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DÉJÀ VU AGAIN? A New Manufactured Housing Institute (MHI) Initiative

February 16th, 2017 No comments

A New Study

I like to say to myself “If you live long enough, you’ll see it all.”  I have now lived long enough to see a second MHI effort to do “major consumer research” to “profile the housing needs and opportunities for the industry among various underserved homebuyers.” Who can forget the first effort?

Jeepers, I have no heart burn with the stated goal and direction of this initiative.  I think it possibly worthwhile, furthermore, we already have experience along this trail.  In the early 2000’s Drucker Worldwide, who is conducting the current study, was replaced by Roper International, in the first effort.  If the stated goals at that time were somewhat different, what was not different was the goal of gathering information by a consulting firm, Roper, create a report, then present a possible campaign to increase manufactured housing sales.  Sounds good, right?”

The Roper study was to be the linchpin for an industry image campaign.  Surely that was badly needed at that time, and still is.  What remains to be seen is whether the course of this initiative ends differently than the Roper effort, which ended badly.

Timetable

According to the study timetable set forth by Dick Jennison, MHI President, it will be a multi-step process; the study first, then present the research results to the members of MHI to determine “its next step is late-summer” (2017).  I must say that all sounds logical, practical and well-conceived, and very Roper-ish.  So far, OK.

RoperReportDruckerWorldWideMartyLavinManufacturedHousingInstituteMHStudy-PostedManufacturedHomeIndustryVoicesMHProNews628x230

As with all Industry Voices, letters to the editor, and op-ed posted commentary, the writer has provided their own text, while we as publisher created this particular image graphic, using the writer’s words and photo.  Differing viewpoints on this or other industry issues are welcomed.

For those of you out of swaddling clothes by the year 2000, the new study must send a chill down your spine and some involved in the Roper study, like me, might say a few more things.  There might even be a question or two.

Again??

First of all, quoting Yogi, this all seems like déjà vu all over again.  Others might say, we sure had a fun time the last time we did a study but will the result be different this time?  Some skeptics might ask, what has changed so much in the 10-12 years since the Roper study was concluded?  Finally, is the initiative once again the springboard to the fabled “Industry Image Campaign,” or headed to something else?  One wonders.

In view of the history on this thing, it is logical to be skeptical of the entire process.

I was very much involved in the Roper effort, which died an ignoble death, dealt a crushing blow to the industry (from which it hasn’t recovered), supposedly couldn’t be afforded financially then, and the industry condition seems even weaker now.

I would question, what is the goal of the initiative in terms of advancing the stated aim?  After all, when you find out from the public that the MH industry is the least liked industry Roper ever studied, where do you go from there?  And, what has changed since Roper reported these facts to MHI membership?

  • Have fewer communities closed since Roper, putting their residents on the street?
  • Have rent increases in communities been muted?
  • Has financing the home purchase become easier since Roper time?
  • Have loan interest rates decreased substantially on new MH home purchases?
  • Does the news media paint any glowing MH articles other than the standard “man have you seen those new trailers lately? They are gorgeous!”  I’ve been observing that one since 1972, with little positive response form the buying public, except during periods of loose/defective retail financing.  Too many sure went wild with that one.

Remind the swaddling-clothes-set that the last industry top in 1998, which saw 373,000 HUD Code homes emerge from our factories, led to the present incapacitated condition of the industry.  Heavy defaults erupted thereafter, leading to the disastrous industry meltdown which saw many portfolios lose all value.

It wasn’t covered in “The Big Short,” but bankers/lenders and government regulators paid scant attention to the MH debacle which could easily have predicted the lender use of the MH lending style on site-built single family homes was likely to create the same result as that which occurred with those highly distressed HUD Code portfolios. Oh, mama!

Yes, the results were similar in site-built mortgages, EXCEPT, that lending there is so much greater in volume that the only similarity was in the results.

