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Seattle Times announces State Investigation of Warren Buffett’s Clayton Homes, as expected – Analysis

February 5th, 2016 Comments off

TheyreBackSeattleTimesLogo-creditSeattleTimesTheirBack-creditDailyBusinessNewsMHProNews-com-As part of the Seattle Times‘ ongoing year-long rant on Warren Buffett’s/Berkshire Hathaway-owned Clayton Homes and their affiliated lenders, Mike Baker and Daniel Wagner have succeeded in drawing Washington Governor Jay Inslee’s attention and his state’s Department of Commerce. This is resulting in a bill to investigate the sales, financing and repossession of manufactured homes.

This latest reprise of their ongoing saga was anticipated by MHProNews, as shown by this link from Jan. 30, 2016.

In a series of previous articles, Baker and Wagner have accused Clayton Homes of discriminatory lending, predatory lending on the poor, and trapping the unsuspected in high-interest loans with an eye on repossessing the manufactured home (MH) once the borrower falls behind on payments.

Steve Lefler, vice president of Modular Lifestyles, Inc. – part of the Newport Pacific family of companies – observed, “Recent defective construction and DOJ investigation on loans I have to say, Clayton may revisit their staff and operations activities. Reputation and public perception are hard to re-claim after these types of accusations.”

Lefler is far from alone among industry professionals in his concerns about the the implications and types of consequences from these articles by Baker and Wagner. Long time industry veteran Marty Lavin voiced his observations and concerns in an OpEd, linked here. Numerous off-the-record comments about this topic have come into MHProNews.

Baker and Wagner

What has been described as their brand of “advocacy journalism” has resulted in calls by some Democratic leadership in Congress to investigate the MH industry, and Clayton Homes in particular, since they are the target of the Seattle Times/BuzzFeed News reports and the dominant producer and lender in the MH industry. Clayton Homes and their affiliated lenders are part of Warren Buffett’s Berkshire-Hathaway, which in a heated election cycle, makes for a stronger draw in readership.

Washington state Commerce Director Brian Bonlender says the stories could offer some solutions to the state legislature during its long legislative session in 2017.

Meanwhile, the Preserving Access to Manufactured Housing Act, passed by the House and awaiting consideration in the Senate, is referred to by Baker and Wagner as “an industry-backed plan to roll back consumer protections.” The duo painted Buffett’s Berkshire-Hathaway “mobile home” (sic) units as being the main winners if the HR 650/S 682 becomes law.

In a story picked up by Nanotech News, The Boston Globe, The Miami Hearld  and dozens of other media outlets, MHLivingNews publisher L. A. “Tony” Kovach takes a critical look at how Baker and Wagner, utilizing a wide swath brush, paints Clayton and Buffett as vampires, sucking the life blood from consumers.

Take one famously folksy billionaire, add a pinch of cherry-picked stats, stir well with a cast of wronged Native American, black and Hispanic homebuyers and you have the latest tag-team assault on the Warren Buffett manufactured home empire.

What could be more clickable holiday fare than the new installment in a yearlong campaign by two reporters who have pretty much made a career of throwing dirt at one of the richest men on Earth?

How about a tale of bilking poor minorities out of billions of dollars amid an atmosphere so steeped in racism it makes kindly Uncle Warren look like an overseer at Tara in Gone with the Wind?

Who cares if it’s not true?” The entire Nanotech News item is linked here.

Kovach did an analysis on that issue for MHLivingNews.com, which the Seattle Times and BuzzFeed have yet to address. See that report, linked here.

The Seattle Times video relates the story of one couple who allegedly were taken advantage of by Clayton and their lender. That video is below.

As a thumbnail analysis of their video, as heart-wrenching as this kind of topic may be, carefully reviewing it actually undermines some points Baker and Wagner are trying to make. Many individuals, couples or households have life events that can lead to a default on a house, manufactured or site-built: divorce, job loss, ill health and death. The interest rate wasn’t the key factor, based upon the information in their own video.

Another point their dark, somber and one-sided video avoids entirely is that no manufactured home lender wants to pick up a multi-sectional home, save as a last resort.  The losses on a repossession like the one described can be so great, lenders would much rather work it out with the borrower if that is possible. Without question, there are lots unsaid in this Seattle Times video report.

