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Sharing Great News

March 9th, 2010 1 comment

I am so glad Spring is almost here – it’s been rough winter weather wise and business wise, but I’m definitely seeing signs of great things on the horizon. It seems like I’m not the only one – the phone is ringing, emails are flying and in the past week I have signed two great new clients in our industry!

What is really great news is that others are starting to notice our industry and talk about what we do in a positive way – especially having to do with modular. Champion Homes and Palm Harbor did a wonderful job of representing us at the International Builders Show and I’ve seen lots of positive press from that, and this week we had a huge door opener – an article in the Washington Post! The name of the story was “The Mansion Goes Modular” and not only were people able to see and read this article in the paper and online at their site, Yahoo also picked it up as a feature and highlighted it on their front page!

This is exactly what we need to be sharing with our customers, local media and potential clients. Think about if you have someone who is a little worried about going modular instead of doing a site built home. Showing them this article with the credibility that editorial from the Washington Post can offer could help close a sale for you.

My business (and the way I pay the bills!) is doing design work, decors, and show houses for builders, retailers and communities, but I firmly believe by doing a lot of writing and using the social media to talk about the great things my clients and the industry I love are doing we all win – it’s just the right thing to do. Here are some ways that we can all share some good news and get our industry moving forward again.

  1. Share the Love: People and companies that write and publish love to have their stories shared, as long as you either link to their site where the story is published or ask permission to publish on your site. If you are looking for some positive things to share you’ve come to the right place – Tony, Bob, and the entire www.mhmsm.com team I’m sure would be thrilled to share what they have put together on their site.
  2. The “Eyes” Have it: More and More the success of any social media including blogs, websites, etc. is judged on how many “hits” it receives or how many people are reading it. By sharing the Washington Post story with as many people as you can we’ll be showing the Post that there is a lot of interest in what they wrote about and hopefully they will write more!
  3. Speak Up: Usually at the bottom of an article there is a comments area where you are encouraged to share what you thought about the subject. This is where the publication is able to listen to what readers thought and again judge the success of the story. If each of us wrote a positive note in the comments about the Post story not only would the Post see that they did a great job, it would also be sending the message to anyone who reads the article that modular homes are a great thing! Be sure to not use this area to specifically advertise your homes or products – this is an area for editorial not advertising. When there is an article that isn’t positive I use the comment area to try to set the record straight – after Katrina and The FEMA “trailer” articles started, this Lifestylist spent hours trying to explain that what they were seeing and mostly talking about were RV’s, not manufactured homes. I also told the story about our industry worked 24/7 trying to get safe housing to those who no longer had a home.

I know that the Manufactured Home Marketing Sales Management team is planning on attending Tunica – please say hello to Tony and the team and thank them for all that they are doing. If you have some great news to share and some great homes to show be sure to let Tony know – let’s all work together and spread the news!

Suzanne S. Felber, Lifestylist
The Home Idea Factory – answers@lifestylist.com

Permalink to the Washington Post article “The Mansion Goes Modular”
http://www.washingtonpost.com/wp-dyn/content/gallery/2010/03/03/GA2010030303708.html

Finance Delays Continue as Consumers and Industry Suffer

March 3rd, 2010 No comments

It is now nearing the two year mark since Congress enacted major FHA Title I manufactured housing program improvements and the “duty to serve underserved markets” (DTS) mandate as part of the Housing and Economic Recovery Act of 2008 (HERA). And while FHA and the Federal Housing Finance Agency (FHFA) have both taken steps toward implementing these badly needed initiatives to revive and expand the availability of public and private financing for manufactured home purchases, the fact remains that neither is yet in place. As a result, consumer purchase money financing for manufactured homes continues to be virtually unobtainable.

As industry members, consumers and, to a growing degree, Congress, are already aware, the near absence of consumer financing for HUD-regulated manufactured homes has had a devastating impact on both the industry and the lower and moderate-income American families that rely on manufactured housing as a key source of affordable, nonsubsidized home ownership. Since the enactment of HERA, this decline has only accelerated, bringing industry production in 2009 to an historic low, below 50,000 homes. This represents significant hardship for lower and moderate-income consumers and has resulted in the widespread closing of industry businesses and related job losses. In particular, this has impacted the industry’s smaller and medium-sized businesses that have traditionally relied on independent sources (i.e., non-captive or related corporate entity) of capital to finance consumer purchases. All the while, retailers report that they have customers who are willing and anxious to buy manufactured homes, but cannot obtain either private or publicly-supported FHA purchase loans.

In light of these unprecedented hardships, it is essential that real and substantive progress in expanding the availability of both public and private consumer financing, as mandated by Congress, be an urgent priority for HUD, FHA, FHFA, the GSEs and every other relevant arm of the federal government — to be achieved as quickly as possible. Accordingly, while FHA has issued Mortgagee Letters regarding the HERA manufactured housing program improvements, it needs to publish a final Title I rule so that the Ginnie Mae moratorium on the securitization of new manufactured housing loan can finally be lifted.

Similarly, while FHFA deserves credit for taking initial steps toward rulemaking to implement DTS, time remains of the essence for the industry and its consumers. With a steadily growing number of business failures and bankruptcies among manufacturers, retailers, communities and others — stemming largely from the unavailability of private consumer financing – the more favorable financing climate that DTS would promote and provide is urgently needed to ensure the survival of the industry and the supply of decent, affordable, non-subsidized housing for Americans at all income levels. And let there be no mistake, continuing and even intensified industry pressure will be needed to advance DTS in a form that would actually benefit the industry and the consumers it serves, as both GSEs made it quite clear in their DTS comments that they will seek to water down DTS as much as possible and delay its full implementation for as long as possible.

