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Posts Tagged ‘affordable housing’

About-Face! City Council Mh Prohibition Reverses Course

October 16th, 2015 No comments

Boy, it is nice when I get to share good news.  Wins for the industry and sharing good news are probably the two best parts of my job, and fortunately for me, those two things almost always go together.

Last night in Huntsville, Texas, the city council reversed course on what started out looking like another bad news day.  A couple of weeks ago the city council met and voted on first reading (they need two readings to make ordinance changes official) to prohibit all manufactured homes from being sited on a lot within the city limits.  Initially they had a small exception for homes going inside communities and for replacement of existing manufactured homes, which incidentally is state law that TMHA worked to get passed years ago.  But other than those two limited exceptions, no more manufactured homes.

The first reading vote was 5 – 2 in favor of the MH prohibition.

A local reporter covering the council wrote a story about the proposed prohibition, and Jenny Hodge with MHI emailed me alerting me about what the council was proposing.  We then pulled titling records and retailer selling records and started contacting retailers with a selling presence in Huntsville.  Thanks to Rob here at TMHA, we were also able to gather some telling data about manufactured housing in Huntsville.  Specifically, we learned that from 2011 to 2014 a total of 843 manufactured homes were sold with the city of Huntsville listed in their address.  MH presence aside the demographics were incredibly telling of a city in real need of more affordable housing, not less.  The median income of a household in Huntsville is $27,362 per year.  Of the existing housing in the city 16.6 percent is more than 45 years old.  Housing supply, specifically affordable housing supply, is clearly constrained because nearly two-thirds of Huntsville residents are renters and in this large renter category 61.8 percent spend more than 35 percent of their monthly income on their rent.  To consider further limitations on sources of affordable housing seems illogical.

But as we all know this isn’t a logic puzzle, it’s politics.  Because this was one of the more rare instances where we actually found out about a proposal before it was final we were able to inform our retailers who would be adversely impacted by the proposed prohibition.  From there those retailers and other citizens who turned up last night at the council meeting to testify against the proposed ordinance took over – and did all the heavy political lifting I might add.

We cannot thank Gary Adamek with Reliable Homes and Les Stone with Clayton Homes enough for the work they did, the time they spent, and the persuasive testimony they provided last night.  These retailers and the results they secured in a near complete reversal by the council (they voted unanimously to continue to allow MH within city limits) once again demonstrates the power of engaged, passionate, local advocacy.

Again, when it comes to local (city and county) politics it is imperative that local constituents and businesses are there to advocate for their industry.  When this happens in a timely manner the industry’s chances of securing a victory increase many fold.

I hope that Gary and Les’ success last night serves as an example to all those in our industry about the power of local political engagement.

Everyone has heard the term, “it takes a village,” and that applies to political advocacy.  The power of timely information coupled with individuals willing to engage locally on behalf of their interests, the interests of the industry, and the interests for consumers who want affordable housing options, can prevail when properly deployed.  I’m happy to report such a deployment occurred last night. ##

http://www.texasmha.com/news/featured/about-face-city-council-mh-prohibition-reverses-course

An Important Contribution to Understanding Manufactured Housing Finance

May 19th, 2015 No comments

Tony,
This special report is very effective in explaining the complex topic of chattel financing and the negative impacts of Dodd-Frank.  Using a real life story, and the final, more costly financial option that the consumer had to turn to shows the devastating irony of Dodd-Frank’s causing more harm than good to the goal of affordable housing.

Congratulations on this important contribution to the understanding of the MH financial world.

Joe

Dodd-Frank and Manufactured Home Financing: The Place Where Good Intentions and Unintended Consequences Collide

joe-kelley-iowa-manufactured-housing-association-industry-voices-mhpronews-com-1Joe Kelly

Iowa Manufactured Housing Association

(Editor’s Note: a number of MH Pros have praised award winning journalist Jan Hollingsworth work in the story above. Associations and corporate leaders are among those who have sent or called kudos for her story).

CFED’s Doug Ryan Sounds off on Consumer Financial Protection Bureau (CFPB) Report on Manufactured Housing and MH Financing

October 4th, 2014 No comments

cfed-logo-posted-industry-voices-guest-blog-mhpronews-com-.gifThe CFPB report supports what CFED and other nonprofit organizations have said in recent years:  Manufactured Home loan borrowers are vulnerable to expensive products and are often not well-served by the current financing market due to the lack of competition, lack of liquidity and the costs of the loans.

I have no doubt, as the Bureau reported, that many borrowers of chattel products could have qualified for traditional, less expensive mortgages but did not get the chance simply because they were not offered or made aware of the options. Indeed, one clear way to address this issue would be for industry to support titling reform that would give families the option to title their homes as real estate and the opportunity to access real estate loans.

The report supports, quite explicitly, the need for the Bureau’s current rules to remain in place and enforced. As the Bureau wrote, “the manufactured housing borrowers being charged interest rates or upfront fees above the HOEPA thresholds are the very populations that HOEPA is designed to protect."

I also believe that this report, and related efforts by industry and CFED and its nonprofit partners, offers an opportunity to develop new loan products, expand the pool of lenders and, ultimately, lower the costs of borrowing.

CFED absolutely believes manufactured housing must be part of the affordable housing solution in communities across the US. Far too many advocates and policy makers are unaware of the quality and aesthetic appeal of manufactured homes. There is no doubt industry has made great strides to modernize the energy efficiency, the design and the value of the homes. Quite simply, the CFPB’s report underscores the need for the financing to be modernized, as well. ##

doug-ryan-cfed-posted-manufactured-home-living-news-industry-voices-guest-blog-mhpronews-

Doug Ryan
CFED
dryan@cfed.org

 

 

Related Links:

1) – MHI's Response to CFPB's Report (Note, the MHI link includes the full CFPB report as a free download)

2) – MHARR's Response to RV legislation and CFPB's Report on Manufactured Housing

3) – CFPB Report on Manufactured Housing Signals Areas of Future Concern

4) – Manufactured Housing Institute Responds to Doug Ryan-CFED commentary on CFPB report on Manufactured Housing Finance

(Image credit: Corporation for Enterprise Development (CFED logo.)

(Editor's Note: As with any opinion column, the views expressed by Mr. Ryan are his own and/or those of the organization he works for, and should not be construed to be the views of MHProNews or our sponsors. Other viewpoints on this or other industry topics are encouraged.

MHProNews plans an Industry in Focus Report using extensive comments from a range of industry professionals on this topic. Watch for it mid-week at the news/reports module link above!)

MHGrassroots: A Call to Action

June 17th, 2014 No comments

As I sit comfortably in a 737 at 30000 feet coming back from a thought provoking meeting at the MHI Expo in Las Vegas I don't have to go in great detail on how the world has changed since 2001.

From how we fly, how we communicate, and even how we conduct business, it has all changed in ways none of us truly imagined then.

Every day I read more about how a government I have grown up loving, is making changes that contradict the core beliefs and attributes it was built upon. With that said, let's look at a few issues that have faced, primarily as it relates to the manufactured home market in the past 15 years.

