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Posts Tagged ‘manufactured home loans’

Don Glisson Jr. – CEO of Triad Financial Services – on Dr. Ben Carson for HUD Secretary

December 12th, 2016 No comments

We at Triad Financial Services are hopeful that President-elect Trump and soon-to-be HUD Secretary, Dr. Ben Carson, are committed to sensible regulation for manufactured housing and home lending.

As the leading independent lender in the manufactured housing industry, we have seen many regulatory challenges during our 50+ years of serving manufactured home buyers. We are very proud of our extremely low customer complaint rate, and have always had a robust compliance program.

We have always played by the rules and taken a conservative approach – which is one reason we have survived for so many years – along with having a stellar regulatory track-record.

Against that backdrop, the past 8 years have brought us regulations that have burdened our company and increased the cost of lending to our borrowers who can least afford it. We cannot see how many of these new rules and regulations are doing anything to protect the borrowers.

We are NOT in favor of “no regulation,” as we have seen the results of irresponsible lending in the past.

But regulatory overreach has driven several fine lenders – U.S. Bank for example – out of this industry, which means the consumer has FEWER choices.

Inflexible and line-in-the-sand regulations – like the 43% maximum debt ratio that applies to Ability-to-Repay (ATR) – don’t take into account, for example, that a person making $10,000 per month can afford a 45% debt ratio – due to disposable income – while a person making $2,500 per month cannot.

DonGlissonJrTriadFinancialServices-quoteFinanceRegulationsNotLogicalExample-MHProNews-

Is it fair that someone with a 42.9% debt ratio is approved for a loan, but someone with a 43.1% debt ratio is denied?

What about considering where the potential borrower lives? A person in Florida pays no state income tax, but a resident of California pays state taxes as high as 12%.

Again, we are all for sensible regulation and would loathe a “Wild West” marketplace where lenders can run roughshod and take advantage of the consumer.

But regulations that do nothing to protect the consumer and erect hard-and-fast rules – with no room for making exceptions – have harmed and will continue to harm this industry, home owners and potential buyers.

As the CEO of the largest independent finance company in our industry, I look forward to working with Secretary Carson and his staff to help them understand the unique challenges that lenders and borrowers face today. ##

Don Glisson, Jr.,
CEO, Triad Financial Services, Inc.
Past Chairman of the Manufactured Housing Institute (MHI).

(Editor’s Note: Parts of this commentary by Don Glisson Jr. are found in an examination of the controversy of Dr. Ben Carson being named by President-elect Donald J. Trump for the role of HUD Secretary; to see that article, click here.)

BenCarsonControversialPickHUDSecretaryManufacturedHousingCommentaryMHProNews

Conventional Housing, not Manufactured Housing, caused the meltdown that gave us Dodd-Frank and the CFPB

July 24th, 2015 No comments

The situation that led to Dodd-Frank, the Safe Act and the CFPB had virtually nothing to do with manufactured housing. That meltdown in housing in 2008 that led to Dodd-Frank was caused by poor conventional ‘on-site’ house lending. Yet we in MH got dragged into it by a reactionary regulatory response by the government.

As a result, the most common method of selling our homes to consumers (as personal property) has been regulated so hard, that even local lenders, not just big U.S. Bank, have pulled out. It appears that the way the government has decided to “protect” consumers from so-called “predatory lending” is to make it impossible for them to get a loan.

Our homes were already the most regulated form of housing in the history of mankind largely, because policy makers just don’t understand our product or its benefits to millions of consumers.

S 682 will allow the consumers that need the affordability offered by our homes reasonable access to financing that fits the needs of their family. It will save them over rent. We see this reality in our business, at the ground level, rather than some non-profit group’s office that claims to speak for consumers. ##

onManufacturedHomeRetailerTX-IndustryVoicesMHProNews-com-Jody Anderson
MH Retailer, Texas

 

 

(Editor’s Note: This is one of several posted comments that have doubled in the last 12 hours on The Hill’s Congressional blog.  It is reprinted with permission.  Please see Ross Kinzler’s blog post, and then comment yourself on the post linked here.)

http://thehill.com/blogs/congress-blog/economy-budget/248665-regulations-for-manufactured-home-loans

As an FYI to those ‘tracking’ the comments, please scroll to the bottom of the comment section every time.  The Hill’s comment section has no discernable pattern on where the comments are posted, unless they are a reply.  The most recent comment is not always ‘at the top’ of the other comments.  MHProNews wants to thank and commend all of those who’ve already take 5 to sound off on this highly read Washington DC blog for their pro-MH financing efforts.)