Additionally, the couple’s home was in a remote location, as they stated, which could mean there may not have had comps around to support a land/home kind of loan at that time.

The Seattle Times video and related articles are, Kovach and others assert, created to provide an entirely unbalanced view of manufactured home living and lending, as quality affordable lifestyles.  The evidence for this in their own video, because there is no opposing or balancing viewpoint shared.

Yet the Government Accounting Office’s 2014 report on manufactured housing graphic below dramatically demonstrates that even with a higher financing rate than conventional lending – which is caused in part by no access to secondary markets, and no federal backing of the loans – the monthly payments for a manufactured home are lower than other forms of housing, because of the dramatically lower cost of the homes.

monthly-housing-cost-2011-manufactured-homes-vs-other-housing.

Graphic credit, GAO report on manufactured housing.  The entire GAO report, along with examples of why the reforms sought by the MH industry of CFPB regulations are indeed a consumer benefit, can be found at the link here.

The Other Side of MH Living Baker and Wagner Avoid

A very different image of manufactured home living emerges from videos that Inside MH has produced, which spotlight home owners, professionals, and experts discussing the appeal and value of manufactured home living. Two of many examples are below.  The first is from a couple living in a land-lease, the second is with a realtor who has sold hundreds of manufactured homes and who’s husband is a custom builder. 

Advocacy Journalism?

Behind-the-scenes of the Seattle Times/BuzzFeed, PBS NewsHour or related stories are efforts by non-profit groups to derail Preserving Access. An in-depth video interview with Marty Lavin, JD – an award winning MH lending expert – about facts relating to the legislation is linked here.

Informed sources tell the Daily Business News/MHProNews  that another installment of the Baker/Wagner duo is expected soon. ##

(Image credit: Seattle Times logo, which is their property, used here under fair use guidelines. Halloween “Their Back…” lettering, by MHProNews.)

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

Will Matt Drudge, Fox or CNN Spotlight Unfair Challenges Harming Millions of Manufactured Home Owners?

May 20th, 2015 2 comments

 

Mike-Baker-SeattleTimes-Daniel-Wagner-CenterForPublicIntegrity-hr650-s682-preserving-access-manufactured-housing-act-corrected-mhpronews-com-

Correction on this photo, an earlier version did not have the proper image of Mike Baker, left.

The Seattle Times/Center for Public Integrity has allegedly targeted Clayton Homes and Berkshire-Hathaway affiliated finance companies in an attempt to derail much needed reforms to Dodd-Frank which harm millions of manufactured home (MH) owners and thousands of MH businesses.

Mike Baker and Daniel Wagner – writers of the Seattle Times articles, done in conjunction with the Center for Public Integrity – used shock tactics prior to the House of Representatives vote to attempt to derail the now-passed HR 650, which enjoyed bi-partisan support.

More recently, that writing duo turn on Warren Buffett’s firms again, in advance of a Thursday May 21st vote in the Senate Banking Committee that will include industry sought relief (S 682) from the Consumer Financial Protection Bureau regulations. Industry professionals say that The Preserving Access to Manufactured Housing Act, would mitigate the harm done to the value of millions of low-cost manufactured home owners by the unintended consequences of Dodd-Frank.

It might take a link by billion-plus monthly page views Drudge Report, or media mavens like Fox or CNN, to right the imbalanced coverage spawned by Baker’s and Wagner’s questionable journalism.

Writing in the Seattle Times, Baker says that the default rate on manufactured homes is higher than conventional housing, and uses pejorative terms about the loans such as “predatory” and “risky.” But should 97 home buyers be barred home ownership via financing others won’t offer, so that the 3 who fail in a year be spared their loss?

As a comparison, should millions be stopped from working because a small minority might quit or lose their jobs? Should subscribers to the Seattle Times digital or print publications be barred from buying their brand of news, because some every year will stop paying them? Should their publication be barred from selling ads because some advertisers will stop using them every year?

Yet that is kind of reasoning being used by Baker and Wagner. Their self-evident goal is an attempt to stir up enough shock value that blurs their use of faulty or circle reasoning, aimed at undermining support for much needed Dodd-Frank reforms.

Real Harm to Millions of Real Home Owners and Thousands of Businesses

The Seattle Times and the Center for Public Integrity (CPI) fail to balance their report by pointing out that the loss of lending that has taken place is harming the value of the lowest cost manufactured homes.