In Texas we were asleep at the wheel in 2001 when House Bill 1869 took effect. I was but one of the many independent dealers who were wondering how this could have happened. I even looked Gov. Rick Perry in the eye and told him point blank that this bill would cost Texans jobs and would reduce home order sales, which in turn would force the closing of several fine manufacturing plants.

Unfortunately I and those around me were right. Even though the TMHA through a lot of hard work was able to have this poor piece of legislature repealed in 2003, the damage was already done.

I won't go into the specifics of the law itself, but I will say it was a killer from day one. If you have any questions about it, just Google it. I have heard the experts’ state that 85% of the independents who were in the market at that time were wiped out by this law and the recession that hit us in 2008. And guess what. Those folks are gone, probably never to return again.

So let's take a look at where the train came off the tracks.

We were too late to stop one train simply because we weren’t aware it was heading for the station.

If we want to be successful in the legislative arena we have to stop the bills before they get that close to the tracks. We, the industry as a whole, must be vigilant in being aware of any laws, in every city, county, state and federal arena that could negatively impact not only us, but the people around us.

This means we have to know, and have a relationship with, the people in charge. Governor Perry signed that bill even after I told him the truth. Why? Simple, he didn't know me from Adam. No relationship equals no traction. We have to build those relationships in order for our voices to not only be heard but to be accredited.

How was it fixed? A grassroots effort. From the ground up. TMHA called upon every member….who in turn called on every state senator and state representative to repeal a bad piece of legislation. And it worked! Why? Because the industry stood up as a whole, and worked together for the common good of all. I call this a victory for the good guys.

Let's look at another victory.

Last year I received a phone call from a landlord who was my ‘competitor’ in Plainview, Texas. I use that word competitor only because we are after the same pool of customers. I call him a friend.

Basically this city was in the process of creating a city ordinance which would require an inspection on every rental inside the city once it was vacated by a tenant. Never mind the fact that this would be in direct contradiction to the HUD code on a manufactured home. Every house, apartment, and mobile home would have to be brought back to current code if this law passed.

This would mean thousands of dollars spent to update every unit.

One unintended consequence of this law would have forced the citizens to pay rent in excess of three times the current rate.

Another would have riddled the city with homes to be demolished due to the repair cost being more then the value of the home.

Yet another would have been a mass exodus of good paying tenants to the surrounding communities which didn't have this law.

So how did we stop this calamity before it was passed like Texas House Bill 1869?

We showed up in droves. There was standing room only at every hearing. Meetings with every city official we could get and we killed it before it could even be heard by city council. How? It took one phone call from each of us who took the time to make that call. And another victory ensued.

So what does all this mean to you, the reader?

It's time. It is time to make a difference and make a call of your own.

I know you are busy, but don't blow this one off.

Dodd Frank and the SAFE Act are not going away. So what are you going to do? I am calling not only those of us in the industry, but all of us.

The government doesn't need us, but this country does. We are this country's answer to affordable housing. But if the people can't get financing for that home what good are we to them?

If you don't know who to call that's ok. Call your state association. If you are not a member, sign up. If you are a member, get active. Make a difference. You can. ##

shawn-fuller-d-r-housing-new-deal-texas-industry-voices-manufactured-housing-mhpronews-com-75x75-Shawn Fuller
D & R Housing, LLC.
New Deal, TX 79350

Who’s in Charge Here?

June 3rd, 2014 No comments

Rick Rand’s excellent proposal for an all-industry conclave at a neutral location is gathering momentum. Such a venue should certainly not screen out the smaller operators who have always been a prime source of innovation, and it is vitally important that the “big guys” also be at the table. Make room for the various associations charged with the thankless task of placating the placating the industry’s many voices.

As a long-retired veteran of manufactured housing, I’m appalled at the conflicts, back-biting and lack of leadership that has always hamstrung our young industry. It was understandable in the early days when the largest manufacturers controlled less than ten percent of shipments and no other industry constituent was in a position make things happen beyond his own company (in those days, the leading players were all men).

Today, though manufactured housing is a shadow of its former self, the product itself is far better, the need for affordable housing is far greater, the leading manufacturers remain profitable, the market for manufactured housing communities is heating up and the stick competition is in disarray. So why are our sales volumes in the dumper?

It is true of course that we, as an industry, have made many mistakes. And we’ll make more.

In a free enterprise system, we learn from our mistakes and keep moving forward. That’s exactly what needs to happen at the kind of meeting Rick has proposed. Pull the tribe together with an agenda focused on the problems we’ve created, the opportunities ahead and agree upon a broad based strategy to deal with today’s challenges. Ideas and innovations are often sparked over a cup of coffee or glass of beer, and contacts have always been the lifeblood of the industry.

But far more is needed than griping about Dodd-Frank and what names we should use for our products. Consider some fundamentals.

Housing is one of America’s least efficient industries. That includes stick builders and us too. Why is that? Well, there’s no serious foreign or domestic competition, no real industry leadership, way too much regulation and negligible innovation. That’s been the case for a hundred years.

Academics and all sorts of advanced thinkers have, for at least that long, looked to industrializing the building process to break out of housing’s quagmire. It has finally happened. The industry we now call manufactured housing has demonstrated the ability to build good housing at roughly half the cost of traditional methods, and we have the black eyes to prove it.

As one result, America’s largest home builder is one of us, and one of the world’s richest men bankrolls MH financing. Something like 20 million Americans live in homes we’ve built and the vast majority of them appreciate the comfort and value those homes provide. There’s ever so much more that could and should be done, but we’ve made a better start than any other tilter at housing’s windmills. Many have tried.

One thing the MH industry agreed upon some 40 years ago was to unite under the HUD banner. That turned out to be a painful process with about as many negative as positive outcomes. We banded together again to reform that process with the Manufactured Housing Improvement Act of 2000 (MHIA 2000), but guess what? Big Brother has its own ideas about “Improvement” which do not include a lot of use for industry committee input.

We’ve got a lot going for us, and yet the squabbles continue. If there’s an industry strategy, it did not emerge from my recent research. What is happening is a plethora of tactics, put forward under various banners, mostly going nowhere.

As an industry professional, you can put forward some ideas for how to deal with these challenges. So can I, and I’ve done so in my recent book, Dueling Curves. It’s not enough.

Maybe at Rick’s gathering of the tribes, some sort of consensus can be reached, on a whole bunch of nifty ideas.

But that’s not enough either.

The single most important objective of such a congress—or whatever it’s to be called—should be to the emergence of industry leadership. Not a task force, committee or agency, but a person of vision who commands the respect of the industry.

A tribal chief who can weave the disparate strengths of the manufacturers, suppliers, financiers, retailers, MH owners and community operators into a strategy we can all salute. Oh well, yes, there will always be a few curmudgeons. No one will be entirely happy with any strategic vision adequate to unite us; not even the leader who ultimately propounds it.