MH Ugly and No Apology

Repossessed homes, financial distress, broken families, children leaving their familiar school, moving in with relatives or to a homeless shelter, loss of home, and huge, and I mean huge lender/investor/government losses.  No one paid attention to the MH meltdown, and too little was learned little from it. And no one apologized.

MHI has a mission to assist the MH industry to prosper.  Growth is certainly a key component of that mission, and if we are in a slight upward hump in sales now, in comparison to our pre-1998 performance, we are but a shadow of our former selves, down by 75% or so.

So why am I bothering to write this piece when my MH activity today is almost exclusively as an expert witness for law suits?  I’m asking myself the same.  But, I greatly fear we are in a glide path to Roperville II, the study-hard, but no-action paradigm of the last effort and various other MHI efforts.

Again, note that all the Task Force initiative participants, save two, are from homebuilders, again similar to the Roper event.  After all, having spent the money on the Roper study, when it came time to pony up the $17.00 to be added to each home section’s invoice built at that time, there was no buy-in from the builders.  To this day I wonder how the builders thought MHI was going to fund any image campaign if most of the money was not coming from a fee added to each home section’s invoice.

And so when the builders didn’t bite, or at least most of the important ones didn’t, the entire Roper effort fell flat on its face.  Great and expensive dog food, but when put down, no dogs ate it.

My Roper stuff went into hibernation in my stand alone hard drive, and there it sits, lonely, still wondering whether it could have done for us what the RV guys and gals accomplished with their GoRVing image campaign.  During the Roper initiative, we had a large joint meeting with the RVers, and they recommended we move forward in the quickest term, with our image campaign.  The RVers all said they’d be on their asses had they not moved forward.  As an industry, we are a little thin on accepting good advice.

Right Course/Wrong Course

In my mind, MHI, for which I worked very hard for 20 years to advance industry healthy, seems under attack lately.  Further, they continue to posit that the health and growth of the industry lies primarily in hat-in-hand visits to various government divisions.  The Duty to Serve/GSE initiate seems for the moment the Holy Grail for the industry.  A great deal of time and effort has been directed there.  At least the current Drucker Study is away from that direction, and for that I think it makes sense on some level.

Parenthetically, I might suggest MHI spend a great deal more time and effort in pushing the Section 8 program to help individuals to buy their HUDs.  I have believed this for years, ever since a very highly placed GSE person said at one of my industry meetings, “The industry needs to find a way to help so many of your financially fragile clients buy their MH with government help.”  After all, why pay Section 8 to rent a rat crap apartment, when instead these same folks could buy their shiny, new MH with Section 8 help.  How much better than an apartment rental is that?  A lot.

Task Force

Some industry builders in the Drucker Study are people known to me.  I like them and they are intelligent folks.  But, one concept that emerged from Roper is a deep seated belief in the industry that you don’t do anything to help your competition, even if it might help you.  And it was obvious in the Roper effort that the “don’t help competition” was alive and well in the final decision to let Roper die peacefully. And some held that adding even an extra dollar to the invoice could destroy the industry!

I strongly suggest that as this effort proceeds forward, if it does, MHI determine two things quickly:

  1. Are builders willing to take important actions to help the industry as a whole even if their competitors will benefit?
  2. How will this be financed and paid for should it move forward?

I know Mr. Jennison wants to show the MHI membership he is taking bold moves to help the industry, especially as he seems somewhat under attack recently.  But the last time the Roper Study cost some $250,000.00, or thereabouts.  Money the industry didn’t have.  How much will be spent now, and where is it coming from?

I want to avoid seeming negative on this whole Drucker thing, but that is the problem with old age.  When young and I saw a ball bearing rolling across a table I wondered whether it would hit the ceiling, walls or floor.  I didn’t know then.  Well, the ball bearing always hits the floor, I know that now.

Please, please

A final plea to MHI. The Roper initiative saw a final meeting where Roper presented some thoughts on the direction of the proposed media campaign, with actual T.V. ads.  This is what Roper did for a living.  Not infallible, but still they are the experts.