Beyond the HERA based Title I improvements and DTS, however, there are other avenues — that have been suggested by MHARR and its finance advisors — through which relevant federal agencies and the GSEs could quickly assist the industry and the consumers of affordable housing that it serves, without going through a long and tortuous process.

First, as MHARR suggested and explained in its September 1, 2009 DTS comments, the GSEs should — on an expedited basis – be authorized to securitize FHA Title I manufactured housing loans. At present, the GSEs securitize only FHA Title I1 manufactured housing loans. FHA Title I loans have historically been securitized by Ginnie Mae, but that agency, in the absence of a final rule to implement Title I program changes mandated by HERA, has imposed a moratorium on the securitization of Title I loans. An extension of the GSEs’ securitization authority to FHA Title I loans would help to alleviate the unnecessary constraints that have been placed on the manufactured housing finance market – even after the Ginnie Mae moratorium is ultimately lifted — and would be consistent with Congress’ strong support for strengthened and expanded manufactured home lending, as illustrated both by the duty to serve and by HEM’S increased FHA manufactured housing loan limits.

Second, because affordable manufactured housing serves a market comprised largely of lower and moderate-income Americans, most purchasers do not have — and in today’s economic conditions, cannot obtain – the cash necessary for a 20% down payment. This effectively excludes them from the manufactured housing market due to the unavailability of private mortgage insurance (PMI) in the wake of the recession. Fannie Mae, however, has given some indication that it believes it has the authority and ability, under its Charter, to self-insure manufactured housing transactions with a greater than 80- 20 loan-to-value ratio, thus obviating the need for PMI. MHARR has supported and encouraged such an initiative, and is continuing to explore this further while urging the federal government to expeditiously take the steps necessary to authorize both GSEs to self-insure such obligations.

Obviously, in addition to these steps, all relevant federal agencies and related organizations, such as the GSEs, should immediately consider – and should be encouraged and pressed by the industry to consider – other and further means, either temporary or permanent, to restore and expand the availability of private financing for manufactured housing consumers.

In MHARR’s view, with the access to virtually all types of financing — both public and private – now effectively controlled by federal entities, the industry in Washington, D.C. (in addition to reform of the federal program) should be concentrating on pressing those entities to comply with the financing improvements legislated by Congress in HERA, as quickly as possible, rather than side-tracking limited industry resources and political capital to other less critical matters.

MHARR is a Washington D.C.-based national trade association representing the views and interests of producers of federally-regulated manufactured housing.

MHI SAFE Act comment letter filed with HUD March 1st

March 2nd, 2010 1 comment

MHI filed the following comment letter today regarding HUD’s proposed rule on the SAFE Act.

The deadline for comments is this Friday, March 5th. Please fell free to incorporate all or portions of MHI’s comments into your letter.

You can submit comments electronically through the Federal eRulemaking Portal at http://www.regulations.gov


March 1, 2010

Regulations Division
Office of General Counsel
U.S. Department of Housing and Urban Development
451 Seventh Street, S.W., Room 10276
Washington, D.C. 20410-0500

RE: Docket No. FR-5271-P-01
SAFE Mortgage Licensing Act: HUD Responsibilities Under the SAFE Act

Dear Office of General Counsel:

The Manufactured Housing Institute (MHI), a trade association representing all segments of the factory-built housing industry including manufacturers, lenders, community owners, retailers, and state associations, appreciates the opportunity to comment on the Department of Housing and Urban Development’s (HUD) Proposed Rules to Implement the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act) (12 U.S.C. §§ 5101-5113).

When reviewing the below comments we encourage HUD to keep in mind two of the purposes of the SAFE Act: (1) increase uniformity; and (2) reduce regulatory burden. The manufactured housing industry has been adversely affected by the SAFE Act in ways that are inconsistent with the purpose of the SAFE Act. State laws are not being applied uniformly to retail sellers of manufactured homes or personal property-only finance companies as compared to the application of the SAFE Act to traditional mortgage lenders. In addition, the regulatory burden is much greater for the manufactured housing industry than that of the mortgage lending industry.

Section 3400.103(c)(1) – Takes an Application

  1. Amend the Rule to Incorporate Clarity from Preamble

In its preamble HUD clarifies that “takes a residential mortgage loan application” does not include an individual whose only role with respect to the application is physically handling a completed application form or transmitting a completed form to a lender on behalf of a prospective borrower. For clarity purposes, we encourage HUD to place this language in the body of its final rule. So section 3400.103(X)(x) will read:

An individual “takes a residential mortgage loan application” if the individual receives a residential mortgage loan application for the purpose of deciding (or influencing or soliciting the decision of another) whether to extend an offer of residential mortgage loan terms to a borrower or prospective borrower (or to accept the terms offered by a borrower or prospective borrower in response to a solicitation), whether the application is received directly or indirectly from the borrower or prospective borrower. An individual whose only role with respect to the application is physically handling a completed application form or transmitting a completed form to a lender on behalf of a prospective borrower does not take an application.

  1. Factual Scenarios – Examples of Not Taking an Application

We seek HUD’s concurrence that the following activities when performed by a manufactured housing retailer or salesperson would not constitute “taking an application.”

  1. Giving a home buyer access to a kiosk in order to complete an application on-line which goes directly to a funding source.
  2. Directing a home buyer to complete a paper application for financing.
  3. Assisting a home buyer with general questions regarding the completion of a loan application by clarifying what type of information is necessary for the application or otherwise explaining the qualifications or criteria necessary to obtain a loan product.1
  4. Suggesting that a home buyer may have incorrectly completed or neglected to complete parts of the application.
  5. Describing the steps that a home buyer would need to take to provide information to be used to determine whether the home buyer qualifies for a loan or otherwise explaining the loan application process.2
  6. Transcribing information from the home buyer and directing to funding sources. For example, entering information into an online application system on behalf of the buyer when the entered data goes directly to the lender.