But let me suggest this. Should we fail to unite behind competent leadership, I can suggest who will become take charge of the industry. Well, maybe I shouldn’t name names, but the initials are H.U.D. ##

bob-vahsholtz-author-dueling-curves-battle-for-housing-posted-industry-voices-guest-blog-mhpronews-com-manufatured-housing-professional-news-75x75-Bob Vahsholtz is the author of DUELING CURVES The Battle for Housing Bob can be reached at kingmidgetswest@gmail.com. Web: www.kingmidgetswest.com

Appalled by Gary Rivlin’s New York Times Article on “The Cold, Hard Lessons of Mobile Home U”

April 8th, 2014 No comments

As an experienced industry professional, former owner of a manufactured home, and academic scholar completing a dissertation on attitudes and perceptions towards manufactured housing, I am appalled by the seemingly acceptable exploitation of low-income residents and lack of corporate social and ethical responsibility conveyed in this article.

Gary Rivlin’s article portrayed Frank Rolfe’s business model and success as the standard for the affordable housing side of the manufactured home industry.

According to peer-reviewed academic research, the negative social construction of low-income families profoundly influence opinions of affordable housing residents (Nguyen et al., 2012).

Contemporary mass media and popular culture, such as Rivlin’s piece, contribute to the negative stigmatization through the depiction of manufactured housing residents as alcoholics, crack heads, drug dealers, wife beaters, sex offenders, and the mentally ill (Kusenbach, 2009).

While Rolfe’s tales of tenants “weirdness” certainly adds humorous entertainment to his lesson of exploiting the poverty class, the damage inflicted through contributing to negative stigmatization of residents is concerning.

Rivlin’s article is a prime example of media coverage that increases misconceptions through inaccurate and outdated information, as well as the omission of information about advancements and improvements.

I am disappointed that The New York Times would contribute to the unflattering depiction of manufactured housing residents and use of deprecating names (i.e. trailer) that reduce social prestige and contribute to negative social perceptions.

According to research by Mimura et al. (2010), accurate media coverage should use proper terminology instead of dated slang words and report truthful and unbiased aspects of the product.

Perhaps Mr. Rivlin should spend some time with one of the industry manufacturers and gain an accurate perspective of the product and targeted consumer market.##

lisa-tyler-walden-university-posted-manufactured-home-professional-news-mhpronews-com-50x50-(1).pngLisa Tyler
Walden University
lisa.tyler@waldenu.edu

(Editor's Note: A broad, industry based response to the Cold Hard Lessons of Mobile Home U, which includes comments MHI's Chairman Nathan Smith and other industry veterans, is found at this link below.

http://www.ManufacturedHomeLivingNews.com/sensationalistic-cold-hard-lessons-of-mobile-home-u-new-york-times-article-by-gary-rivlin-draws-manufactured-home-industry-ire-desire-and-fire/

The story linked above, as the second one below, have both been leading reads on their respective sites.

Reader responses to this topic or others of industry interest are welcomed at latonyk@gmail.com or iReportMHNewsTips@mhmsm.com please indicated your topic in the subject line, thank you.)

Subsidized Housing vs. MHCs from an MHC Owner’s Perspective

February 7th, 2014 No comments

I could believe that a lot of community owners are unaware of the subsidized housing threat. Unless you live in a city large enough to be targeted by developers and unless you are living in a state with a very active Finance Authority, you may not see what is coming down the pike.

However, if Des Moines Iowa is any example, "affordable/subsidized" housing, is coming on "Big Time" and killing both HUD manufactured housing sales and rentals.

It is likely that this will expand out into the smaller and smaller communities over time. Most "affordable/subsidized housing" is new, upscale, geothermal, and well below market. If it is not new, they are able to get millions in government grants to renovate—I don't believe community owners have access to federal or state "renovation grants.”

I can hardly turn on the TV without a least a weekly pronouncement by some politician or city councilman that, "We need more affordable housing!" Of course, what they are really saying is, "We need more subsidized housing.”

But as might be surmised, if they told the truth, the reception of that statement would be very different.

"Affordable/subsidized" housing is NOT affordable to the majority, who pay for it. In part, I fault MHI for some of our impending "affordable/subsidized" housing problems. Why, without so much as a whimper have they allowed subsidized housing to steal our "affordable housing" label? To call subsidized housing "affordable" is perverse and Orwellian, yet MHI says NOTHING. ##

Margaret-Clark-Co-owner-Grandlakeview-Retirement-MHCs.jpgMargaret Clark
co-owner of Grand Lake View Retirement MHC
grandlakeview.com
grandlakeview@gmail.com

(Editor's Note: This column was submitted in response to the following Masthead blog post, Your Thoughts on “I Am Affordable Housing.” We welcome other perspectives on this topic or others of industry interest. Editorially speaking, we are unable to accurately comment at this time on what efforts MHI or the NCC may have in motion on this subject.)

Rent Control in MHCs

September 4th, 2013 1 comment

Tony,

The phone rang one morning and a young man returned my call to him, we'd been playing phone tag. I had left a message with his wife in Oregon earlier, and he was calling about two Vermont MH communities I have listed for sale. From the voice of each, I guessed they were both far younger than I.

Speaking with him, as I answered his questions, it was obvious this was not his first call on LLCs for sale. In a knowledgeable way he wound thru the obvious questions, finally asking whether Vermont LLCs are rent controlled. Yes, I explained, they are. I went on to explain Vermont allows CPI, about 3% annually presently, without concern, and a big one, allows provable capital improvements in addition, annually. I told him that as a former VT LLC owner I had found the scheme fully workable, as do many of my contemporaries.

The next day I got an email message saying he and his partner/wife had decided not to invest in any locale where rent control is in force. OK, I get it, but that removes quite a swath of locales, many which are hot purchase markets. This philosophy allows investment in say Mississippi or Alabama, but negates purchases in Florida or much of California. Oh…

After that, my mind wondered over my experiences of the dangers of rent control and lack of it. Yes, I said the danger of the lack of it. I actually was pretty young once, had hundreds of apartments and almost 2000 MH/RV sites. With the exception of a Florida LLC, I was in no jurisdiction where rent control was in effect. And when rent control was threatened in a jurisdiction, I was the first to the battlements opposing its imposition. I was and am a capitalist, and rent control seemed an anathema to my beliefs. I'm not alone, right?

But time went by, slowly the days passed, and some of my beliefs at 40 years of age made transition to a more measured understanding as I aged and acquired experience I previously lacked. Let me be frank, I was an accomplished and notorious rent increaser, which in my twilight years brings me no acclaim by others, and more importantly, myself.

What I found was that in apartments, and we're not speaking of New York City here, the market rents in an area kinda act as rent control. You find yourself as the top dog in rent rate for your 1000 sq. ft three bedroom apartment in your area. What you are very likely to find, as I did, your apartment rents last and less, staying empty longer than it should. Recovering the lost time and money brings you back to Earth and unless your calqy is busted, your late debt payments slap Hai Karate hard. I found apartments very self correcting as to rents.