EZ! Virtually Charging “The Hill” for more Manufactured Home Lending

July 24th, 2015 No comments

The Hill is a newspaper and blog read extensively on Capitol Hill.  This week L.A. ‘Tony’ Kovach was invited to post an article about manufactured housing.  He laid down a great defense of the industry and its lending practices in response to all of the consumer group complaints.

We invite you to read the blog and post your own reply.  The more industry members add to this article the better.

http://thehill.com/blogs/congress-blog/economy-budget/248665-regulations-for-manufactured-home-loans

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RossKinzlerWisconsinHousingAllianceExecutiveDirector-IndustryVoicesblogManufacturedHousingProfessionalnews-MHProNews-comRoss Kinzler
Executive Director
Wisconsin Housing Alliance

 

(Editor’s Note – Ross is a leader who first takes his own advice.  Mr. Kinzler has posted a fine comment on the topic, and others in MH have followed suit.  Be it a short or longer comment, make your voice heard on this issue, please.  If you want more MH lending, if you want to help those MH owners harmed by the CFPB’s regulations, sound off where the DC media, Congress, staff and policy advocates read.

Then, forward the link above via email to your Senators and Congressman, with a thank you for their support)

 

MHI 2013 Annual Meeting Recap

October 10th, 2013 No comments

IMHA Executive Director Mark Bowersox attended the Manufactured Housing Institute’s (MHI) annual meeting held September 28 – October 1 in Carlsbad, CA. As with most recent industry meetings, speakers and conversations at the event were focused on the impact of the Dodd-Frank consumer protection legislation and reforming the CFPB’s upcoming regulations. MHI and other industry representatives continue to work with the CFBP on three key areas:

Exemption for manufactured housing appraisal requirements

Based on the most recent rules issued by the CFPB loans on all new manufactured homes, regardless of whether or not they included land, are exempt from the appraisal requirement. Loans on existing manufactured homes, not including land, are also exempt from the appraisal requirements. Additionally, all mobile homes (pre-HUD code) home loans are exempt. The CFPB’s rule solidifying these exemptions is still pending. When finalized the rule will go into effect in January.

Key rule clarifications and exclusions

Loan originator compensation guidelines issued by the CFPB this summer provide the industry with key exclusions from the points and fees calculation that lenders must perform and clarifies certain activities that retail sales staff can engage in without being defined as loan originators.

Manufactured home sales price is excluded from the points and fees definition and does not have to be included in calculations performed by lenders unless a creditor has knowledge that the sales price includes compensation for loan origination activities.

 

Retail sales commissions paid to employees is excluded from points and fees calculation requirements unless the salesperson is receiving compensation from a lender for loan origination activities.

According to MHI, activities that do not classify a retailer or its sales personnel as loan originators include:

  • Providing or making available general information about creditors and loan originators that may offer financing for manufactured housing
  • Gathering or collecting supporting information or documentation on behalf of a consumer for inclusion in a credit application
  • Providing general credit application instructions so that a consumer can complete it themselves
  • Financing the sale of no more than three homes in a year.

Activities that will make a retail employee be considered a loan originator include:

  • Filling out a credit application for a customer
  • Discussing particular credit terms with a customer
  • Directing or influencing a customer to select a particular lender or creditor

MHI continues to seek from the CFPB to provide further clarification on what activities retailers can engage in without being defined as loan originators.

