Posts Tagged ‘manufactured homes’

Emily Goode vs City of Richland, Mississippi

October 12th, 2012 No comments Mississippi Manufactured Housing Association (MMHA) was very encouraged when HUD sent the City of Richland a letter regarding their requirement to home owners to update their manufactured homes to the current HUD code standard. MMHA had requested such letter in April of 2012 and received a response in August of 2012. Below is a summary of the case.

Mrs. Goode owns a 1984 HUD Code certified manufactured home located in the city of Richland, MS. In late September of 2010, she contacted the city to have her water turned off because she would not be staying at her home for some time due to family and work related issues, and did not want to risk her water pipes rupturing due to freezing weather while she was gone.

While Goode was gone, her utilities remained connected and she continued to receive mail to her home. She would periodically check on her home since all of her belongs were still located in her home.

In March of 2011, Mrs. Goode contacted the City to have her water reconnected, but the City informed her that her water would not be reconnected because the City claimed that the property had been abandoned for over 90 days in violation of the City Ordinance 2007-1 and had not been maintained according to the standards set forth in this Ordinance. She tried several attempts in vain to explain her situation to the City. The new Ordinance required that the home had to be updated to current HUD standards. On August 17, 2011, the Richland Municipal Court found Mrs. Goode guilty of violating City Ordinance 2007-1. Her attorney, Robin Hood, contacted MMHA for assistance.

The MMHA Board decided to have our attorney assist with this case. Mrs. Goode then asked MMHA to assist her in appealing her case to Rankin County Court.

The appeal was heard in County Court on April 9, 2012. During the trial it became apparent that the City was attempting to use City Ordinance 2007-1 to require Goode to maintain her 1984 manufactured home according to the most current version of the HUD Code. We were able to get Mrs. Goode’s case dismissed because of the evidence that the city attempted to use to show that Goode’s home had not been maintained in accordance with the current HUD Code was not obtained by the City until after the June 6, 2011 issuance to the citation summons charging Goode with violating the ordinance 2007-1.

The court entered an order dismissing the City’s case against Goode on May 2, 2012. On April 17, 2012 we petitioned HUD to write a letter to the City regarding their ordinance requiring homeowners that their manufactured homes had to be updated to the current HUD standard. After the trail, we learned that the City had adopted yet another manufactured housing ordinance which requires an inspection of a long list of items for manufactured homes to be located or relocated within the city.

When we received the copy of HUD’s letter to the City of Richland, we met with their attorneys to discuss the matter further. We reviewed the inspection list and discussed which items on the list applied to Mrs. Goode’s case. The City of Richland replied back to HUD that they would comply with HUD’s letter.

After months of going through this legal maze, on October 4, 2012, MMHA assisted Mrs. Goode in obtaining the appropriate permits to begin the process of getting her home prepared for her to move back into. MMHA will be present when the city inspector inspects Mrs. Goode’s home to make sure only the items pertaining to Mrs. Goode are inspected. Hopefully the next report will be that Mrs. Goode is living “happily ever after” in her manufactured home. ##

HUD Letter on Preemption in Response to Richland, MS Zoning issue, August 2012. Hall
Executive Director

Leading the Charge: The Back Story on S. 3484

August 8th, 2012 No comments

tim-williams-ohio-manufactured-home-association-mhpronewsWhen you get a key piece of federal legislation sponsored in the U.S. Sentate, how does that happen? We asked Tim Williams to answer that question, and here is what he told us in his own words.

“First and foremost Nathan Smith is the game changer (with the credibility and relationship) who advocated and led the industry effort with the assistance of MHI. Nathan, myself, Tim Williams of 21st and MHI’s Jason Boehlert as well as several other MHI key finance members initially met with Senator Brown in January regarding the industry’s concerns with Dodd/Frank. Nathan did a great job debriefing the Senator and his staff on the issue and encouraging  legislative consideration. It was clear Senator Brown had a good understanding and sincere interest in the issue and our industry even before the meeting started.

I was able to discuss Ohio’s strong MH Commission’s role in consumer protection under the industry led independent Ohio MH Commission (6 of 9 commissioners must be appointed per a list nominated by OMHA per Ohio  law). Senator Brown was very interested in the industry, our consumer and their protections under the Ohio Commission including the fact that 100% of all homes are inspected during three critical phases of the  installation process in Ohio. He asked many questions regarding Ohio law, demographics and industry businesses as well as the jobs aspect of our economic impact in Ohio and nationally. He was clearly engaged with us on the issue.