Now, on to LLCs. We all know the reasons we invest in communities; they own the dwelling unit, they can't move the house, etc. All good stuff, of course. So as I bought LLCs from original owner/developers, I found that as longtime owners they had allowed their rents to slip behind the market, keeping their management easy, with many long term residents.

Of course, the purchase price always reflected the oft unspoken premium of raising rents to market. "Hell, they can pay a lot more than that!" So I paid more than cash flow to get the community, not real unusual, right? Then the rent increases started. Often stiff and early increases happened shortly after closing.

The first few increases were swallowed, albeit with plenty of bitching by residents. We raised rents as much in two-three years as the former owner did in 10 years. Note that in some instances the increased rent still didn't pay for the capitalized investment costs. I knew that, they only knew and cared their rent had doubled in short order. No esoteric explanations of cap rates and other MH investor jargon seemed particularly persuasive to the LLC residents.

Who was it, Newton, who theorized every action has an equal and opposite reaction? I raised rents, they moved out. And I acquired a reputation in that community as a rapacious rent increaser. And these reputations are hard to escape. I wouldn't really care that much except the reputation had a very bad impact on homesite rentals. That, I did care about.

At first I did the calculation I see many others doing. Yah, I had 100 homes at $100 per month, and even though I'm quickly down to 90 homes at $111 per month, hey, I'm getting the same money with less work and expenses. And it keeps going this way as rents increase, residents fleeing like a torrent, out the MH Paradise Estates gates, which has turned into Hell Bent Acres.  And as vacancies mount, you lose control of the community, no longer able to count on the desire to live in your LLC to keep people in line. And that desire includes pricing.

Were I the only one to have followed the raise-rents protocols, then only I would have suffered the residue, but of course, such was not the case. The MH industry's then flawed model, subsidized for years by flawed lenders, finally collapsed, dropping from 373,000 shipments in 1998, then tantalizing us into believing the hurricane-inspired 135,000 shipments of the mid 2000s was the stopping point, to the grim reality of 50,000 homes in the 2010s. Yah, I hear 60,000 homes could happen any day now.

I sat in on some very contentious MHI committees in the late 2000s era trying to formulate a chattel long term lease the GSEs could swallow. In concert with this I reviewed many LLC profiles showing monthly rent and occupancy. It probably won't surprise you that the vacancy was truly scary, yet rents occurred steeply and frequently.  I had already tried that, and even with the generous retail financing by GreenTree, CIT, The Associates, Security Pacific, Chase and their ilk, it didn't work. Now we were dealing with the GSEs, who I did not find stupid, and we were trying to equate rents in LLCs to the capitalized valuation of single family conventional real estate lots. Any thought of sharply limiting rent increases to gain long term and low rate financing being the trade-off, got serious push back. Such was not to be and by then as the effort lost all bouyancy, the GSEs woke up to far bigger challenges.

As a post script I am the very first to admit that some major figures in that committee have since come far closer to the rent restraints advocated in the long term lease effort as their stated belief for industry resuscitation.  Will that be enough? I greatly doubt it, but I sure think it is an indisputable industry wide measure in the road back to something other than Warren Buffett's table scraps.

So to my young friend in Oregon, rent control, other then confiscatory NYC apartments or some California cities in MH, can be a useful LLC owner restraint, quieting some of the early animal spirits we can all exhibit before experience shackles us. Did I like going to the rent hearings in my community in Florida and taking phallus down the throat to the gag control center? Oh, I loved it.

Still, Florida LLCs are and have long been highly prized acquisitions, not greatly injured by the relatively manageable process for raising rents.  With the relatively benign rent control such as in Florida and Vermont, you and the industry are actually protected from many of the practices employed in the industry, leading to so much push back against us.

Before you believe I'm asking you to petition your jurisdiction for rent control, let me disabuse of that notion. Nothing could be further from the truth. I rail against governmental intrusion in to my affairs daily. Everyday the beast grows larger, only a financial collapse likely to abort its growth. The only point I am making is that one must practice rental increase restraint on your own. Sometimes laws can help a process.

The flip side is that lack of restraint causes lack of residents at a time LLC vacancy nationwide forebodes another step down in industry size. In places like Vermont and Florida and others, rent control, which one should practice on their own, is instilled by statute. Perhaps not the best solution, but the record says the world did not end there.

Yes, we tell a great story which seemingly has legs of truth about our affordable housing heritage. But for whatever reason, even though its great dog food, the dogs won't eat it. Perhaps a legacy of rapacious rent increases, closing parks, high default rates and high home value depreciation could be a good place to start the industry resurgence. We build great homes, but my friends, that, by itself is not enough. ##

marty-lavin-posted-on-mhpronews(MARTIN V. LAVIN
attorney, consultant & expert witness
350 Main Street Suite 100
BURLINGTON, VERMONT 05401-3413

802-660-8888 off / 802-238-7777 cell
marty@martylavin.com

(Editor's note: The hot link was added by us, not Marty, nor was the link requested in any way by Marty. We think it is good for others to realize that while Marty is 'retired,' he is still involved in this industry and clearly cares about manufactured housing deeply. That is why he sounds off on issues, because he cares enough to raise them for discussion, thought and action.

As always, letters and articles by you or your colleagues that may agree or take other perspectives are encouraged. Send them to latonyk@gmail.com with Industry Voices Guest Column in the subject line. )

Will California Park Owners Begin Heading For the Exits?

July 10th, 2013 5 comments

With the political changes in Sacramento, the tenant advocates are pressing their agenda with new vigor in 2013. Once again, they are pushing to amend the subdivision conversion statute (Government Code § 66427.5). They are advocating for changes which would allow local governments to deny conversions not supported by a majority of residents and which would give such governments authority to implement their own “conversion” regulations. There are even rumblings for statewide rent control for mobilehome parks.

Conversions under Section 66427.5 have been a favored exit strategy for park owners, resulting in related litigation all over the state. Recent decisions applying Section 66427.5 have been a "mixed bag." The decision in Sequoia Park Associates in 2009 was the “high water mark” for limiting the interference of local governments in conversions since the Ordinance was amended in 2002 to add the requirement that tenants be surveyed regarding their support. Based on that decision, many local governments and lower courts have approved conversions despite resident opposition. Subsequent reported decisions by different appellate courts have chipped away at and offered different interpretations of Section 66427.5. The 2010 decision in Colony Cove v. Carson held that local governments could "consider" the resident survey results, but the Court did not provide any guidance as to how local governments could consider or use the surveys. The Court did acknowledge, however, the lack of resident support in and of itself could not block a conversion.

The worst decision for park owners, Goldstone v. County of Santa Cruz, was decided in early 2012. Goldstone held local governments could deny subdivisions if the subdivision was not supported by a majority of residents. Although not explicit, the Court seemed to adopt the view that a "bona fide" or “non-sham” conversion is, by definition, one supported by a majority or at least a large percentage of tenants. Chino MHC v. City Of Chino, decided in late October 2012, took a decidedly more pro-park owner view, concluding that a local government was required to approve a subdivision unless there was overwhelming opposition by the tenants. The Court also made clear its view that a bona fide conversion was one in which the park owner truly intended to convert it to tenant ownership. Unfortunately, the Chino decision still encourages tenants to attempt to block subdivisions or extort favorable terms in exchange for support for the conversion.