Section 3400.103(c)(2) – Offers or Negotiates

Examples of Offers or Negotiates. In its proposed rule HUD provides three examples of offering or negotiating terms of a mortgage loan: (a) presenting mortgage loan terms to a borrower for acceptance; (b) communicating directly or indirectly with a borrower for purposes of reaching an understanding about prospective loan terms; or (c) recommending, referring, or steering a borrower to a particular lender or set of loan terms, in accordance with a duty to or incentive from any person other than the borrower (emphasis added).

  1. Presenting Mortgage Loan Terms to a Borrower for Acceptance. We understand this example of offering or negotiating is intended to focus on activities that are the equivalent to an extension of an offer. Consistent with traditional contract terms, in order to qualify as an offer, the item or terms that are being presented to the home buyer must be items or terms that are capable of acceptance. Otherwise, an offer has not been made.

Therefore, MHI seeks HUD’s concurrence that the following activities when performed by a manufactured housing retailer or salesperson do not rise to the level of an offer under the SAFE Act.

  1. The mere sharing of general information about a financing source, such as available financing.
  2. Acting as a passive conduit between the home buyer and the financing source without engaging in specific discussion of financing options from a particular funding source.
  3. Discussing hypothetical financing options.
  4. Presentation of a spectrum of options.
  5. Giving the home buyer a list of available financing sources without recommending any of the sources.
  1. Communicating Directly or Indirectly with a Borrower for Purpose of Reaching an Understanding about Prospective Loan Terms. We understand that it is HUD’s intention to capture communication between the home buyer and the manufactured housing retailer or the salesperson that rises to the level of mutuality, i.e., agreement on specific loan terms.

Therefore, MHI seeks HUD’s concurrence that the following communications between a home buyer and a manufactured housing retailer or salesperson do not rise to the level of negotiating under the SAFE Act.

  1. Discussing the home buyer’s ability to afford a particular home, i.e., examples of monthly payments for a particular home.
  2. Discussion of various alternative financing options.
  3. Presentation and/or discussion of generic facts sheet or generic rate sheets (which may be provided by financing sources).
  4. Closing personal property transactions. A retailer may assist a home buyer by receiving closing documents from the lender. The retailer will deliver the closing documents to the home buyer for review and signature. Since the home buyer and the lender already agreed upon the loan terms, there is no offering or negotiating. Additionally, there is no reasonably available alternative for closing personal property transactions, as third party closing agents limit their services almost exclusively to real estate-secured transactions (e.g., closing attorneys, title agents, etc.).
  1. Recommend, Refer or Steer A Borrower to a Particular Lender or Set of Loan Terms, in Accordance with a Duty to or Incentive from any Person Other than the Borrower. We understand that in order for a manufactured housing retailer or sales person to trigger this example of offering or negotiating, the retailer or salesperson must act as a result of a duty to a financing source or the retailer or salesperson acts in order to receive an incentive from the financing source. Without the duty to the financing source or the incentive from the financing source, this example of offering or negotiating will not be met.

MHI therefore seeks HUD’s concurrence that the following examples do not constitute recommending, referring, or steering a home buyer.

  1. Forwarding a completed application to only those financing sources that will consider the home buyer’s application.
  2. Forwarding a completed application to a limited scope of lenders.
  3. Giving the home buyer a list of available financing sources without recommending any of the sources.

MHI seeks HUD’s concurrence that the duty must flow to the financing source and the incentive must come from the financing source and therefore, the following would not qualify as a duty or incentive.

  1. The desire to sell a manufactured home.
  2. The commission resulting from the sale of a manufactured home.
  3. A sales person’s salary.

MHI seeks HUD’s guidance on whether the following items are considered incentives or duty to act on behalf of the financing source.

  1. A pre-arranged agreement between the retailer or sales person and the financing source with regard to available financing and underwriting guidelines.
  1. Compensation or Gain. The receipt of compensation or gain is critical to the trigger of licensing requirements under the SAFE Act. We therefore seek HUD’s agreement that the following examples are not considered compensation or gain.
  1. A sales person’s commission for the sale of a manufactured home to the extent that the commission received is the same in a financed transaction as that in a cash transaction. In this situation, there is no direct or indirect correlation between the compensation or gain and the taking of an application or the offering or negotiating of a loan.
  2. Any benefit which is the same in a financed transaction as that in a cash transaction. In this situation, there is no direct or indirect correlation between the compensation or gain and the taking of an application or the offering or negotiating of a loan.
    Loan Processor. Section 3400.23 of the proposed rule provides that a loan processor is an individual who performs his or her duties at the direction of and subject to the supervision and instruction of a state-licensed loan originator. We seek HUD’s clarification that the state-licensed loan originator who supervises an individual who tangentially performs clerical and support tasks is not required to be that individual’s direct supervisor. As long as the state-licensed loan originator directs, supervises and instructs the loan processor, he or she is not required to be the loan processor’s immediate/direct supervisor.

De Minimis Exemption. We encourage HUD to follow the recommendation of the Federal Agencies and consider a de minimis exception for certain individuals.3 In their draft final rule, the Federal Agencies suggest that an individual who does not regularly or principally function as a loan originator, for example has acted as a loan originator for 5 or fewer residential mortgage loans in the past 12 months, is not subject to the SAFE Act. Similarly, we ask HUD to consider the small manufactured housing communities who may take very few applications in a 12 month period. Consideration is requested based on the uniqueness of the industry. A small community is not motivated by the same incentives as a mortgage lender. A community is motivated to find the best home for the buyer and maintain that person within their community. These are typically family-run businesses with very few home sales within any 12-month period.