MHI is still working with the CFPB and various consumer interest groups on the need to revise the upcoming High Cost Mortgage Loan triggers for manufactured home loans. IMHA will continue to be engaged on this issue, along with MHI and other interested parties. ##

mark-bowersox-imha-posted-industry-voices-guest-blog-mhpronews.com-75x75pxl-.pngMark Bowersox
Executive Director
Indiana Manufactured Housing Association
Recreation Vehicle Indiana Council
3210 Rand Road
Indianapolis, IN  46241

(Editor's Note: You can find more info on the LO Comp Rule and HOEPA from DJ Pendelton's article published in the Industry In Focus Reports module, linked here.

 

You can also find Mark Bowersox's “It's Now or Never” featured article, linked here. )

Action Alert: Don’t Let Lending for New Homes Dry Up on January 1, 2014!

June 12th, 2013 No comments

IN A NUTSHELL: If we do not get legislative changes this year, loans for home buyers could be EVEN LESS available afterJanuary 1, 2014.Yes, it can get even worse if we do nothing. Please help us by doing two things

1. Contact your Member of Congress to express your support for H.R. 1779 (information is below).

2. Please go to cosponsor.gov(http://cosponsor.gov/details/hr1779-113) and express your support for H.R. 1779 (you need to have a Facebook account use cosponsor.gov).

BACKGROUND: We have encouraged VAMMHA members and others who read this to contact members of their Congressional Delegation to ask them to cosponsor H.R. 1779. Members in the 5th District of Virginia are encouraged to contact Congressman Robert Hurt (who has already agreed to cosponsor the bill) to thank him for his support.

Here is what this issue is about: Reps. Stephen Fincher (R-TN), Bennie Thompson (D-MS) and Gary Miller (R-CA) have introduced thePreserving Access to Manufactured Housing Act(H.R. 1779).

The measure would amend provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act that would otherwise curtail the availability of credit needed by those seeking to purchase manufactured housing if action isn't taken..

Specifically, the bill would revise the High-Cost Mortgage triggers for manufactured home loans, and make clarifications to the Loan Originator definition as it applies to manufactured home retailers and salespeople.

These two areas of the law—which are scheduled to become effective January 2014—would substantially reduce lender ability to originate manufactured home loans.

Assistance is needed from VAMMHA members and others within the manufactured housing industry, in contacting their Representatives to request they co-sponsor H.R 1779.

More details are available in thisdetailed issue brief/action alert.

Here is what we need: Please take a moment to contact your House member and ask them to cosponsor H.R. 1779.

To help you out,here is a sample letter that can be faxed or cut and pasted into an email to Congressional offices.

If you need to look up your Member of Congress, please click herehttp://www.house.gov/representatives/find/.

IMPORTANT: Congressman Robert Hurt (5th Congressional District) has agreed to cosponsor this bill. So, if he is your Congressman, instead of using the sample letter, please contact him to thank him for his support.

The following resource information is also available:

Over the coming weeks, Sen. Sherrod Brown (D-OH) is expected to introduce companion legislation in the Senate. Additional information will be provided at that time.

Please be sure to share with us any feedback you get from your Member of Congress. Thank you for all that you do to support the factory-built housing industry in Virginia.

tyler-craddock-executive-director-virginia-manufactured-and-modular-housing-associationTyler Craddock, Executive Director
Virginia Manufactured and Modular Housing Association
8413 Patterson Avenue
Richmond, Virginia 23229
Office804.750.2500
Mobile804.980.1172
Fax804.741.3027
Emailtcraddock@vammha.org

Hearing Explores Government Role in Multifamily and Health Care Facilities

May 22nd, 2013 No comments

Even though this hearing and the Chairman’s quoted comments arise within the specific context of multifamily housing, they nevertheless are relevant to manufactured home financing as they reflect broader thinking in Congress regarding federal involvement in the housing market

Most particularly, the comments in paragraphs 3 and 4 once again confirms what MHARR has been saying all along with respect the failure of the FHA (via GNMA) and GSEs to provide adequate securitization and secondary market support for manufactured home loans and especially personal property (chattel loans) –i.e., that FHA and the GSEs have fundamentally departed from their original statutory mission of providing access to credit for lower-income borrowers and first-time homebuyers. That departure has harmed the very consumers that these entities were formed to serve, as well as the manufactured housing industry as a provider of affordable homeownership, with both FHA and the GSEs refusing to provide high-volume securitization for manufactured home loans – citing “risk” and “perceptions” without any hard data on the performance of current-day manufactured home loans – when it was the ventures of FHA and the GSEs in the “exotic” and subprime site-built mortgage market that led to the insolvency of the GSEs and now the near-insolvency of FHA.