Late last year, the California Supreme Court issued a decision directly relevant to conversions in coastal zones, Pacific Palisades Bowl v. Los Angeles. The Court in that case held that local governments did have some authority to review conversions for compliance with the Coastal Act requirements (and other state laws). The ultimate impact of this holding is not entirely clear, but it makes clear that local governments can impose conditions relating to the replacement of affordable housing in a coastal zone.

Under the existing statute which has been relatively favorable to park owners, there still has been substantial resistance to subdivisions in many local communities, in some cases, even where no rent control exists. The processing of a subdivision for Pacific Mobile Home Park in Huntington Beach is a good example.

Articles.000/4819-2353-3075v.1

Pacific initiated a subdivision in 2010 with the support of a majority of the residents in the Park. The City fought Pacific’s subdivision Application. Pacific had to file a lawsuit after the City denied the Application. The City not only aggressively defended the lawsuit, but attempted to extort a favorable result by filing a cross-complaint seeking immediate physical removal of homes owned by park tenants who the City claimed were “trespassing” on an unused City right of way for decades.

The City’s denial of the subdivision Application was reversed in July 2012, which resulted in the City approving the subdivision in November, 2012. However, on December 3, 2012, the newly elected City Council voted to rescind the approval. Pacific then obtained a court order invalidating the vote and barring reconsideration of the subdivision Application by the City. That court order still did not stop the City two weeks later from voting to confirm their illegal December 3 vote. This did not sit well with the Judge who issued the order. The Court granted Pacific’s Application to set a trial for Contempt of Court for 6 of the 7 Council Members and the City Attorney. Finally, with the threat of a criminal trial hanging over their head, the City Council abandoned its challenge of the subdivision.

If Section 66427.5 is amended, which seems likely given the current political environment, then park owners can count on more local opposition to subdivision. The sad reality is that while local politicians often talk about how important affordable housing is to them, they often really do not want to see mobilehome park uses become permanent, particularly in coastal or other “upscale” locations.

If the door to subdivisions is closed, the final path of escape for park owners trapped in confiscatory rent control is closure. The U.S. Supreme Court has made clear that governments cannot stop closures in Yee v. Escondido. Yee recognizes that the right to go out of business is one of the crucial “sticks” in the “bundle of property rights.” Of course, the crucial issues become the cost of closure and the viability of alternative uses. Government Code 65863.7 limits payments to tenants to the “reasonable cost of relocation.” The common sense interpretation of “reasonable cost of relocation” limitation means the cost of physically moving a mobilehome and the tenant’s belongings. Certain local governments have adopted requirements that exceed this limitation, but we do not have any appellate decisions directly addressing the question. If conversions are made more difficult, it is likely we will get binding authority, hopefully confirming a “common sense” interpretation of Section 65863.7. We can count on the courts for common sense, right?

mark-alpert-hk&c-law-manufactured-home-professionals-mhpronews-com-75x75-.jpgMark Alpert is a partner with Orange County law firm, Hart, King & Coldren. He focuses much of his practice on manufactured housing issues, and has a particular expertise in rent control, subdivision conversions and park closures. Mark can be reached at (714) 432-8700 or at malpert@hkclaw.com.

Interview with Marty Lavin, JD

April 3rd, 2013 1 comment

Marty, before we get into the meaty topics that will follow, let's establish your credentials for readers who may not know you and your background.

  • 1) MHProNews: Please tell us about your years involved in manufactured housing, including legal, as a community owner, expert on financing and any other. Include a sense of your MHC, financing and other business interests.

marty-lavin-50-posted-mhpronews-com-industry-voices-blog Marty Lavin:

I’m now 70 years old and I look back to 1972, when as a summer intern I entered the mobile home business. I was a junior in law school and was working at Ray’s Homes, who operated owned and franchised lots up and down the east coast, from New Brunswick to Florida.

For you youngsters, 1972 and then 1973 following it were the absolute pinnacle of the mobile home industry, reaching almost 580,000 shipments both years. At today’s shipments level, that is about eleven years of shipments, in each year, back to back. Those were giddy times, and predictions of 1,000,000 annual mobile home production seemed heady, but few seriously doubted it could happen, there seemed no barriers.

There were factories building homes all the way from some constructing them in their garage to the industry giants, Champion and Fleetwood or their compatriots. Time dims my full memory of 1972 and ’73, but not the excitement of those incredible times.

What it does not dim is that our sales organization was a national scope powerhouse, selling over 5,000 new homes in 1973. Think of that, almost 1% of all national sales, in one small outfit run by 3 people! I was proud of that then and still am.

What I remember most about 1972 is a time I was asked to go to a local land lease community owned by our organization. The community had about 214 homes in it, as I remember, a very large community in our small State of Vermont.

I was to field resident complaints. As I recall, a modest rent increase had just gone in and there was an uprising. I was to go up and quell the unrest.

I arrived at 5:30 PM, alone, at the community ballpark, and I met with 200+ very angry folks, and since they had been playing softball there were lots of baseball bats in the hands of the angry. Lesson: never attend a resident meeting alone with 200 angry people with baseball bats in hand. Actually a number of lessons came from that incident, which later served me well in both the MH Community and the apartment business. After all, the folks who inhabit apartments and MH Communities are not so different.

I came back after law school graduation and spent the next five years managing the legal affairs of sales lots, calling on banks for our service company, doing other legal work, and giving zoning presentations for MH Communities and strip shopping centers. Let’s say that the strip center zoning was easy compared with zoning MH Communities in most eastern states, as it was a serious challenge, even in the 1970’s. Always the endeavor was contentious, costly and endless, not a good business model.

By 1977 I became a General Motors dealer, selling Chevys for 4 years, then Oldsmobile and Cadillac for another 5 years. Sad to say, as much as I liked selling cars, I could not succeed financially although my sales were excellent, but profits, not sales volume sets the business paradigm, in cars or MH, and I fell short there. At the time the U.S. auto business was under serious pressure from the foreigns, and GM was already a doomed giant.

Back I went to real estate and the MH business.

From 1985 until 1995 I ran fast and hard buying communities in several states. As I remember at one point I was in George Allen’s top 75 list or thereabouts of community owners. These were communities I owned mostly on my own, few partners, just bank and seller debt. And of course, whether it is equity money from public subscription or money partners, or purchase money debt, they can all be harsh masters, and the vicious real estate depression of the 1989-1993 and the RTC (Resolution Trust Corporation) had us all in workouts. Most of my friends and partners declared bankruptcy. I thought that foolish, as it seemed unnecessary. Lots of talking and court appearances, but I got through it in spite of $55 million in debt, in 1989 dollars.

Rather than bankruptcy, my own course was entirely different. I chose to be prickly, but reasonable. Prickly, in that I could not be easily rolled by the creditor, and reasonable in that sometimes a property is not working, and it needs to go to someone with greater resources.

