joint statement says, “Regardless of whether residential mortgage loans are QMs or non-QMs, the agencies continue to expect institutions to underwrite residential mortgage loans in a prudent fashion and address key risk areas in their residential mortgage lending, including loan terms, borrower qualification standards, loan-to-value limits, and documentation requirements.” The Department of Housing and Urban Development (HUD) has issued its own QM rule for FHA loans which takes effect Jan. 10.

(Image credit: moneycontrol.com)

New Final Rule Exempts Manufactured Homes

December 5th, 2013 Comments off

The Consumer Financial Protection Bureau’s (CFPB) new consumer disclosure forms, called “Know Before You Owe,” that will take effect Aug. 1, 2015, is designed to give the borrower more control over the mortgage loan process as well as add transparency to the transaction. Paul Trepeta of the National Association of Realtors, noting the CFPB retained the TILA (Truth in Lending Act) parts of the three-day waiting period, says, “This is a major change from what was proposed where even minor changes to the closing documents could have required a new three-day waiting period.” But he also acknowledges making the lender responsible for the documentation may lead to more cost and confusion for the borrower. In addition, as rismedia.com tells MHProNews, creditors and settlement agents are given sufficient flexibility “to arrive at the most efficient means of preparation and delivery of the Closing Disclosure to consumers,” according to the CFPB’s own words. The borrower must receive the Closing Disclosure at least three days before the loan closes; and any changes to to the Disclosure are permitted at closing without another three-day waiting period unless the lender changes the interest rate by more than one-eighth of one percent or changes the loan product. Also, the final rule does not apply to manufactured home loans, reverse mortgages, closed-end consumer mortgages or home equity lines of credit.

(Image credit: andyenstallblog)

Banks Offering Five Percent Down Loans

November 6th, 2013 Comments off

Following the bursting of the housing bubble, lenders were requiring 20 percent down on loans or else consumers had to go with the Federal Housing Administration (FHA) for a low down-payment loan. Now some banks are offering mortgages for as little as five percent down, according to CNNMoney. The FHA’s reserves were heavily tapped when it was making loans during the housing bust, forcing it to raise premiums, which opened the door for other lenders. TD Bank offers loans for five percent down, and even allows borrowers to receive two percent as a gift from a third party, requiring them to only have three percent of the sale price. MHProNews has learned while lenders require consumers to buy private mortgage insurance, it is only necessary until they build up 20 percent equity in the home.

(Image credit: HousingWire)

Exemption for certain Manufactured Housing Appraisals on Tap

July 16th, 2013 Comments off

On July 10th, the Consumer Financial Protection Bureau (CFPB), in cooperation with five other federal agencies, issued joint proposed regulations providing exemptions from appraisal requirements for certain higher-priced mortgage loans (HPMLs), which would include manufactured home loans. Imposed by the Dodd-Frank Act, mortgage loans are considered to be higher-priced if they are secured by the borrower’s home and have an APR (average prime rate) more than 1.5 percent above the average prime offer rate. The proposed rules released by the CFPB exempt from appraisal requirements transactions secured by existing manufactured homes and not land, which covers new manufactured homes as well as pre HUD Code homes. This exemption marks a breakthrough for the manufactured housing industry and consumers. Additionally, the proposed rule change exempts loans of $25,000 or less, without which creditors providing non-QM loans for the purchase of manufactured homes would have been required to perform a complete Uniform Standards of Professional Appraisal Practices (USPAP)-compliant appraisal. That would add costs to the consumer and a burden to the lender, as MHProNews has learned from the Manufactured Housing Institute (MHI) newsletter. All six federal agencies are seeking comments on the proposal which closes Sept. 9, 2013. The rule is scheduled to take effect Jan. 2014. For the full report, please click here.

(Image credit: andyenstallblog)

Plenty of Hardship in the Land of Plenty

July 6th, 2013 Comments off

Adding to a story we posted July 4, 2013 from Harvard University’s annual Joint Center for Housing Studies, the report reveals 42.3 million families (37 percent of the nation’s total) pay more than 30 percent of their income for housing, including 20.6 million who pay more than 50 percent of their income for housing. Between 2007 and 2011, 2.4 million homes changed from owner-occupied to renter-occupied, well above the 900,000 rental unit starts during these four years. 258,000 new rentals came onto the market in 2012, the highest number since 2004, as MHProNews has learned from thewestsidegazette. Meanwhile, the report states racial disparity in homeownership continues: White homeownership stands at 73 percent, but only 44 percent of African-Americans and 46 percent of Hispanics are homeowners. In addition, in 2011 despite historic low interest rates, African-Americans were denied mortgage loans 37 percent of the time, while the rate for white borrowers was 14 percent.

(Image credit: firstbanktrust)

HUD Hopes to Reduce Shadow Inventory

May 7th, 2013 Comments off

The U. S. Department of Housing and Urban Development (HUD) has announced it will sell approximately 20,000 severely delinquent mortgage loans insured by the Federal Housing Administration (FHA) in an attempt to reduce the shadow inventory and hone in on areas showing high foreclosure activity. Through its Distressed Asset Stabilization Program (DASP) it will increase funds to the FHA’s Mutual Mortgage Insurance (MMI) Fund and hopefully help some of the communities hit hardest by non-performing loans. The first sale date is set for June 26, followed by a second sale July 10 for properties located in southern Calif., Chicago, southern Ohio, and North Carolina. The loans are sold competitively at a market-determined price usually lower than the outstanding principal balance. HUD sold 16,000 seriously delinquent mortgages in March, and expects to sell 40,000 this year, as MHProNews has learned.

(Image credit: news365today)

Housing Expert: Modify the Mortgage Interest Deduction

April 30th, 2013 Comments off

In an interview in Forbes, Nicolas P. Retsinas, former Federal Housing Commissioner and Director Emeritus of Harvard University’s Joint Center for Housing Studies, says the housing recovery is being spurred by new household formation, which in turn has been sparked by the improving job market, and abnormally low interest rates. He says while the administration is trying to accelerate the housing recovery, the government-sponsored enterprises (Fannie Mae and Freddie Mac) which insure, securitize, and guarantee 95 percent of all mortgage loans, are narrowing the credit tunnel because they do not want to lose money and be on the front page asking for a bail-out. Noting we over-encouraged homeownership, which in part led to the housing downturn, he says the mortgage interest deduction (MID) has become a sacred cow, but perhaps it is time to allow first-time homebuyers and those below a certain income only to use it, as it deprives the government of $100 billion annually. MHProNews has learned in a book Retsinas wrote, he says nearly all cultures have in their psyche the notion of homeownership, including two-thirds of American families. He says when the current demand for rentals subsides, the equilibrium will shift and homeownership will likely rise.

(Image credit: texaslendingtoday)