Tim Williams of 21st was able to succinctly condense a rather complicated issue in to an understandable dynamic all could grasp and wrap our heads around. Tim’s ability to take the issue down to its basic components was very helpful in demonstrating the practical  challenges facing the ability to finance Ohioans in to affordable manufactured home ownership. I am very appreciative of Tim and 21st Mortgage's leadership on the Dood/Frank  concerns and believe his impact on the legislative aspect of all of this is probably underestimated but nonetheless critical to our success.

I personally appreciate the effort Senator Brown demonstrated in understanding our industry and concerns as well as to brief us on the legislative dynamics of the issue. I encourage all industry members to thank Senator Brown and express support to his office in any appropriate manner.  He stood up for our consumers and industry on a challenging issue regardless of the pressures he faces in an election year.

tim-williams-ohio-manufactured-home-association-mhpronewsTim Williams
 Executive Vice President
 Ohio Manufactured Homes Association

Greeting the Wolf with Shotgun in Hand

August 3rd, 2012 4 comments

I was talking to a member on the phone recently and he asked, “DJ, when is your ‘interim’ going to actually be an interim?” I simply had to laugh and politely remind him the association is and will always be full time. The most we can hope for during interim years is for something less than the 90-hour work weeks the Texas legislative session brings every other year. I had to laugh again at this ludicrous thought when I recently landed in Austin at 12:45 a.m. back from a quick trip to Washington, DC.

But there are no complaints here. When I ask members how business is and they give the positive response: “busy,” I always respond, “Busy is good.” The same is true for our association.

Our industry is also busy right now. Over the past several months we have seen an ever-so-slight improvement over previous years, but improvement is improvement. After three years we welcome a return to “busy.”

This year Texas’ national market share in shipments has been approximately 20 percent. In 2012 one out of every five manufactured homes sold was sold in Texas.

It goes without saying, but I’ll say it anyway – God Bless Texas.

Of course, everything is not bright rays of summer sunshine. This is depicted by the imagery of our front cover and the efforts underway that demand so much time and so many additional resources.

To read the article referenced in the image above, click the image or click here.

Before I go into the details and describe the issues and threats on our horizon, I want to acknowledge it is not my intent to scare the ever-living-life out of you. Our membership is diverse and we have differing levels of risk aversion. From a credibility standpoint TMHA does not want to be a “boy who cried wolf.” However, we also refuse to be oblivious.

There are ominous clouds on our horizon, and we don’t know how these potential storms will play out. New laws and regulations take years to become a business reality and still years more to be challenged and legally tested. The trouble is these new laws and regulations resulted from a pendulum swing caused by the subprime meltdown. With this significant slant, the penalties are far from toothless. I suggest one’s attitude toward future risk should be determined, in part, by the level of volume and personal money at stake in these regulated markets.

Mindful of the axiom, “Las Vegas is not built on winners,” we must remember the purpose of the Consumer Finance Protection Bureau. It is not their goal to allow lenient or flexible regulatory enforcement. Case in point: the CFPB already has a consumer complaint hotline and has dedicated a portion of its website for consumer complaints. The question I have is, “How does one know if the person being complained about broke any rules if the rules are not written?” And yet, this seemingly obvious logic did not get in the way of the CFPB from establishing a hotline first thing out of the gate.

So, whether you are hoping for the most defensible, fortified position in light of the new regulatory developments or you are betting true enforcement will never actually materialize, the reality is there are federal threats heading our direction. In this edition, we explore this and other key issues relevant to TMHA and your business.

The issues and dangers are perceived by TMHA’s Executive Board, Board of Directors, our national organization, MHI, and others in our industry as posing a significant risk to our Texas market and our national market. At TMHA’s Third Quarter Board of Directors meeting, it was inescapably clear that inaction at this critical time was not only too risky but too costly.

Therefore, TMHA pledged both efforts and financial resources over the next 12 months to join forces with MHI and others to navigate us through these treacherous waters

The possible successes of our efforts are unknown at this point. Regardless, I fear we will not come out unscathed.

Fundamentally, we first must learn if the regulatory powers care about this area of the housing industry. If so, do they trust us enough to make the changes we advocate? Both of these questions must be answered “yes” in order for us to have a fighting chance. Otherwise their massive regulatory locomotive will run over us.