By 1988 I had formed an MH chattel loan service company, representing a large number of northeast area banks in originating loans, for home only, going primarily into communities. The general downturn of 1989-1993, with a steep decline in MH sales and lots of repossessions, stopped the service company’s climb to the big loan numbers. But they ultimately did come. In 1998, our company, Mortgage Services, Inc. (MSI) originated over 6,500 loans, totaling $188 million in originations. Those are big numbers in chattel loans by a broker. But as proud as we are of our volume, our record of clean paper without games, is a greater source of pride.

We originated loans for Vanderbilt, Chemical/Chase Bank, The Associates, CIT Group and many others. As one lender said to me a couple years after they left the industry and was running off the portfolio, “If every loan we bought were like yours, Marty, we’d still be in the business.” Satisfying words, indeed, in an industry enshrined in the Lending World Hall of Shame for Fraud.

We hung on with ever-smaller loan volume throughout most of the 2000’s, finally calling it quits after 2008, when we could no longer make money and my eyes glazed over trying to reinvent myself.

In 1999 or thereabouts, I was elected Vice Chair of the Financial Services Division of MHI, a two year assignment, which then leads to a two year assigned as the chairman of the Division. But, the industry was cratering so quickly, that the then chairman’s company exited MH lending, dropped out of MHI, and my term of almost 4 years as Financial Services Division Chairman began quickly.

In spite of an industry decline of frightening proportions, for many the reality had not yet sunk in. Mid-2000s shipments ranging from 125,000 to 150,000 homes, only with the grace of God who sent hurricanes and the industry built homes to house the dispossessed. But for anyone who could put it together, it was obvious: things in the industry were unraveling very quickly with scant hope of recovery.

For almost ten years I wrote a monthly newsletter, “Marty’s News and Notes,” commenting on the scene in Trailerville. What was obvious to me seemed less obvious to many. The industry was putting itself in an ever-shrinking situation and was not lifting a finger to try to save itself. The MH Image Campaign was endlessly pondered, but in the end, powerful industry forces that would profit by a weak industry joined hands with industry nabobs who to this day contend that our present situation is just an industry pullback, to kill the image campaign. Today, the industry has no ability to do any general industry promoting being too small to raise the money.

The highlight emotionally of this fading late 2000’s era was my dis-invitation from a community owner’s conference I was accepted to attend. My ideas of the industry decline, its causes, potential cures, and likely outcome were too radical. “Lenders could make money, they just got scared,” they said. They’d be back. I reasoned with even “good” MH chattel portfolios into land lease communities suffering over 30% lifetime defaults, lenders were unlikely to return, and so they haven’t. My one satisfaction since is that those who dis-invited me to the conference have of late finally grasped what I was saying over 5 years ago. Welcome to the party, even if belatedly so.

I very much enjoyed my assignment with Fannie Mae from 2003-2009 as their factory built housing consultant. I tried, as did Fannie, to bring some useful and survivable lending programs to the industry, but essentially they were rebuffed. To the end, the industry wanted to shuck and jive lenders to take losses in their behalf. I found the people at Fannie to be very intelligent and knowledgeable. They knew how to research a subject.

In many regards industry performance and industry attitude have never meshed. One would think an industry which had shrunk by 80% would go into bodies they were soliciting for help with hat-in-hand. Instead, bolstered by the industry shibboleth of “America’s Most Affordable Housing Form,” demands were more common than requests. That operating form continues to this day! I call it Pit Bull lobbying.

My proudest moment was in October, 2004, when my peers at the MHI Financial Services Division awarded me the Totaro Award of outstandinglifetime achievement to the division and industry. An award of this type makes one feel that all those meetings, flights, conferences and commuters, time consuming and personally expensive as they are, did not go unnoticed.

              

2) MHProNews: Tell us what you think the outlook is for us on the legislative or lobbying fronts on initiatives to modify regulations with the CFPB (Consumer Financial Protection Bureau) in Washington DC and why.

Marty Lavin:

One must look at the world as it is, not as one wishes it to be. Since the enactment of the Patriot Act in this nation, government found that they could pass very onerous and controlling laws, with relatively muted public outcry. In fact, the general public mood was that we wanted to be regulated. “Me, I’m ok and can be trusted, but that guy over there, let’s put him in regulatory shackles,” seemed to be the prevailing attitude.

An onslaught of rules and regulation ensued (Osama, you won, pal!). Many of them came as a response to the 2008 financial crisis, leading to an endless array of rules, regulations and laws. Nothing was left to chance. Endless government employees were hired to man all fronts. People not wanting to sit around in their government office with nothing to do, wrote their hearts out with rules and regulations. This necessitated a whole new group of people to enforce the laws, to make sure knuckles were broken for transgressors. Dodd-Frank and the Alphabet Laws ensued, and who knows what else (ObamaCare).

And what industries were targeted?

Well, all those mortgage lenders who had caused or appeared to cause the 2008 fracas. One would think the manner in which our industry had responded to being entangled by the regulation was that was they had “clean hands.” The industry acted as though they had not caused any of the lending problems which brought the regulations. Forget that from 1999 until 2005 or thereabouts, millions of MH homeowners lost their homes to the depredations of our sellers and industry lenders and the highly flawed portfolios they originated. “But we gave them a chance for home ownership,” was the industry refrain. Some chance, when portfolios were originated with well over 50% defaults.

This led to many problems for the lenders, but the primary losers for those bad portfolios were the homeowners, and the investors who bought the portfolios, just as occurred in the 2008 mortgage disaster. In the MH 1999-2005 loan meltdown the plight of homeowners with lost homes, lost jobs, divorces, financial problems, moves for other housing and the emotional distress it caused seemed unreported and without concern by anyone. But did it escape the gaze of the regulators?

When these things occurred in the real estate lending meltdown of 2008, the scope was so great and consequences so extreme, that homeowner plight did not go unnoticed. To the contrary, many undeserving homeowners were given breaks they did not deserve. Little of that occurred in the MH debacle.

The CFPB arose from that wellspring; Chattel loan shenanigans led to homeowner/borrower consequences essentially identical to the mortgage mess, so why treat them differently? To say nothing of the industry reputation for loan fraud, and dealing with many financially fragile people who were not viewed as able to protect themselves.

Don’t misunderstand my drift; I’m simply reporting what I see as the motivation for the formation of the CFPB, and by extension, the prospects for any serious changes in their rules and regulations.

Were I sitting across the table from industry lobbyists, in the back of my mind is the knowledge that exempting the MH industry from these rules is loosening the grip on an industry who hasn’t acted as though their past lending was fair to the consumer.

Yes, as the industry claims, a few more homes might be sold if rules were relaxed, but the CFPB rules and regs do not by themselves stop a 580 FICO buyer from getting financed. That’s a self-sustaining process by industry lenders for the moment. But it might protect the 660 on up FICO MH buyer from some of the known operating defects from which the industry has suffered. That’s the thinking the industry faces in seeking changes.