The meeting descended into enumerable people complaining loudly about the projected ads. They had far better ideas!  Individuals who spent lots of time widening their asses seated in lender’s chairs and others who spent their days walking dusty lots in white shoes and gold chains at sales locations suddenly became Doyle Dane and Bernbach, the international advertising network.

Please, please, if you get to the point that some sort of campaign is warranted to move forward, do not allow a room of 200 people screaming at the proposal.  Keep it in a tight group, such as the task force.  Let them make the decision.  Democracy is not a good application to this process.  It needs benevolent dictators. ##

marty-lavin-posted-on-mhpronewsBy Marty Lavin, JD.
350 Main Street
BURLINGTON, VT 05401
att’y, consultant, & expert witness
only in factory built housing
 

 

Dare’s 3 Point Plan for Manufactured Housing Industry Recovery

June 29th, 2016 No comments

TitusDareSVPEagleOneFinancial-PostedIndustryVoicesMHProNews-com-With apologies to MH Industry legend Randy Rowe and his 5 Point Plan for Industry Recovery – which is insightful and important reading – let me

suggest that what the Industry needs is a foundation that’s built upon a simple three point plan – which is really a 1 point plan – and everything else is a subset to that basic necessity.

Ready?

Education, Education, Education

James McGee and Chet Murphree said it very well on a video, its all about education. That’s sounds so simple, but they were correct, and its so true.

What keeps more lenders from entering the manufactured housing market? Education.

What does and has Triad Financial done so successfully for years to bring more lenders into the manufactured housing space? In a phrase, they’ve educated bankers and credit unions to the realities of modern manufactured homes.

The Three Forms of Education needed for MH Industry Recovery are these:

1) Public Education

Consumers must be exposed – educated – about the product.

This can happen at events, online, at a retail center, community, factory, visiting a friend’s manufactured home, etc. The more the public is educated, the better they understand our product and the more they will buy it.

The secret sauce for manufactured housing success is to attract and sell more credit worthy buyers, which in turn will cause the stigma to subside. As more millionaires and the mid-to-upper middle class buyers purchase a new manufactured or modular home, the more success the industry will enjoy in selling the entry level market that no one but manufactured housing can successfully serve without serious public subsidies.

EducationIsAKeyToProfitablyAdvanceManufacturedHousing-TitusDare-imagecredit-MHProNews-com

Editor’s note – All images on this page, save Titus’ photo, are provided by MHProNews.com as illustrations for his message, and were not sent by the author.

2) Outside MH Professional Education

Want More Lenders? Be it the GSEs, or others, education – not a sales job, education is at the heart of what’s needed. Educate them on how the existing industry lenders do it successfully. Do what Don Glisson’s team has done, or what I’ve been a part of doing in MH for many years.

Some 80% of HUD Code MH sales make appraisal, so 20% of potential sales don’t meet appraisal.

Want more appraisers to give better appraisals on manufactured homes? Then, you better help them get their arms around the nuances between the upper end homes and the entry level homes, underscoring the point that they are all built to the HUD Code and are safe, durable and energy efficient. Educate them!

Want more public officials to say yes to manufactured housing? Educating the public, and creating their demand for the product – while also educating local, state and national officials – educating each of those groups are essential. Each must be educated uniquely, but each form of outreach should take place at the same time.

Want more developers, Realtors ® and other housing professionals to embrace manufactured homes? Isn’t that also about education?

Make no mistake about it – the industry has to reach out to a myriad of other groups and professionals if it is to achieve its potential. But the rewards will be worth the effort.

Inside MH Professional Education

To sell more of the upscale buyers, and to convince more public officials, mainstream media etc. – all of those are educational efforts, that requires better motivated, informed and yes – educated industry professionals.