Consequently, even though the availability of high-volume securitization for manufactured home loans – and especially chattel loans – has the capacity to turn the industry around virtually overnight and provide access to truly affordable homeownership for the lower-income borrowers and first-time homebuyers that these entities were created to serve, they nevertheless cling to discriminatory policies that have severely restricted such lending through the FHA Title I program and effectively excluded such loans from GSE support, notwithstanding the statutory “Duty to Serve” mandate. These baseless policies, moreover, have enabled the domination of the chattel finance market by a handful of companies with either pre-existing access to that restricted securitization or independent financial backing, further harming both consumers and the industry.

As this demonstrates, expanding the availability of chattel loan securitization and support to high volume levels must be a top priority for the industry in Washington, D.C.

Given the focus of the current Administration on providing fairness and increased access to home financing for the lower-income borrowers that FHA and the GSEs were created to serve, the industryhas a window of opportunity in the coming months to take concrete steps to correct these flawed policies and expand the availability of manufactured home financing. ##

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Manufactured Housing Association for Regulatory Reform (MHARR)

1331 Pennsylvania Ave N.W., Suite 512
Washington, D.C. 20004
Phone: 202/783-4087
Fax: 202/783-4075
Email: MHARRDG@AOL.COM

 

 

 

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Press Release

 

For Immediate Release
May 16, 2013

 

Hearing Explores Government Role in Multifamily and Health Care Facilities Mortgage Insurance and Reverse Mortgages

 

WASHINGTON –The Financial Services Housing and Insurance Subcommittee continued its examination of the troubled Federal Housing Administration (FHA) today with a hearing that focused on several of the agency’s programs that operate outside its mission.

This was the subcommittee’s third hearing this year examining FHA and the need to reform the agency.

“FHA runs its operations contrary to the most basic principles of insurance and is nearing insolvency, putting taxpayers at risk of another government bailout,” said Subcommittee Chairman Randy Neugebauer (R-TX). “Members on both sides of the aisle strongly support FHA’s core mission of providing access to credit for lower-income borrowers and first-time homebuyers. There still is a general consensus in favor of strengthening and improving FHA, without risking further taxpayer exposure.”

Today’s hearing examined the mortgage insurance programs the FHA operates for multifamily housing, health care facilities and reverse mortgages – all of which are activities that reach far beyond the agency’s original mission. The FHA’s original mission is to provide mortgage financing opportunities for low-income and first-time homebuyers.

Given that the FHA was designated a “high risk” agency by the Government Accountability Office earlier this year, many wonder whether the FHA can viably carry out its original mission, much less these other programs that are not related to its mission.

In addition to insuring single-family mortgages, the FHA also insures other kinds of mortgages—such as those for multifamily rental housing and health care facilities—through a separate insurance fund called the General Insurance and Special Risk Insurance Fund. While this fund is not projected to incur losses in the near term, many are concerned about the role the FHA plays in the multifamily market and that its policies subject taxpayers to undue risk.

Due to a lack of transparency in the GI/SRI Fund, Congress cannot fully assess the fiscal state of the FHA’s multifamily insurance program.

The FHA also operates an insurance fund for reverse mortgages that enables those aged 62 or older to obtain additional income by borrowing against the equity in their homes. To make these mortgages possible, the reverse mortgage insurance provided by FHA protects lenders from losses due to non-payment.

In recent years, as home prices have fallen, many experts have become concerned about losses in the FHA’s reverse mortgage portfolio. An independent actuarial review released last November estimated that the economic value of the FHA’s reverse mortgage insurance program was negative $2.8 billion.