So, what do I think the industry lobbying efforts will gain as to the CFPB? I seriously doubt that any meaningful loosening of regulations will occur as making the case for it is not easy. At best, a few more homes could be sold and financed to responsible buyers, but regulators do not see loosening regulations which simply allow people at the bottom to “buy” more MH, and suffer a high loss of homes. And that is what the industry seeks, at its heart. My advice, onerous as the regulations are, learn to live with them and take advantage of a new competitive factor introduced by CFPB. Master the requirements and get a leg up on those who will not, of whom there appears to be many.

3) MHProNews: What is your impression of the working relationship between various industry associations, HUD and the DOE?

Down through the years I have known both sides of the continuing lobbying drama. The industry wants this and that, most of which conflicts with the regulators desire to control the industry and protect the consumer. We now have a history of going at this since the late 1970’s, without any magical results for the industry. It has recently become a highly regulated industry which heretofore, though the industry viewed itself as highly regulated, it was not. That changed. Welcome to the new America where regulation of all stripes holds sway.

Of the major industry associations, MHI (Manufactured Housing Institute) has been the compromising industry element. While individual members have been combative, the association has tried to be firm, but compromise has not been unknown.

The other group, MHARR (Manufactured Housing Association for Regulatory Reform), has catered to the industry segments which feel we can go toe-to-toe with industry regulators and have our way with them.

I think if we took a long and serious look at the actual achievements of both associations, the record reveals little success by the pit bull faction, and some, though limited success from the compromisers. But what would we expect from an industry whose main claim is that it is America’s most affordable housing, when government now finds non-profits or developer-required low-income housing as the better vehicle to deliver affordable housing, not the MH industry. The industry has become suspect, and that is at the heart of the regulations, just as it was with the mortgage industry which brought on their highly increased regulatory burden.

I’ve written at some length in this publication in the past on this very matter of the associations, and a view of that might shed even more light on the subject as to my thoughts on our associations and their operating style and effectiveness.

I do not want to leave this matter of lobbying without speaking to the state associations.

All during my 40+ years in Trailerville, I’ve dealt with them. They have many very talented people involved and members can really get involved without the major time and money cost of national association meeting attendance. Some belong to both, but at my speeches at various state associations I met many I never saw in Washington, who obviously were very involved in state matters. Their record of storming the state capitols to seek redress shows how effective close relationships can be. We see an effectiveness locally we simply do not see on the national stage.

Locally we may represent a strong voice listened to. Nationally, even when we had a fairly strong PAC $$$$, we were a minor player in most regards and were treated as such. Today with our PAC having the same money as the allowance for an 18 year-old, we don’t get too much respect or time.

In most states, with strong associations, getting into the halls of power and talking with a regulator or politician who is a personal friend of yours yields excellent results. Would it be this action was transferable to DC. But in DC relationships seem to hinge on $$$$$.

4) MHProNews: What do you think would help the industry's working relationship with regulators?

Marty Lavin:

The industry needs friends. It has few if any in government, and none I know of in the non-profit world, which takes an ever greater share of attention within government. As we’ve seen repeatedly, at all levels of government, a few loud critics, especially from non-profits, have enormous sway over board and regulators. Meanwhile, everything we say is questioned and mostly disbelieved.

Long have I encouraged MHI to join folks like AARP, who is a serious critic of the industry, in trying to resolve issues between us.

Is the water too poisoned to join with various non-profits? Perhaps, but if we can work with them on specific issues, powerful forces could be unleashed on our behalf, which would greatly enhance our clout with government. Against us they seem to be prevailing. But we must get past the ingrained industry belief that we do no wrong and do not need to change or compromise.

By ourselves, in an essentially buggy whip industry (fading), I do not see the regulators doing anything we request, save at the margin. And any slide back from regulations will quickly be rescinded as soon as industry infractions occur once more. History tells us that will happen quickly. Just look at the number of industry people trying to slide around the numerous lending regulations now hung around our necks.

5) MHProNews: What do you think would be useful in having a positive impact on our lobbying efforts for modifications in Dodd-Frank with Capitol Hill?

Marty Lavin:
I fail to come up with any positive, easy solutions to our problems, heaven knows I tried. The industry reputation of “bad-actor,” who treats consumers unfairly, who closes communities to sell 150 families out so a Wal-Mart can be built, who champion chattel lending where very financial fragile people have high default rates in communities, who raise rents endlessly, have led to not only Dodd-Frank, but to highly restrictive zoning laws, rent control laws, and a myriad of lending and non-lending regulations. These have help squeeze the life from the industry.

But let’s confront the real culprit for the fall from 580,000 homes in 1973 to the 50,000 range today, even as population has increased by 50% since 1973.

Listen intently here, Junior, it ain’t the regulations which plague us.

It is this simple fact, like it or not: Chattel lending to the average customer drawn to our product is not sustainable because of high default rates and the attendant high loss upon resale of defaulted collateral.

I needn’t remind you this is a complex, intractable problem at least for now, and solutions are extremely elusive. If lenders lend only to those customers likely to default at less than 20% lifetime rates, then this is a small industry, as we now see. If lenders follow the lending regimen of 1960-2003, then defaults will lead to huge lender losses, even as sales soar, for a while anyway.

Since the ABS MH meltdown of the late 90’s and early 2000’s, lenders are aware of this fact. Sad to say, after innumerable industry meetings, I note only our lenders seem to appreciate this fact. The rest of the industry seems unconvinced, not wanting to be confused by the facts.

Thus the present extreme caution in lending, as even six months of lending error will likely bring an enterprise down, results from the reported facts of the ABS era. MH Lenders have decided that it will not be them who subsidize the industry through loan losses.

The GSE’s were probed to take over that role and even though they did so with real estate mortgages with disastrous ramifications, they refused to do so with MH.

HUD/FHA through its lending programs has always been probed to have them assume that role. Once the 50 year lender subsidy of the industry was withdrawn, reality set in as to the real size of the industry. Not the 1975 to 1999 trend line of 250,000 homes annually, but a mere 50,000 home shipments per year, was the real size.

And even if the hurricanes run wild again, will government turn to us again for homes?

That leaves only government-subsidized loan losses in order for the industry to be able to return to those golden 250,000 annual home shipments. So far every government agency has refused to do so, especially after the losses suffered in the Title I, Chattel Loan program, which the GAO report demonstrated was a serious loser. No one wants to be our bitch.

I dare say that the loan losses and its connection to industry size were well recognized by some by the late 1990’s, when I heard a senior GSE official say that only with government subsidies could the industry succeed once lenders retreated. That hasn’t happened. I was gape-jawed at the time, but how right they were!

So going to Capitol Hill on Dodd-Frank almost seems like deck chair moving. Let’s suppose all Dodd-Frank and other new lending license requirements were repealed, does selling self-financed used homes to 580 FICO borrowers save the industry?

I think not and clearly stated as such years ago when an industry scribe was waxing eloquent about the potential for self-finance to save the industry. It is not going to happen for a variety of reasons, and I told him so as well. It may help some individual organizations, but the entire industry? Yeah, right.