    HUD’s Express Authority to Review State’s Laws. We respectfully suggest that HUD’s review of state SAFE Acts is limited in scope. In HUD’s July 2009 Report to Congress, HUD acknowledges that it is “charged by the SAFE Act with establishing and maintaining a loan originator licensing and registration program for any state or territory that does not have in place a process for licensing and supervising loan originators that meets the requirements of the SAFE Act, or that fails to participate in the NMLSR.” The requirements of the SAFE Act that Congress authorized HUD to review for compliance is limited to three sections of the SAFE Act. Specifically, section 5107 of the SAFE Act, entitled “Secretary of Housing and Urban Development Backup Authority to Establish a Loan Originator Licensing System” provides that after the time periods for compliance allowed by the statute, if the “Secretary determines that a State does not have in place by law or regulation a system for licensing and registering loan originators that meets the requirements of sections 5104 and 5105 and subsection (d) of [section 5107], or does not participate in the Nationwide Mortgage Licensing System and Registry, the Secretary shall provide for the establishment and maintenance of a system for the licensing and registration by the Secretary of loan originators operating in such State as State-licensed loan originators.” HUD’s review of state compliance is limited to sections 5104, 5105 and 5107(d). HUD is not given express authority to approve or deny state definitions of loan originators or exclusions for individuals traditionally regulated by the states.
    State’s Sovereign Rights to Create Exclusions. The states have the right to interpret their SAFE Acts in order to enact and implement their own laws covering or excluding certain persons and activities. Congress did not give HUD the broad authority to preempt a state’s interpretation and implementation of section 5102 of the SAFE Act. We respectfully suggest that HUD will exceed its statutory scope of review if it interprets states’ exclusions as non-compliant with the SAFE Act. A determination by HUD that manufactured housing retailers and salespersons are included in the definition of loan originator will be given deference only if there is ambiguity in the SAFE Act and Congress either explicitly or implicitly delegated authority to HUD to cure that ambiguity. See, American Bar Ass’n v. F.T.C., 430 F.3d 457, 469 (D.C. Cir. 2005).

Delayed Effective Date. Section 3400.107 of HUD’s proposed rules authorize HUD to approve a later effective date upon a state’s demonstration that substantial numbers of loan originators (or of a class of loan originators) face unusual hardship. We request HUD consider allowing the demonstration of unusual hardship to be proven on a national basis by industries suffering unusual hardship.

In addition, we request HUD consider issuing a statement to the states permitting a delayed effective date in the licensing of loan originators. A delayed effective date will give states time to address HUD’s comments and amend laws, if necessary. Once the laws are in final form, the industry will be able to appropriately interpret laws and determine who must be licensed as a loan originator.

Moratorium on Enforcement of Loan Originator Laws. For the reasons stated above, we also believe that a moratorium on enforcement of the current state SAFE Act laws is in the interest of all affected until the state laws are final and compliance is achievable. We therefore, request HUD consider issuing a statement to the states permitting a moratorium on enforcement of the licensing requirements for state-licensed loan originators.

Loan Assumptions. We encourage HUD to agree that assumptions are not the equivalent of a new loan subject to the SAFE Act because assumptions do not result in the extinguishment of an existing loan and the replacement by a new loan, but rather the loan is assumed by a new obligor.4 We strongly urge HUD to consider the importance of consistency in the application of the SAFE Act and apply the rational from the Federal Agencies draft final rule, that individuals engaged in assumptions are not acting as loan originators as defined in the SAFE Act.5

Application of the SAFE Act to the Manufactured Housing Industry. Congress expressly stated two objectives of the SAFE Act are to create uniformity and reduce regulatory burden. These two objectives are not being met when it comes to the manufactured housing industry. In fact, there are unintended consequences placing significant increased burden on the manufactured housing industry as a result of the states’ implementation of the SAFE Act. There is also unequal application of the laws and licensing requirements on the manufactured housing industry.

As the states enacted their SAFE Acts, many also amended their mortgage lending laws to incorporate the SAFE Act definition of mortgage loan. This resulted in the inclusion of personal property transactions in state mortgage lending laws. Personal property finance lenders are now finding themselves subject not only to state sales finance and installment loan laws and licensing regimes, but they are now also subject to mortgage licensing and compliance requirements.

The result is dual licensing requirements for personal property lenders (and transactions) in many states. The traditional mortgage lender is not subject to the same dual licensing requirements. This is an unequal application of the SAFE Act to the manufactured housing industry and a significant increase in regulatory burden.

Personal property finance lenders must immediately become licensed under a mortgage lending scheme and/or comply with the substantive requirements of the state mortgage lending laws. This will result in duplicative disclosures to the consumer for the same transaction, conflicts between rates and charges, and in many instances duplicative examinations for the same transactions by different state agencies. Personal property finance lenders have been put in a disadvantaged competitive position. The cost of the new regulatory burdens will outweigh remaining in the business of personal property financing.

We seek HUD’s assistance in guiding the states to reconsider the application of their amended laws and focus on the intent and purpose of the SAFE Act: (i) to license individuals (not to create new licensing requirements for already sufficiently regulated entities); and to (ii) create uniformity and reduce regulatory burden.

Implementation of the SAFE Act through NMLSR is not Meeting its Minimum Goals. HUD is required to oversee the successful implementation of the NMLSR system. This requires state licensing of individuals acting as loan originators, including obtaining a unique identifier. Although not a prerequisite of the SAFE Act, the NMLSR creates sponsorship of an individual loan originator as a condition precedent to license approval. An individual loan originator can not work until he or she is sponsored by an entity in the NMLSR. Typically, the sponsoring entity must be the loan originator’s employer.

In the manufactured housing industry, at least three types of entities may employ loan originators: (i) personal property-only finance lenders; (ii) retail sellers of manufactured homes; and (iii) owners of manufactured housing communities. These entities typically hold sales finance company licenses, installment loan licenses, or retail seller licenses. Because NMLSR does not include these licenses in its system, these entities are unable to sponsor their employees. This is a fatal flaw in the NMLSR system. We encourage HUD to address this NMLSR flaw by creating an exempt status to allow these personal property finance lenders, retail sellers and community owners to sponsor their loan originator employees.