Some 20% of the homes that 20 million manufactured home owners live in would sell for under $20,000, the mark that 21st Mortgage Corporation set below which they could not safely make a loan and still hope to profit. With 8.8 million manufactured homes and pre-HUD Code mobile homes in the U.S., that 20% would represent about 1,760,000 manufactured/mobile homes (MH).

Since most MH owners live in their homes an average of about 10 years, millions may not yet realize they are harmed.

Comrades in Arms Against Reform?

Organizations like the Center for Enterprise Development (CFED) are ducking tough questions from MHProNews. Meanwhile, CFED’s Doug Ryan willingly comments to the Seattle Times or OZY Media, why? Are his comments made to other media a desperate effort to shock enough people with headlines and stories that don’t stand up well to close scrutiny? Aren’t CFED and Ishbel Dickens led National Manufactured Home Owners Association (NMHOA) harming the very home owners they claim to be advocating for? Is their ideological stance more important to them than the realities on the ground caused by the polices they advocate?

Dickens sent MHProNews an emailed reply, saying she was on vacation, and thus could not answer questions. Her “vacation” ends after the Senate vote. She can email that she is on vacation, but can’t email a simple reply on the impact of current CFPB regulations on the values of millions of manufactured homes? Or how publishers such as OZY Media are arguably harming the value of MH owners, by using improper and derogatory terminology?

CFPB Regulations harms all current Manufactured Home Lenders

By spotlighting Berkshire-Hathaway affiliated companies, Baker and Wagner are allegedly attempting to derail needed reforms of Dodd-Frank, that impact manufactured home owners and every lender in the manufactured housing space.

don_glisson_2Triad Financial Corporation is a competing company to 21st Mortgage. Triad’s President and CEO, Don Glisson Jr., has told MHProNews that his firm’s costs have skyrocketed since CFPB regulations have gone into effect.

Glisson said, “Triad has been the leading lender in the “A” credit market for over 50 years and I have personally been with the company for over 30 years. Regulations have always been a fact of life for us, but our compliance costs have quadrupled in the past 3 years alone.”

Another industry lender, formerly with US Bank, told MHProNews off-the-record that their bank’s manufactured housing loan program was profitable. But the high costs of regulatory compliance, coupled with low loan volume, caused U.S. Bank to end their manufactured housing lending program. That mirrors the official statement made by the bank when they pulled out of manufactured home lending in November, 2014.

A third manufactured home lender said off-the-record that they are glad 21st Mortgage and Vanderbilt Mortgage and Finance (VMF) make the loans they do. Why? Because in the wake of the 2008 financial collapse, loans on manufactured homes originated by 21st and VMF were crucial to the survival of thousands of MH Industry companies, which included hundreds of independent operations not owned by Berkshire-Hathaway.

Doesn’t the dismal failure to report in a balanced fashion – as Jan Hollingsworth did in writing on the impact of Dodd-Frank on manufactured home buyers and professionals – undermine the credibility of a journalist?

Senior management with every major industry lender MHProNews spoke in favor of reforms on Dodd-Frank, even if they don’t make the same kinds of loans 21st and VMF do.

Triad’s CEO elaborated on the challenges faced by their firm and other manufactured housing professionals. “Since we specialize in A credits, we have never had an issue with higher cost loans and the rules that surround higher priced loans have zero impact on us.”

However,” Glisson stated, “the rule that prohibits a manufactured home retailer from advising the customer on finance options is one that we would like to see changed. Currently a buyer of a site built home can receive advice from their realtor or builder on financing options, while manufactured home buyers have no similar ability to seek a seller’s help. This would be like going to a car dealer to buy a new SUV and when you ask for help securing a loan they hand you the phone book and say they can’t help you so just pick one out yourself.”

Glisson explained what impact this CFPB regulation has made on their operation. “This has doubled the amount of applications we are now processing to do the same amount of lending. In the past, before the CFPB regulations, a retailer could pre-qualify a buyer by accessing their credit reports and analyzing their income, just like every Realtor ® in America can do. With that information, they could at least determine what lender NOT to send the application to. We have had to add several full time equivalent team members to handle the crush of applications, as we are now bombarded with applicants who have no chance of qualifying with us.”