 

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Dodd-Frank Act and Manufactured Housing

July 12th, 2011 No comments

Editor’s Note:  Received from the Manufactured Housing Institute (MHI), July 2011, thanks to a communication from Executive Director Thayer Long

The Wall Street Reform and Consumer Protection Act of 2010 (or “Dodd-Frank”) is approximately 2,200 pages long and affects all financial service products, including manufactured home loans.  Because of the legislation’s enormous size, complexity and its broad scope of impact, discussing it in piecemeal terms is difficult.  Even within the banking industry, community banks have a different focus compared with the large national banks.  For non-depository institutions, the same problem also exists.

Yet, there is a commonality of interest across a number of sectors.  Dodd-Frank contains a number of unintended consequences that impact a variety of industries and consumers.  For instance, with respect to the manufactured housing industry, Dodd-Frank was structured and written around a regulatory framework for real estate mortgages.  However, the bill essentially reclassifies all manufactured home loans as mortgage products.  Manufactured home loans not secured by real estate are not the same as mortgages.  To regulate all home loans the same way is an unsuitable model, which creates significant challenges to the industry and the consumers it serves.

Manufactured home loans have unique characteristics.  Manufactured home loans, in most cases, are much smaller than typical residential real estate secured mortgages and have shorter durations, which make transactional costs harder to recover.  Manufactured home loans have higher servicing costs than residential mortgages, requiring specialized knowledge and more personal contact and less reliance on technology.  Many manufactured home loans (with the exception of FHA Title I loans) are made with no government guarantees or potential losses to taxpayers.

How is the Industry Impacted?

First, the law creates a new standard for a “high-cost mortgage” loan which is based on interest rate spreads that fluctuate over time.  If the Annual Percentage Rate (APR) exceeds the average prime offer (the loan purchase rate established by Freddie Mac) by more than 6.5 percent, or in personal property transactions under $50,000 by 8.5 percent, then the loan is considered “high cost.”

For example, if the law became effective today a “high-cost mortgage” loan is any residential loan over $50,000 with an APR of 11 percent or more, or, a loan under $50,000 (if the dwelling is considered personal property) with an APR of 13 percent or more.  The law does not prevent “high-cost mortgage” loans from being made, but it does make it more difficult to make these loans, and it imposes a significant level of potential legal liabilities making them virtually impossible to securitize.

This is a problem because since our cost of capital is higher, manufactured home loan interest rates are typically higher.  Since Fannie Mae and Freddie Mac do not purchase loans or create a secondary market where manufactured housing lenders can access capital at a discounted rate, lenders need to rely on other sources to make loans.  These sources charge a higher interest.

Also, there are other fixed costs associated with making any kind of loan, such as fees for preparing the legal documents necessary to originate a loan.  These basic costs increase with each state and federal law and regulation that is enacted.  In addition, there are costs associated with each prospective borrower, including borrowers that are rejected and those who for whatever reason end up not taking the loan.  These costs also include a portion of the advertising and marketing that go into borrower acquisition, the costs of maintaining methods of communication, and the costs of determining loan eligibility.

This conflict is particularly compounded with existing manufactured homes sales, where loan balances tend to be smaller.  The loan may be smaller, but fixed costs are the same regardless of the loan size.  These fixed costs must be recouped in some way in order to make the loan.  Therefore, the only way to recoup these costs is by charging a higher rate.

If a lender decides to make a “high-cost mortgage” loan under Dodd-Frank, they must be prepared for a variety of new regulations, including

  • requirements for borrowers to undergo loan counseling by a HUD-Certified Counselor, the cost of which is expected to be $400-$600;
  • prohibitions that prevent financing points, fees and closing costs;
  • rules limiting late fees; and
  • rules requiring multiple disclosures to sell or assign “high cost” loans.

Second, Dodd-Frank does provide a path for relief through the definition of a “Qualified Mortgage (QM),” which is intended to provide a legal safe harbor from some of the Act’s more burdensome provisions.   However, the criteria that must be met to be considered a qualified mortgage include:

  • no balloon loans;
  • points and fees are restricted to 3 percent of the loan amount;
  • ability to repay must also consider taxes, insurance, and assessments; and
  • standardization of debt to income guidelines that have not yet been determined.