1This example is taken from the FFIEC’s draft final rule.
2This example is taken from the FFIEC’s draft final rule.
3See Federal Agencies draft final rules pages 18-19.

* * * * * * * * * * * * * * * * * * * * * * * * * *

MHI and its members look forward to working with HUD in the months ahead regarding the matters raised in this comment letter.

Sincerely,

Thayer Long
Executive Vice President
Manufactured Housing Institute

Flourish or Perish in 2010… The choice is yours

February 24th, 2010 3 comments

Adapt or die… That is the universal ultimatum, and retailers in the factory built housing industry are no exception.

Well, spring is just around the corner and for most of you, the snow is melting and the “season” is about to get under way. You have survived yet another winter and you are most likely looking forward to increased activity. But\ are you really ready? Are you really prepared to harvest as much business as possible over the next 8-10 months or are you going to suffer through another less-than-stellar year? Flourish or perish, the choice is truly yours. In this article I will give you what I believe to be the 5 essential elements for not only survival, but to actually be extremely profitable. That’s right… I said “extremely profitable”.

If history is allowed to serve as a teacher, then I am absolutely convinced that while the overall future of this industry may look a bit more challenging than you would like, there will be retailers who will make as much profit this year as the most successful retailers did when our industry was experiencing better times. Interestingly enough, whether you think this is possible or not, you will be right. What we do know is that we cannot “change” the economy, but we can certainly learn to be profitable within our economy. Some of the retailers, communities and developers that will embrace these 5 principles will have good years, others will have great years, but everyone will benefit.

The Status Quo

Before I share these 5 principles, let me first address what I see that is NOT being done. I see still way too many retailers or community operators sitting with their thumb up their proverbial derriere waiting for things to change. If that describes you, here’s the news… things WILL change… but not in your favor unless you MAKE something happen. Stop living under the illusion that the industry is in dire straights and there is nothing you can do about it. Tough times sometimes build character, but tough times always reveal character.

I see retailers all across the country trying to cut more costs by reducing marketing and advertising, reducing commissions, eliminating sales positions, and further reducing inventory. Understand that you cannot simply “save your way to prosperity”. Your revenues MUST outpace your expenditures and I am quite certain that the majority have cut all of the fat out of your organization and any further cuts will slice too deep.

What I am not seeing are enough retailers focusing on the other side of the equation and doing all that can be done to increase sales, increase traffic, increase conversion ratios and following up with current prospects.

Included in your “growth kit” you will find 2 fundamental strategies and 3 disciplines that you have to master. If you understand and embrace these 5 concepts, you will not only survive, but you will be more profitable than you can imagine at this point. First, the 2 basic beliefs:

1st Basic Strategy: Think Small

What I mean by thinking small is to begin developing and structuring a business model that is based on gearing down your operation to a size that is concurrent with your current market. This restructuring of your business has to be based on what is often referred to as a “break-even strategy”. In other words, it is about putting plans into place that allows your organization to be profitable in virtually any market. Keep in mind that markets have always been cyclical. You can be profitable in any market as long as you are prepared to operate within that market and as long as you know what your fixed overhead is and you know how much you need to sell in order to break even and even make money. If you’re struggling with this issue, I would suggest calling Chad Carr at Rainmaker Software (563-359-4441 or chad@getrain.com). I know of no-one who is as adept and knowledgeable about explaining and helping a retail builder implement this very timely and powerful business strategy.

2nd Basic Strategy: Don’t try to “Save your way to Prosperity”

Understandably, one of the first reactions a small business owner has when times get tough is to reduce overhead. One must realize that reducing overhead without having a plan of how to most effectively apply the money that you DO spend, often does more harm than good. If your cutting out the fat in your organization, that’s great. We should do this regularly. If you’re cutting into the muscle of your organization, that can be detrimental, and if you cut off your legs, that can be devastating. When times are tough, you don’t need LESS advertising, you need more EFFECTIVE advertising. You don’t need LESS inventory, you need less DEAD inventory; you need inventory that has a proven track record. In tough times you don’t need LESS sales people; you need your sales people to be more PRODUCTIVE.

1st Discipline: Prospect Acquisition

It is absolutely essential that you have a comprehensive marketing strategy that will put you and your organization in front of every prospect that is shopping for your product in your market place. I realize that all of you have walk-in traffic, and drive-by is a great source for prospects. Many of you spend a great deal of money on increasing your curb appeal and I applaud you for this effort and foresight.

According to our research 87% + of all prospects begin their shopping efforts on the internet. If you do not have a “visible” presence on the internet, you will never see those prospects unless they happen to drive by your location. Having a website is great for promoting your business on the internet, but in order to drive people to your website, you must MARKET YOUR WEBSITE and most business fail to do so.

2nd Discipline: Customer Conversion

Once you have the number of qualified leads you need, it is absolutely essential that you have a specific, documented and measurable process by which you fulfill the inquiries you get from the internet or via phone calls. Here is what you need:

  1. First, you need a process by which you get these inquiring prospects to your store.
  2. Second, you need a Sales Process by which you convert the largest number of these prospects into homebuyers. After all, this is the essence of our business.

According to our research, if all other requirements are met as they relate to the sales process, 30% of the prospective home buyer will make a commitment on the very first visit to your location. That means that 70% of the prospective home buyers will either not buy at all, or make a commitment to someone at some time in the future. Your sales people must have the ability to build enough of a relationship and have a specific follow-up methodology in place so that these other 70% of prospects actually will respond when the sales person follows up. There are too many sales people that have all but given up on following up with prospects because their prospects either don’t take their calls, return their calls, show up for appointments and, obviously rarely come back to buy.

