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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. ##

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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!)

Most Manufactured Home Lenders Facing Major Changes Revenue Cliff for Some; Business As Usual for Others

October 10th, 2013 No comments

Wall Street calls this a “revenue cliff.” A sudden drop in cash flow. Dodd-Frank regulations that are set to take effect in mid-January 2014 will result in major changes in guidelines for most of our industry’s major Manufactured Home (MH) personal property lenders.

Among the non-captive lenders, the hardest hit will likely be 21st Mortgage Corp. This lender is expecting a decline of up to 47% in loan volume.

MH Retailers who rely on 21st Mortgage should brace for a sudden revenue loss of 50% – 75% including overall loan volume and an adjustment in origination fees.

This will be devastating for many.

An informal survey of our four credit facilities who primarily bankroll the MH chattel financing aide of the MH industry has revealed major changes expected by most, and business as usual for one lender.

Our lender headquartered in San Antonio, CU Factory Built, is at present reviewing their loan products and origination fee policies. Committees have been assembled, reviewing the new regulations and their guidelines.

Informed industry sources tell MHProNews, who advised us, that CU’s very popular “Step Rate” loan product will likely remain intact, surviving the new regulations.

However, this lender’s origination fee schedule could be cut by up to 50%, more closely resembling the origination fee guidelines of their competitor, Triad Financial Services. The final outcome is yet to be determined.

Thus MH reatailers and loan officers who rely upon CU as their primary lender need to brace for a “revenue cliff.”

Our office has learned that Triad, based in Jacksonville, FL, is expecting “business as usual.” Apparently their loan products and origination fee guidelines have been in compliance with the expected changes in regulations.

Our industry’s other major lender, US Bank, with their regional office based in San Diego, is being very tight-lipped about any changes. Their spokesperson recently declined to comment to us.

The anticipated changes in loan products and origination fees will impact everyone in the MH industry. As loan brokers, quite a few of our employees will be devastated.

Analyzing the changes at this juncture is like shooting a bullet at a speeding train. The best advice we can give you is to dig in and redouble your efforts in support of HR 1779 and related.

If each of us contacts our Congressional Representative and two U.S. Senators in favor of HR 1779 and its planned companion bill, there is still time to avoid this fiscal/financial cliff our retailers and communities who sell are heading towards. ##

dave-shanklin-mhmsm-com.jpegDave Shanklin
Loan Consultant
Empire Homes, Inc.
Santa Rosa, CA
800 – 401 – 3372
NMLS ID # 314463

(Editor's Note: All views expressed on MHProNews are those of the author, and may or may not represent those of publisher or our sponsors. We recommend that you contact the representatives of the lenders you work with and see for yourself what they expect. Take Action! You may also find this related article of interest.)

Manufactured Housing Institute and Consumer Groups Urge CFPB to Change Loan Originator Guidelines; Support Builds for H.R. 1779

September 15th, 2013 No comments

In a communiqué to MHProNews, MHI's Vice President of Regulatory Affairs, Jason Boehlert shared the following report to Industry members.

MHI and Consumer Groups Partner to Revise CFPB Rules

On September 5th, MHI joined with a coalition of consumer advocacy organizations, including the Center for Responsible Lending (CRL), Corporation for Enterprise Development (CFED) and National Consumer Law Center (NCLC), to jointly urge the Consumer Financial Protection Bureau (CFPB) to amend key mortgage finance rules and preserve access to credit in the manufactured housing market.

Since May, key MHI members and staff have been working with representatives of these three consumer groups to develop a compromise on rules related to loan originator compensation and classification, and HOEPA High-Cost Mortgage triggers – issues that are addressed in the Preserving Access to Manufactured Housing Act (H.R. 1779).

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Negotiations have been taking place through the assistance and participation of majority and minority staff of the House Financial Services Committee and Senator Sherrod Brown, who serves as Chairman of the Senate Banking Subcommittee on Financial Institutions and Consumer Credit.

As a result of the negotiations, MHI and the three consumer organizations have agreed to jointly ask the CFPB to clarify and amend its rules in two key areas:

Loan Originator Compensation — for purposes of classifying a manufactured home retail salesperson as a Loan Originator, urge the CFPB to better clarify that as long as no incentive is provided or offered by the retailer or the lender to the individual salesperson to steer the consumer to a certain lender or loan product, then the salesperson should not be considered a Loan Originator.

While the CFPB has issued recent rules removing the manufactured home sales price and any sales commission paid to a sales person from points and fees calculations, an individual salesperson can still be classified as a Loan Originator by performing certain activities (i.e., taking an application, and referring a consumer to a lender). This activity would then classify the retailer as a mortgage broker. Both designations carry significant requirements and liabilities, most notably supervision by the CFPB.

HOEPA High-Cost Mortgage Triggers — consumer organizations have agreed to join with MHI in urging the CFPB to reopen its previous final rule on HOEPA. As a result of the significant dialogue that has taken place between the two sides, the consumer organizations have agreed that a significant reduction in access to credit would result in January 2014 (when the rule goes into effect) for the manufactured housing market unless the CFPB modifies the High-Cost Mortgage triggers. While the two sides have not agreed to a specific number, the willingness of the groups to push for the CFPB to reconsider their prior rulemaking is significant.

MHI and the consumer organizations will continue to meet with the CFPB on a joint basis in September on HOEPA issues. Pursuing a strategy of engagement with consumer groups provides the industry the opportunity to underscore the broad impact of CFPB rulemaking on consumers and the industry. In addition, it will provide a more rapid resolution of the industry’s concern when compared to a potentially protracted legislative battle over reopening the Dodd-Frank Act.

However, it is important to note that as the industry gains ground with the CFPB and the consumer groups, Congressional support for the H.R. 1779 continues to build.

Co-Sponsors to H.R. 1779 Grow

During the month-long Congressional recess, more than 20 U.S. Representatives added their names as co-sponsors to H.R. 1779. Currently, nearly 70 Representatives have co-sponsored the measure and support continues to grow. MHI thanks its members and the national network of state associations for their hard work in urging Representatives to co-sponsor this important legislation (to view a current list of co-sponsors, click here).

As has been previously mentioned, provisions of H.R. 1779 were included in GSE reform legislation (PATH Act; H.R. 2767) that was approved by the House Financial Services Committee and MHI staff continues to work with committee staff to seek an opportunity to move the legislation separately.

While the CFPB has provided some key relief in recent rulemakings to the manufactured housing industry – with respect to appraisals and the calculations of points and fees – work still remains to be done to amend HOEPA triggers and the Loan Originator definition to better represent the needs of the manufactured housing market. Absent regulatory relief, statutory change is necessary.

The industry is asked to continue its outreach efforts to U.S. Representatives. Urge them to co-sponsor H.R. 1779. For more information, click here to access MHI’s action alert. ##

jason-boehlert-mhi-manufactuired-housing-pro=news-.pngJason Boehlert
Manufactured Housing Institute (MHI)
Vice President of Government Affairs
1655 North Fort Meyer Drive
Suite 104
Arlington, VA 22209

MHI members can contact Jason Boehlert at jboehlert@mfghome.org or (703) 558-0660.

(Logo image credits to their respective organizations. Photo credit of Jason Boehlert, MHProNews.com)

(Editor's Note:  Consumer groups did NOT in fact get on board for HR 1779, as we editorially observed in this blog post here.)