6) MHProNews: What closing thoughts would you like to leave with industry readers today?

Marty Lavin:

Tony, in those dozens of “Marty’s News and Notes” I wrote in the 2000’s I proposed many changes in the industry operating model I thought would help. Of course, most all of them were unenforceable, were likely to be violated by many, and some were deemed to make industry action more difficult, as though if not enacted the industry would get better and easier.

The Image Campaign was an excellent example. After Roper Associates polled the public on industry public perception, their report to the industry said that in their 30+ years of polling, no industry had been so poorly perceived by the public and their customers. This was strong incentive indeed for an industry seeking to refurbish itself. We did nothing. So they don’t like us? Who gives a rat’s azz?

Regulators deal in the real world. They read the newspaper account of another tenant revolt in a community after a rent increase. The photos of another community closing with pathetic people having to move a worthless 40 year old home to another elsewhere and not having the resources to do so can’t help but move the public.

Not our problem you say? Perhaps, but our regulators and critics wield their dictatorial power against us, even as the industry seems oblivious to it. And like the drip of the Chinese water torture, little by little our operating style has gone out of style. Yeah, but dick-head, we are moving to create green homes! That will help.

In spite of everything I’ve said in here, let’s zero in on the most important fact I can remind you of today.

Like the stock market which is a market of individual stocks, this is not an industry, but an accumulation of individual opportunities, all revolving around a factory built home.

There are plenty of players surviving, even flourishing in their own endeavors.

It would be nice to have a strongly growing industry to help business, but the industry has shrunk enough, shedding many enterprises, as it seeks its new level. Some elements, like the communities, will likely continue shrinking as the cornfields which became mobile home parks courtesy of crazy lending, revert to cornfields.

You know that from those endless real estate broker-sent emails asking for offers on troubled properties, with 50% occupancy, almost all of which are owner financed homes. Mercy, Jesus…

Don’t plan your business around Dodd-Frank, or SAFE or CFPB being modified or overturned. The chances of that are slim. Pay attention to your own unique niche. Follow the rules, stay out of trouble, and meld business needs with empathy for your buyer or community resident. Become the “good guy” in a sea of others.

Hard as it is, do the things required by law if necessary to succeed. If the laws are overturned or modified, you can quickly revert, but you are wasting time trying to battle what is in place now.

Know that GreenTree Financial is not returning and the industry lenders, few as they are, will not become GreenTree. Don’t worry about that rumored 580 FICO industry chattel lender coming to the sales lot close to you. It isn’t happening. And if it does, keep those bottom right drawer loans denied by everyone else flowing to it quickly, as the life expectancy is about three years.

Nothing is likely to change. Partner with your local hometown bank(s), protect them, and reap the rewards that can flow from that association. Make your plans based on increasing regulations, not less. Your ability to operate easily in that regulatory environment will be the key in the future.

Finally, the hot button of this moment; titling what has historically been personal property as real estate, that is the home-only, even in land lease communities.

I first bumped into this around 2004 at a meeting of land lease residents and non-profit employees who ran the communities. This was described as the new panacea, after all, we know how secure real estate secured mortgages can be, especially with sub-prime lenders and borrowers. This change in titling protocols would fix everything for the homeowner.

Then about 5-6 years ago a law professor from the University of Minnesota contacted me to discuss the concept. She was writing a law review article on the matter, as I remember, and had liberally quoted a lot of my written work. Very complimentary. I will tell you the same thing about titling personal property homes as real estate by fiat as I told her. You can do it by law if you chose to but to what end?

Presumably, doing this well-intended move is a desire to remediate the whole purchase, default, repo resale process. That process entails two issues: first the incidence of loan defaults, or what percentage will default, and severity, or how much money will be lost on the repossession and resale of the home. With broadly expansive chattel lending, these two have plagued the industry since the very first, and by extension, plagued the homeowner.

Of course, if by fiat one can entirely change the character of an item, I am all for it. I would start by declaring Martin V. Lavin as a young, handsome, vital man instead of an old, ugly, tired man. Well, of course logic tells us that in both the home and the man, the declaration by fiat of something it isn’t is doomed to failure.

Don’t let that hold you back. Perception is reality. Remember, put a tooth under the pillow and the good fairy comes.

The refrain always is; it works in New Hampshire, why not elsewhere?

This is a refrain that can only come out of a mouth of someone who hasn’t been in a three year old home which has gone into default, the home has been owned by uncaring people, the rugs stained, the appliances and furniture taken with the former owners, and during the repo period, neighborhood kids stoned all the windows and took a dump on the floor in the bathroom. They missed the hopper.

I’ve been in those homes, often located in a community with very substantial home vacancy and the owner just loves those substantial, frequent rent increases. So why does it all work in New Hampshire and a few other states as well even without real estate titling? The key to low frequency and severity hinge, on several factors:

  • High home values in conventional housing in the area
  • A relatively tight area housing market
  • A home placed in a community with low vacancy
  • Landlords/community owners who exercise rent increase restraint or rent control
  • Low numbers, if any, of community-owned homes

New Hampshire has most of these factors. Take away the vaunted “real estate” designation and do you think the MH market in New Hampshire would noticeably change. I think not.

Alternately, go to rural Alabama or Mississippi and go into some of the typical communities there, which do not share the factors above enumerated and do you think that real estate titling will change anything? “Hot damn, my trailer just became a mansion by the new law passed,” said Johnny Hayweed. All I can say, is if passing a law which says that chattel is real estate is all that is needed to correct frequency and severity, bring it on! Do you really think that is the answer?

From the recollection I have of dealing in New Hampshire financing years ago, the process was more onerous than a simple chattel loan for whatever that means. On the positive side real estate financing brings with it a number of borrower protections that pure chattel transaction have not always enjoyed. I’m not sure that with all the Alphabet Laws plus Dodd-Frank that protections on pure chattel transactions are now lacking.

But again, it doesn’t really matter whether this move has any particular merit or not, get your throat ready for the shove-down, its coming. And who is pushing it? Why the aforementioned non-profits, especially the Ford Foundation and its many allies. You know, the people the industry has failed to engage and who are now calling the tunes. Wake me when it’s over.

For the record, I still own a manufactured home community, remain comfortably retired, but keenly interested in the manufactured housing industry. And I still get an occasional consulting and expert witness assignment. ##

(Photo Credits: Supplied by Marty Lavin)

(Editor's Note: As with all of our Industry Voices guest articles and other featured articles, the opinions expressed are those of the the writer, or in this case, of Marty Lavin, JD, who thoughtfully and candidly replied to each of our questions. A careful look at Marty Lavin's thoughts will reveal that this is not pure 'doom and gloom,' as he points out exceptions to the rules that he has witnessed. We at MHProNews.com welcome posted comments or reply columns on this article and encourage similar or differing points of view. You may submit a guest column with the usual editorial guidelines to us by email. Use the words Letter to the Editor or Industry Voices Guest Column in the subject line to: iReportMHNewsTips@MHMSM.com or latonyk@gmail.com Be sure to ask for a message confirming your submission, thank you.)