    Your effectiveness in your follow-up efforts is in direct correlation to your ability to build a strong relationship with your prospect while they are in front of you.

3rd Discipline: Prospect Management

We are living in the Information Age, which simply suggests that he who gathers the most information, who can analyze this information and who can manage this information… WINS. At least they will win more often than those who do not.

We also know that sales people today are busy, or at least they should be. Sales people should only be focused on two things:

  1. they should be either in front of a prospect, or…
  2. they should be busy trying to get prospects BACK in front of them.

I think you get my drift. Sales people should be selling. As I stated earlier, because such a large percentage of prospects are not going to make a buying commitment until a later time, sales people are required to stay in front of and keep up with a fairly substantial number of prospects at any given time. This is virtually impossible unless you have some type of technology working on their behalf. At the very least, not having such a technology is horribly inefficient. Also realize that sales people by default are only going to keep up with people that they believe are going to buy in the very near future… ones that they can SELL. The rest, I’m afraid will fall through the cracks, not because they’re not going to buy, but because your sales person believes that they’re not going to buy in the immediate future. Again, a good prospect management system will avoid losing prospects and increase your sales. If this is an issue, visit www.getrain.com and you will find some really great information.

So there you have it.

While the industry outlook may be less stellar than we would like, there are few, if any, reasons why you should not be very profitable as long as you plan to be profitable and you position yourself to be profitable. Think small, spend wisely, attract quality leads, sell the ones that will buy today and stay in front of those who are not yet ready to make a commitment. Sounds simple… but rest assured that those retailers, developers and community operators who are going to experience high profitability in the next 2-3 years, and I have several clients that are expecting record years, will be paying attention to the 2 basic strategies and the 3 disciplines I just discussed. They will not perish, but they will flourish… and you have the same opportunity.

My gift to you…

For those who do not have as effective and efficient sales process as you would like in place, over the next few months I will be offering a step-by-step sales training program which will be easy to understand and even easier to follow. In appropriate sequence, with each article I will address one step of the sales process and give your sales people a sure-fired system for closing more deals in less time. If you will print and collect all of these 7 articles and keep them in a binder, you and your sales people will have a brief, but poignant sales methodology in place. Follow it and succeed. This is my gift to you, but what you do with it is entirely up to you.

Conclusion…

The ONLY thing that will bring our industry out of the doldrums is enough retailers and sales professionals just like you will step up to the plate and be committed to doing all that they can to knock every ball out of the park. You and others like you ARE the industry.

I, and many others like me, are deeply committed to helping you prosper and our passion for this industry is as strong as ever… but we can’t do it for you. I know you want to not only survive, but also prosper, otherwise you would not be searching through this highly informative website nor would you be reading this article.

So in 2010, let’s lift the bat off of our shoulders and swing… swing hard and swing accurate… and let’s for once, claim our rightful place in the affordable housing industry.


John Underwood has been a sales and sales management consultant in the factory built housing industry for over 25 years. During that time, he has helped literally thousands of sales people reach the level of performance they wished to achieve.

He is also the author of “Scratch Selling: 18 Lessons Golf Will Teach You About Sales“, an author for numerous industry publications, as well as a past member of the Executives in Residence program at the University of Arizona where he spoke on sales and marketing issues.

Mr. Underwood is available to work with your retail organization or community to help you build a more effective and efficient sales organization. He currently resides in Naples, FL and can be reached at:

John A. Underwood
380 Stella Maris North
Suite 2607
Naples, FL 34144
Cell: 520-241-9907
Office: 239-393-0465
sellingedge@aol.com

Announced FHA Policy Changes

February 23rd, 2010 No comments

Announced FHA Policy Changes:

1. Mortgage insurance premium (MP) will be increased to build up capital reserves and bring back private lending


  • The first step wil be to raise the up-front MIP by 50 bps to 2.25% and request legislative authority to increase the maximum annual MIP that the FHA can charge.
  • If this authority is granted, then the second step wil be to shift some ofthe premium increase from the up-front MIP to the annual MIP.
  • This shift will allow for the capital reserves to increase with less impact to the consumer, because the annual MIP is paid over the life of the loan instead of at the time of closing
  • The initial up-front increase is included in a Mortgagee Letter to be released tomorrow, January 21st, and will go into effect in the spring.

2. Update the combination of FICO scores and down payments for new borrowers.

  • New borrowers wil now be required to have a minimum FICO score of 580 to qualify for FHA’s 3.5% down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10%.
  • This allows the FHA to better balance its risk and continue to provide access for those borrowers who have historically performed well.
  • This change wil be posted in the Federal Register in February and, after a notice and comment period, would go into effect in the early summer.

3. Reduce allowable seller concessions from 6% to 3%

  • The current level exposes the FHA to excess risk by creating incentives to inflate appraised value. This change wil bring FHA into conformity with industry standards on seller concessions.
  • This change wil be posted in the Federal Register in February, and after a notice and comment period, would go into effect in the early summer.

4. Increase enforcement on FHA lenders

  • Publicly report lender performance rankings to complement currently available Neighborhood Watch data – Wil be available on the HUD website on February 1.
    • This is an operational change to make information more user-friendly and hold lenders more accountable; it does not require new regulatory action as Neighborhood Watch data is currently publicly available.
  • Enhance monitoring of lender performance and compliance with FHA guidelines and standards.
    • a Implement Credit Watch termination through lender underwriting ID in addition to originating ID.
    • This change is included in a Mortgagee Letter to be released tomorrow, January 21st, and is effective immediately.
  • Implement statutory authority through regulation of section 256 of the National Housing Act to enforce indemnification provisions for lenders using delegated insuring process
  • Specifications of this change wil be posted in March, and after a notice and comment period, would go into effect in early summer.
  • HUD is pursuing legislative authority to increase enforcement on FHA lenders. Specific authority includes:
    • Amendment of section 256 of the National Housing Act to apply indemnification provisions to all Direct Endorsement lenders. This would require all approved mortgagees to assume liability for all of the loans that they originate and underwrite
    • Legislative authority permitting BUD maximum flexibility to establish separate “areas” for purposes of review and termination under the Credit Watch initiative. This would provide authority to withdraw originating and underwriting approval for a lender nationwide on the basis of the performance of its regional branches

In addition to the changes proposed today, the FHA is continuing to review its overall response to housing market conditions, and continuing to evaluate its mortgage insurance underwriting standards and its measures to help distressed and underwater borrowers through FHAHAMP and other FHA initiatives going forward.