Again, because of the nuances in manufactured home lending, the definition of QM is unworkable for many loans made in our industry.  First, while balloon payments are not commonly made by manufactured home industry lenders, they are common with captive finance companies and local banks.  Second, the cap of points and fees at 3 percent coupled with our smaller loan balances will force lenders to charge a higher interest rate (thus tipping the scales and classifying them as “high-cost mortgages.”)

Communicating this in detail is complicated because the law’s impact will vary from lender to lender depending on their business model and the types of loans that they make.

What is true of all of the existing non-captive lenders involved in manufactured home lending is there is a limit, which varies from organization to organization, of how small a loan they believe they can make and still recover a reasonable amount of their costs.  Lenders will have to make a decision on what their lowest loan amount will be due to new limits on their ability to recover those costs.  To better understand this, a lender has only three ways to recover costs which are:

  • to buy the loan at a discount, which is only possible if there is a motivated seller involved in the transaction who is able and willing to accept a discounted payout;
  • to charge the borrower additional closing costs; and
  • to raise the interest rate and recover the costs as the borrower pays back the loan.

Even the strategy of using points to keep the interest rate below the triggers of a “high-cost mortgage” is impeded leaving no way to recover costs.

To further clarify, if the cost of origination and legal compliance equals X, that number does not change based on the loan size or duration.  The shorter the term and the lower the dollar amount, the harder it is to recover those fixed costs.  Here is an example:

A lender is considering making a $10,000 loan with a term of four years.  Using a risk-based pricing model, the correct interest rate is determined to be 11 percent.  If the fixed costs of origination are figured to be $2,000, the lender must charge the borrower either in points or closing costs that $2,000 to keep the rate at 11 percent.  If a law or regulation caps the lender’s closing costs or points, then the lender must look to raising the interest rate to recapture whatever costs could not be recaptured through points or closing costs.  If the entire cost were recovered via interest, the interest rate would need to be increased to 17 percent to recover the costs.

Captive finance companies currently have zero, or very low, minimum loan cutoffs.

Typically, they utilize higher interest rates to recoup costs, but often the justification for lending in the first place is that their related entities are profiting from the transaction in other ways, not the home loan itself.

What is the Result if Dodd-Frank is Not Amended?

Financing will still be available for those buyers with good credit and who can make a sizable down payment.  Industry lenders that have or require higher credit quality customers may not be as impacted by the “high-cost mortgage” loan provisions.   Those needing to serve customers with more challenged credit quality, and therefore needing to risk price their loans accordingly, will be impacted.

Also, those who fund low balance loans will find it more difficult to do business and existing homeowners will find it very difficult to sell their homes to buyers that need financing.

The dollar amounts for not making a loan will vary by lender because of all the variables detailed above, but each lender will find and set a minimum loan requirement based on their internal numbers.

It has been estimated that 50 percent of all the loans made on manufactured homes in manufactured home communities are under $25,000.  Another source has estimated that nearly 75 percent of all manufactured home personal property loans are under $75,000.00.  If the fixed transactional costs mandated by current and proposed law are higher than the lender’s ability to recover costs, the loan will not be made by lenders independent of other profit center relationships.

Bottom line is that without changes, there will be a significant number of consumers who will not be served.

Potential Solutions

MHI has an effort underway to seek bi-partisan legislative relief in six specific areas that needs and deserves the support of everyone in the manufactured housing industry.  The issues identified by the MHI Dodd-Frank Task Force are as follows:

  1. Elimination of the expanded scope of Homeowners Equity Protection Act (HOEPA);
  2. Clarification of the Qualified Mortgage Standards;
  3. Clarification and Consistent Standards of a Mortgage Originator;
  4. Exemption of Manufactured Homes from the new Appraisal Standards;
  5. Exclusion of Manufactured Home Loans from the Residential Mortgage Loan Definition; and
  6. Clarification and strengthening of exemptions for manufactured home retailers from CFPB Oversight.

A six-page white paper created by MHI can be obtained from MHI or any state association.  Industry members should obtain copies and distribute them to their Representatives and Senators along with personal letters and emails urging them to support this effort.  Those reading this article should distribute it as widely as possible throughout the industry along with their personal efforts to persuade other industry members, including employees and community residents, as well as suppliers,  to also contact their Representatives and Senators.

