November 16th, 2011 2 comments
Dick Moore's Industry and Finance Perspective
Well, it seems that I struck a nerve with our friend up East. He mostly disappeared for a couple of years, quit writing his newsletter, and went dormant. I figured maybe his conscience was bothering him, after the spin he put on our industry.
Now I see a new post from our buddy in “Industry Voices,” the guest platform on Tony Kovach’s e-zine MHMSM NewsLine (MHMSM.com = MHProNews.com), wherein he goes on and on about me in a general mis-representation of my writings. I certainly never opinioned that he had powers akin to Superman. He did, however, invent some mystical losses derived by using losses from Brigadier, Conseco, and other lenders who did not know or understand how to buy MH paper. He then reported those loss figures to Fannie Mae & Freddie Mac, keeping them out of the (Manufactured Housing) markets.
This lack of competition had a negative impact on the other lenders that were still major players in our industry.
He admitted to me in Louisville one year that he was an “attorney” and was being “paid” by Fannie to advise them. He later denied all that, but everyone knows the credibility of lawyers and politicians. After all, who else gets “paid to have an opinion”?
My ex-neighbor was a college professor who taught business
administration at Memphis State University. After listening to his
many goofy ideas and theories, I realized the source of the old adage “If you can’t do it, teach it.” If you were a failure in the finance business, then go out and advise others how to do it!
The Mortgage Industry produced paper much worse than the MH
industry ever dreamed of, and that was the paper that our friend
advised Fannie to buy (instead of MH paper). Fannie’s losses are the worst losses the United States has ever endured, and it continues still. (How good was that advice?)
It is easy to measure or analyze a situation the way you
want it to look – just choose the measuring criteria needed
to give you the end result you want and ignore any thing
The MH Industry (its survivors) remains the only low-cost housing that is un-subsidized. Just because less qualified people enter the business and lose money from their poor business decisions does not equate to a ‘subsidy.’ Maybe our friend does not know or understand what a subsidy is. He sounds like Obama explaining the debt ceiling and how someone else created it.
I’m sure there will be another argumentative letter, but I have work to do and do not have the time to continue with fruitless exercises in writing.
This industry and its recourse lenders fared well and made good money from the 50’s to the 90’s, with no taxpayer subsidies.
This industry faces a number of problems, with the main one being lack of financing. The lenders and the learned professors of the industry like to blame the dealer for all the woes. True, we have had some bad apples in our business, just like every other industry. But the level of damage from that kind of dealer falls way short of the debacle we as an industry are paying for now.
One major issue our industry faces concerns resale values of our houses, which directly affects the lender’s recovery on defaulted loans. We as dealers have very little influence in that arena.
Many MH Communities will not accept houses over 10 years old; lenders will not finance homes over 10 years old. Somehow, when the house hits its 10th birthday, it suddenly is worth ZERO!?!?! And this is the dealer’s fault?!?!
When free enterprise existed in this country and banks lent money to their dealers with recourse, our industry performed well! Lenders were selective about who they would take on (based on the dealer’s financial condition and track record in the community), the dealers would take care of their funding pipeline by not sending them dead-beats (since the
dealer would have to repurchase if the loan fell out), and the dealers were paid endorsement fees for this guaranty. The dealers worked to re-sell the bank’s repos with good unpaid balances, and the paper overall performed quite well. It was that performance that led to the influx of the non-recourse lenders that we saw in the 90’s.
Long-gone lenders such as Bombardier, Conseco, Greenpoint Credit, BAHS, et al, saw the performance of recourse lenders’ portfolios, due to good resale values on houses sold under recourse agreements, and made the mental jump to they can do that too! Soon tactics such as withholding of proceeds and diverting rate spread and the odd-days’ interest into non-interest bearing reserve accounts became the norm from the lenders, at the expense of their MH dealer network.
In their headlong rush for gold, they also opened the funding gates to credit buyers who (like in today’s meltdown) had NO reason in their track records to get approved for loans at low rates and low down payments.
So, they kept the endorsement fees, put that rate spread into a reserve account for repossessions, and bought non-recourse.
Their inability to manage the repos, refurb and re-sell them (as the recourse lender/dealer relationships had done) created massive losses for them. Again, I fail to understand how this is the dealer’s fault.
President Obama is railing against corporate jets, while flying around on the most expensive jet in the world. The tax deductions on all the corporate jets in the US would not pay for Air Force One. Is this leading by example or “Do as I say, not as I do?”
Good leaders lead by example. They don’t accept favors from lobbyists and major contributors to their re-election campaigns, and they don’t spend the taxpayers’ money recklessly.
The crash of the housing/mortgage industry was caused by Fannie Mae and Freddie Mac, which is govt. money invested into private enterprise, wherein all the profits go to the cronies of powerful govt. people, but the risks and losses go to the taxpayers. # #
post submitted by
R. C. “Dick” Moore
Categories: Uncategorized Air Force One, argumentative letter, bad apples, Brigadier, business, concerns resale values, conscience, Conseco, corporate jets, credit buyers, debt ceiling, defaulted loans, e-zine mhmsm newsline, end result, endorsement fees, et al, expensive jet, Fannie, fannie mae, finance business, financial condition, freddie mac, Free Enterprise, fruitless exercises, funding gates, funding pipeline, general mis-representation, Good leaders, good money, good resale values, good unpaid balances, Greenpoint Credit, guest platform, headlong rush, industry, industry voices, lenders, little influence, Long-gone lenders, loss figures, low rates, low-cost housing, main one, major contributors, major issue, major players, Many MH Communities, massive losses, mental jump, MH dealer network, MH industry, MH paper, mystical losses, negative impact, nerve, new post, NO reason, non-interest bearing reserve, non-recourse lenders, old adage, performance, poor business decisions, powerful govt, President Obama, private enterprise, rate spread, re-election campaigns, recourse agreements, recourse lenders, Repos, resale values, reserve account, Superman, tax deductions, taxpayer subsidies, taxpayers, Tony Kovach, track records, United States, worst losses