Doug Gorman submitted this announcement. He has also shared his notes and minutes from the MHI Winter Meeting, which you can download here.

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Washington Update — Report And Analysis

February 23rd, 2010 No comments

Given the continuing decline of the manufactured housing industry and the related loss of affordable housing opportunities for moderate and lower-income American families, the attached February 23, 2010 MHARR WASHINGTON UPDATE — REPORT AND ANALYSIS, addressing the following issues, is a must-read in order to be fully up-to-date regarding these important matters:

  • MHARR And FHFA Officials Meet On Private Financing
  • MHARR Members Brief Congress On Pressing Issues
  • No Time For More Costly Regulation
  • Energy Regulation Catching Up With Industry
  • MHARR Refutes HUD Position On Administrator

Click here to read the entire articles

Manufactured Housing Association for Regulatory Reform
1331 Pennsylvania Ave N.W., Suite 508
Washington, D.C. 20004
Phone: 202/783-4087
Fax: 202/783-4075
Email: MHARRdg@aol.com

Building a Community

February 21st, 2010 4 comments

As an industry we have done a remarkable job of designing a product that consumers need, but what I am seeing is most consumers don’t know we offer that product. The stereotypes of “trailers”, “mobile homes” and “sales lots” drive away many people who could really benefit from what we do. This includes everything from the most affordable housing to amazing estates we all would love to live in. There has always been a lot of talk about doing an image campaign (and the cost) but maybe this is an idea who’s time has come by taking a different approach.

I’ve never been very good at doing what everyone else does – that’s why I became a Lifestylist instead of a traditional designer or merchandiser. Consumers want more than just a decorated house – they want a home that reflects their lifestyle. This takes a little more time and research but it shouldn’t cost anymore – it might even cost less. I also really believe in spreading the word about the great things my clients are doing as well as talking about trends and ideas that can help everyone. I don’t charge my clients for this – I consider it a service and part of my cost of doing business. I also go to trade shows, events and do work in the site built industry so I can bring back more than “what we’ve always done” as an industry.

This week I got invited to a meeting of the Social Media Club of Dallas. In a few hours I met some amazing new people who I was able to share the message of factory built housing to and they shared with me the importance of social media. Social media by definition is the various online technology tools that enable people to communicate easily via the internet to share information and resources. Social media can include text, audio, video, images, podcasts, and other multimedia communications. These include Twitter, Facebook, YouTube, FourSquare and blogs. For $20 (which included dinner) I learned what to expect from these groups and how to make them work for myself and my clients. They shared case studies that had mind boggling results.

What really made an impression is how easy and cost effective it could be if the members of our community came together and started using social media to promote our industry. There would be minimal or no cost and think about what could happen if every person who benefits from being in our industry got on Facebook or Twitter and started telling the world what a great product we provide. Is this the ultimate answer to change our image? With technology changing as quickly as it does it might be the solution we have been looking for. At least we would be doing something and getting our community connected.

Tony Kovach has done an amazing job in a short period of time sharing the message and bringing the community together with his Manufactured Home Marketing Sales Management site. It is always full of great information and he is always updating what is there and keeping the message current. And I think his idea of having a Virtual Louisville Show© is right on trend. I attended most of our traditional shows for the past 8 years and the last two have been painful as far as attendance and sales. We designed some beautiful homes but it was like having a party and no one came. What a great opportunity for the factory built industry with a virtual show to take back our place in the market as an innovative, cost effective and green way to build. I know I’ll be attending this virtual show and will also be tweeting and blogging about it.

Let’s get this party started and get connected. You can find me at:

Twitter: @homeideafactory
Facebook: http://www.facebook.com/pages/LifestylistDesign/104907317529?ref=search&sid=1370651794.2078388608..1 (or search LifestylistDesign)
Blog: www.aboutmodularhousing.com

See you at the show!

Suzanne Felber

InTime Time Management Video

February 21st, 2010 1 comment

We all get just 24 hours per day. How do you spend invest your time?

Legal and Legislative Update – VERY IMPORTANT

February 20th, 2010 3 comments

Hi all! Your government is at it again. Just when we thought seller financing would finally be recognized as an alternative to clogged-up credit markets, it again comes under attack. This time it’s HUD’s interpretation of the 2008 SAFE Mortgage Licensing Act that requires our immediate attention AND ACTION.

Included below is the verbiage of an e-mail I received earlier today from a member of the national REIA. BE SURE TO READ THE PROPOSED RULES. Then, make your views known by commenting on the www.regulations.gov website.

This is extremely important. We could dissect the proposed rules and write volumes about why they are bad not only for our industry but our entire economy. However, there simply isn’t time. The deadline for comments is next Tuesday, February 16th. Deadline for comments has been extended to Friday, March 5th. PLEASE ACT NOW.