##

MHI is the preeminent national trade association for the manufactured and modular housing industries, representing all segments of the industries before Congress and the Federal government.   This article was prepared with input from the MHI Dodd-Frank Taskforce, in particular Ken Rishel, Sheila Dey, Dick Ernst and TF chair Tim Williams.

Open Letter to CFED regarding Dodd-Frank and its impact on affordable Manufactured Housing

May 24th, 2011 No comments

To: Kathryn Gwatkin Goulding
Cc: CFED Federal Policy

Kathryn,

I am receipt of CFED’s newsletter earlier today in which praises were heaped upon the Dodd-Frank Bill and its related Consumer Financial Protection Bureau. Analysis of the bill by numerous manufactured housing industry financial services consultants have concluded that without modifications, this bill could destroy our industry which is currently only hanging on by a thread anyway.

The Dodd-Frank Bill is far too typical of Congress’ meddling with our system with devastating effects on lower income families. While boasting about protection for consumers, the results of the bill without alteration will be to eliminate the availability to finance home loans lower than $78,000. Since our loans average about $60,000, more than half of our market will be eliminated. Those unable to get loans will be the ones at the lower portion of our client base. I don’t think these wanted Congress to legislate them out of the ability to purchase a home. Rather than promoting the infallibility of the Dodd-Frank Bill, CFED should be rallying to support the changes needed to protect the lowest income home purchasers in our nation. Just because they are low income, they should not be forced out of the ability to purchase a home. As I assume you are aware, our industry is already at the lowest level of shipments since record keeping began in 1961. Unmodified, the Dodd-Frank Bill will most likely destroy any hope for a recovery. The sad thing is that the death of the industry will not result from the Free Enterprise rejection by the market; it will be the result of an ignorant Congress legislating low income consumers out of the ability to borrow the funds necessary to finance their home. Of course, Congress did the same thing to the US light bulb manufacturers so maybe we should have seen it coming.

Please note the comments below in a column written by industry expert and Industry Person of the Year, George Allen. Please join our industry to encourage Congress to make the modifications necessary to preserve the ability of our lowest income homeowners to achieve their goal of homeownership. I appreciate the efforts CFED has taken over the years to protect low income families. Removing their ability to purchase a home will not be to their benefit.

George Allen–
Dodd-Frank Fallout. Geesh! This bill isn’t even law yet, and finance-related businesses are closing, simply to avoid having to put up with the more onerous of its proposed/planned regulations. Already, ‘former employees,’ perhaps even potential borrowers, are paying the price for what, to many of us, appears to be excessive regulatory reach into the financial sector. Here’s the plaint of one blog flogger (i.e., reader) writing to us this past week…
‘Dodd-Frank forced us to close our mortgage company in ___________ , and lay off several employees. Reason? Our capitalization with _______________ (a major bank) as our JV partner, was slightly in excess of $1,000,000. We were not a broker, but a direct lender, using the bank’s money. Under Dodd-Frank, unless you have a ten million dollar capitalization, you get classified as a broker. And as a broker, you have additional disclosures, the required language of which pretty much scares your customers away to a direct lender. So, we are out of business. Multiply that many times, in every community in America. An apt example of ‘the law of unintended consequences,’ as well as job and prosperity killing legislation!’ (lightly edited. GFA)

…the Dodd-Frank bill is maybe the ‘final nail in the coffin of chattel finance,’ where manufactured housing is concerned? Whereas the necessity of added fees will necessitate a minimum manufactured housing loan of $78,000.00, to simply ensure the return of basic and added fees to a chattel lender. And outside certain high-priced local housing markets, how many times do we see manufactured home loans, especially on resale homes, in excess of $78,000.00? # #

Thanks,

Doug Gorman
Home-Mart, Inc.
9516 East Admiral Place
Tulsa, OK 74116
800-364-4663 Toll free
918-835-0500 Office
918-835-8146 Fax
918-250-6867 Home
918-640-1357 Cell
doug@homemart.us
www.homemart.us

Editor’s Note: Please click here to read the CFED document.