This is a pattern of “shot-gunning” applications by retailers to all MH lenders, to avoid the appearance of steering, that other lenders have confirmed for MHProNews.

Glisson went on to say that, “Beginning in 2014, when the rules went into effect, our origination cost per loan has skyrocketed. Pre-2014 we would approve about 50% of the applications we received as they were pre-screened. Currently we approve about 30% of the applications we receive, so our efficiency went down the tubes and we are working harder and spending more to make the same amount of loans.”

These are the kinds of real world problems caused by federal regulations that cause a lender such as U.S. Bank to pull out.

inside_mh__am_landy

As Sam Landy, President and CEO of UMH Properties pointed out in a video interview linked here, it has caused them and others in the community business to stop lending to potential manufactured home owners. They now rent homes to those who before would be qualified by their finance arm to make renters into home owners. How does that regulatory caused impact help those thousands seeking ownership and equity instead of rent receipts to advance in life?

Doing the Math

Finance experts tell us that a community operator like UMH, using a related or ‘captive finance’ company, can afford to make loans at a lower interest rate than a traditional lender because they are only loaning on manufactured homes in their community. In the event of a default, their costs and thus their loses are lower. Additionally, a manufactured home community operator can benefit even if their loan program is only marginally profitable, because they are getting additional revenue from a sold home and filled homesite.

There is no similar benefit to the third party loans made by 21st, VMF, Triad Financial, CU Factory Built Lending or Mountainside Financial. The same holds true for regional or local lenders who must profit on the loan itself, or they won’t make the loan in the first place.

Does Buffett win more than Millions of home owners would from the proposed reforms to Dodd-Frank?

While the Seattle Times’ Baker and his tag team writer Wagner make it sound that Warren Buffett and Berkshire-Hathaway related companies are the big winner from financial reform, they clearly overlook the real world impact on an estimated 20% of those home owners who live in a home that is worth under $20,000.

If those homes averaged $15,000 each, 1.76 million MHs represent an aggregated value of $26,400,000,000. That sum dwarfs the benefits to Berkshire-Hathaway, or indeed, to the entire manufactured housing industry.

Since financing is the key to most big ticket sales, a loss of financing causes the same drop in value that was seen in conventional housing in the wake of the 2008 mortgage collapse.  Just as conventional housing lost value absent lending, the same holds true for manufactured homes.

As the now-retired president of the Manufactured Housing Association for Regulatory Reform (MHARR), Danny Ghorbani, has said, the factory built home industry was not the cause of the 2008 housing/mortgage bubble. So why were manufactured home owners, housing businesses and professionals penalized? Why is manufactured housing owners and buisnesses taking such a direct hit from the impact of CFPB regulations?

eric_powell_and_family

 As Eric Powell told Jan Hollingsworth about the impact of Dodd-Frank and the CFPB regulations on their manufactured home purchase, What were they thinking when they did that?”  Or as Sam Landy told MHLivingNews, the consequences to millions of manufactured home owners and thousands of business may well have been untended, but someone has got to fix this. ##

(Image credits 3 and 4, MHLivingNews; Don Glisson Jr photo and composite photo and graphic of Baker and Wagner made by MHProNews).

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

Times’ Talton tells housing affordability woes with two tables

October 9th, 2014 Comments off

laborshare-fredgraph-bls=stlouisfed-posted-seatle-times-dailybusinessnews-mhpronews-Jon Talton at the Seattle Times shares his take on the housing affordability challenge with MHProNews that could be summed up with this quote:

In other words, housing is less affordable because most American workers are making less.”

Talton notes that some areas on the West Coast have “crazy high housing cost” but also points out that Places with “cheap” rents and mortgages also pay poorly.

While the second statement may be exaggerated to make his case, with Texas as an example of a blend of job and wage growth with more affordable housing than some other regions of the U.S..

Nevertheless, the points Talton makes are important. The reality of declining earnings and increasing demand for rentals, as manufactured and modular housing professionals and enthusiasts know, are precisely what opens the door for potential opportunities in numerous American markets. ##

wages-fredgraph-stlouisfed-posted-seattletimes-and-daily-business-news-mhpronews-com-(Image credits: Fredgraph-SeattleTimes, sources St. Louis Federal Reserve, Bureau of Labor Statistics)