HUD Issues Problematic Rules Interpreting SAFE Mortgage Licensing ACT

HUD has proposed to eliminate ALL seller financing unless the seller lives in the home or becomes a licensed mortgage originator. The proposed HUD Rules interpreting the federal SAFE mortgage act can be viewed at www.regulations.gov Use the search parameter “HUD” and the keyword “safe”. Please review and comment regarding the impact of this broad interpretation of the law.
“In addition to establishing HUD’s responsibilities under the SAFE Act, through this rule, HUD proposes to clarify or interpret certain statutory provisions that pertain to the scope of the SAFE Act licensing requirements, and other requirements that pertain to the implementation, oversight, and enforcement responsibilities of the States. HUD solicits comment on the proposed clarifications and on the regulations proposed to be codified.”

History:
As you may recall, we lobbied hard last year to maintain the right for individuals to make up to five seller financed transactions per year before being subject to mortgage originator licensing, etc… However, that law was passed subject to the Department of Housing and Urban Development’s (HUD) approval of the law as “compliant” with the intention of the federal law. If any state does not have a compliant law, the SAFE act allows HUD to implement licensing for the state. HUD has since issued proposed rules. In a nutshell, seller financing would no longer be allowed for non-owner occupied homes.

How YOU can help:
We learned about the publishing of the rules very late in the process…
and the deadline for comment is upon us on February 16. However, we desperately need thousands of seller finance professionals across the country to go on record with HUD on this issue. We will be working to try to affect this law in other legislative ways, but cannot hope to gain traction unless you have clearly communicated you are opposed to this portion of the rules. This is your chance to be counted on this issue.

PLEASE SUBMIT YOUR COMMENTS TO HUD! We have less than one week to flood this system with comments.

Follow these simple steps:

  1. Logon to www.regulations.gov
    You will see two white boxes for searching
  2. On the left box labeled “Document Type”, pull the menu down and select “proposed rules”
  3. On the right box labeled “Enter keyword or ID”, enter “safe mortgage”. Then, press search
  4. Locate the blue search result “FR-5271-P-01 Safe Mortgage Licensing Act: HUD Responsibilities Under ….” To read the rules, click on this title. You will be taken to another page. You will see “views”. You can click on PDF file or another symbol which will show you the rule document online.
  5. On the right of the screen, click on “submit comment”
  6. Complete the form providing required information and your comments and then submit

What do you say?

Say what you feel, but say it politely! The message should include that you would like the definitions in the proposed rules to be changed so that private individuals can originate and service loans on properties they personally own.

Some ideas from others:

  • bank loans are not available on some types of properties
  • the tight lending climate has made bank financing “out of reach” for many
  • seller financing is an “age old” tradition based on private property rights
  • these rules would prohibit even partial seller financing – i.e. a “seller second”
  • according to HUD’s “Residential Finance Survey” in 2001, roughly 40% of all non-farm residential properties in the US are owned free and clear
  • an estimated 6 million Americans own a property other than their own primary residence
  • an estimated 4.5% of Americans own three or more properties, many purchased solely as investment properties
  • 40% of non-owner occupied residences are mobile homes which are more difficult to sell with bank financing
  • approximately 5% of homes in US are for sale or for lease… seller financing may be key to liquidating this inventory

The continued success of our industry as we know it is threatened by these proposed regulatory changes. Please do not hesitate to follow the steps above and make your voice heard.

Marc Faulkner
michiganmoney@hotmail.com

Please comment below:

HUD’s William Matchneer Speaks at MHI’s Winter Meeting

February 4th, 2010 No comments

William Matchneer, HUD’s Associate Deputy Assistant Secretary for Regulatory Affairs and Manufactured Housing addressed over 100 members at MHI’s Winter Meeting on February 2 in Savannah, Georgia. Matchneer outlined the Department’s priorities for the manufactured housing program in 2010 as follows:

  • The long awaited proposed rule on the new Title I loan insurance will be published within the next few weeks.
  • A Manufactured Housing Lenders Summit hosted by FHA Commissioner David Stevens and Congressman Joe Donnelly (D-IN) will be held to find solutions to the financing issues affecting this industry.
  • Action will be taken to protect preemption of the HUD code by publishing a proposed rule on the changes recommended by the Manufactured Housing Consensus Committee (MHCC) and it would be in the industry’s best interest for this to be on a three year cycle of code changes consistent with other nationally recognized building codes.
  • Changes to the MHCC by-laws and rules as prescribed by the Federal Advisory Committee Act were finalized to improve the MHCC process.
  • Efforts will continue in working with manufacturers to provide technical assistance to update manufacturing plant quality assurance manuals. He emphasized that HUD is not viewing these actions as an enforcement issue, but rather an opportunity for HUD to serve as a resource to assist manufacturers in putting updated quality assurance procedures in place.
  • A proposed rule to Manufacturer Inspection and Certification Requirements and Primary Inspection Agency responsibilities (24 CFR Part 3282 Subparts E and H) will be published by this Summer.
  • Serious and thoughtful review of all comments submitted to HUD in response to its proposed rulemaking on the SAFE Act will be made. Matchneer encouraged everyone to submit comments to the proposed rule by February 16.
  • The non-career administrator position will not be filled in the next few months due to budget constraints. He assured members that we have an excellent industry advocate in FHA Commissioner David Stevens who is a highly regarded official. Matchneer is the industry’s point person at HUD. He knows how critical these issues are to the industry and is there to help. He encouraged members to continue to work through the MHI staff with which he has a great working relationship.

Other topics discussed at the Winter Meeting were weather radios, Energy Star Tax Credit extender legislation, pre-1976 replacement home legislation, FEMA emergency housing and financing issues. The two-day meeting concluded with a meeting of the MHI Board of Directors. Resolutions were passed on the SAFE Act and federal preemption. MHI will be working hard during the upcoming months on these critical regulatory and legislative issues.

MHI is the the preeminent national trade association for manufactured and modular housing industries, representing all segments of the industries before Congress and the Federal government. From its Washington, D.C. area headquarters, MHI actively works to promote fair laws and regulation for all MHI members and the industry. For more information on MHI, visit www.manufacturedhousing.org.