Some in the industry are truly forward looking. Others are hoping for a return to Conseco and Greentree days. The later won’t happen and wouldn’t work for long if it did.

For the Industry to attract new capital, we must prove we are educated enough ourselves to be thinking about ways so that everyone in the mix will benefit and win.

The win-lose days are over.

Further, you don’t usually sell a millionaire the same way you do that customer who can just barely qualify for the least expensive entry level house. You have to approach every prospect based upon their unique needs, wants, world view and expectations.

All of that and more are a matter of training, of education.

What Won’t Work

What’s clear is that manufactured housing endured over a decade of downturn, followed by a modest roughly 6 years of recovery.

We may have the best product ever, but what attracted those new lenders in the past and what attracted developers and other housing professionals to MH before was what appeared to be the opportunity to do volume and to do it in a profitable way.

MH was once one out of every 4 new homes hooked up to electrical service in the U.S. Today, its a fraction of that total.

We can’t tilt at windmills, we can’t cry over split milk, but we can learn our lessons. That learning…is education! So we can begin to educate our way back to success.

4S=SafeSoundSanitarySustainable-postedIndustryVoicesMHProNews-com-

In case you missed it, click the link above to see Titus’ original column on MHProNews.

Every step of what it takes to be successful in lending, which is critical for the advancement of this or any other big ticket industry, must be connected to those 4S I mentioned in my first column.

The news is breaking as I’m writing this today that YES! Communities is being pursued on a 2 billion dollar potential buyout. Whatever happens on that deal, we know that several billions in MHC transactions have already taken place in the last year. That tells us what we already know.

Manufactured housing has demand, because affordable housing has demand.

What did Frank Rolfe say on that video? People hate their apartments. Rolfe and his associates are growing because they understand a key aspect of affordable housing. Price and payment sells!

Exaggerating to make the Point

In truth, education, education, education is a key.

But there are subsets to that, where experts in lending, in developing, in production of HUD Code and modular homes, in proper installations, in safe transit, insuring, supplying, associations, legal minds and other experts all play a role. So I’m exaggerating education a bit to make the point.

Over the years, at educational events I was part of to promote manufactured housing lending and manufactured housing as the ideal source for affordable housing for potentially millions of people, I had the opportunity to meet all sorts of Industry pros.

I’ve mentioned Don Glisson Jr. and Rick Rand, but there was also the Claytons, Dan Rolfes, Lad Dawson, Marty Lavin, Dick Ernst, Phil Surles, Joe Stegemeyer and so many others I could fill this page with their names. Each one brought certain qualities to the table.

That’s what must happen again – bring together the best minds, to educate – and education is the best form of promotion that manufactured housing could possible offer for the future.

Is there more to do than educate?

You bet, and with Tony okay to publish it, I’ll gladly share that in a future column too. Let’s note that Tony and his team and sponsors have already started this educational ball rolling on MHLivingNews – educating the public and public officials, and on MHProNews by sharing the insights, interviews, comments, news and opinions that so many have on these pages over the years.

End the Fear, and the Growth Will Follow

One piece of the advancement puzzle is ending fear. Education overcomes the paralysis of fear, or the no that fears cause. State or national associations clearly have many potential roles to play.

Come on in the water is fine” won’t work when trying to get the FHFA, GSEs or anyone else to come to the manufactured housing table on doing long term chattle-style (home only) mortgage lending.

As a career banker and a true believer that MH can, and will, solve our housing crisis in America, I ask each member of this great industry to pull together and refocus the efforts of the industry on education, education, education for the next 3 to 5 years. I believe the results for the MH industry and all those involved will be astounding. ##

(Editor’s note – the headline was written by MHProNews, the contents of this message were sent to us by the author; we note that so that readers don’t get the impression that Titus Dare named himself in the headline! 😉

TitusDareSVPEagleOneFinancial-PostedIndustryVoicesMHProNews-com-By Titus Dare
Senior Vice-President
EagleOne Financial, Inc.