I can assure you, any potential losses will not be for lack of effort, time, money or passion. Personally, I’m optimistic. We are an industry in unquestionable demand serving good consumers in an industry we passionately believe in. We will succeed, adapt, and thrive regardless of any final rules or regulations.

I recognize there are some who criticize our efforts. Some will continue to deem us another “boy who cried wolf.” To those critics I simply say, if it turns out we are the boy who cried wolf, at least know we did everything in our power to be ready. And, if the wolf actually does show up, we greeted him head on…shotgun in hand. ##

By D. J. Pendleton, J.D. Executive Director, Texas Manufactured Housing Association (TMHA) 505 W. 14th Street, Austin, Texas 78701 512-459-1221

(Editor's Note: The Texas Manufactured Housing Association, Chairman of the Board, Ronnie Richards, who is VP of Marketing at manufacturer and retailer American Homestar, spelled out in detail the concerns DJ's article is referring to, see Ronnie's well documented article here. These are among the reasons why association membership is more important than ever before in our Industry. To find your state, community or national association, click here. To paraphrase Ben Franklin, we will either hang together, or hang separately.

Information on the TMHA's annual event is at this link here. The dates are Sunday, August 19, 2012 – Tuesday, August 21, 2012)

Re-assessing the Stabenow Amendment to Extend Energy Star Tax Credits

April 13th, 2012 2 comments

Hi Tony,

As you know, the Stabenow Amendment to Extend the ENERGY STAR Tax Credit for Manufactured and Modular Homes Defeated in the Senate. As a retail salesperson some reading this will say I’m only interested in my own good. But not only do I believe the Amendment should be passed but I think it should be expanded.  I am talking about a program where the federal government offers a tax credit to customers who purchase an energy efficient manufactured home. 

There is currently no tax credit for energy efficient manufactured homes.  In spite of the so many in the U.S. government saying it wishes to create more manufacturing jobs, increase home ownership, stimulate the economy (home owners make more purchases than just a house), decrease banking instability, decrease consumers debt load, increase energy efficiency and lower dependency on foreign oil imports, some in the federal government are missing the benefits of manufactured housing and the ability to kill 10 birds with 1 stone. Factor in as well the potential to export our homes to other countries too.*

The only credits available are to home owners from local utility companies, but Louisiana does not currently have such a program. While in some areas we lead the country in tax credits for things like solar energy, we offer nothing to someone that is currently living is substandard housing who’s income is too low to qualify for a loan – due to debt to income (DTI) ratios rather than credit scores – to improve their living situation.

Consider someone that owns a home that is inefficient and or hazardous and would like to upgrade, but to do so would require taking the house down to the studs and starting from scratch.  Banks are reluctant to lend for such major changes, especially if that is the collateral for the loan and merely increasing energy efficiency does not increase the value of the property enough.

Lets mention the fact that banks often charge higher interest rates on land/home deals simply because the home owner is buying a manufactured home effectively pricing lower income people out of the housing market and condemning them to substandard housing that is energy INEFFICIENT.  

If the same effort where put into upgrading access to American made homes that was put into upgrading autos (most of which were not even manufactured on U.S. soil) through “CASH FOR CLUNKERS," oil dependence could be halved in a few years.  

I wonder why no one has filed a class action law suit on behalf of the low income consumers everywhere. Basically they are being forced to pay higher utility bills because they can not pay the $70 – $120 per square foot cost of existing site built homes, or the still higher costs of new conventional on-site construction.

Sometimes worse yet they may effectively be forced to obtain housing through Section 8 housing programs, to me this smacks of discrimination and blackmail.  

Where is rhe logic to say to someone on a low or fixed income that you can afford a $300 – $500 monthly energy bill, but not a $500 new home payment that could help limit our dependence on foreign oil? Or you are effectively saying in some case that you will have to leave your A/C or heat off if you would also like to have food…this is unconscionable.  

I think that every dilapidated house that could be replaced with a new, energy efficient manufactured home not only helps the individual but the economy and the country.

As someone that works for a manufactured home retailer, I know that we are the front line in this battle and when I am ordering a home for a customer the very first thing I do is try to sell them on upgraded insulation and energy efficiency. I have gone so far as to order an upgrade on insulation without charging the customer. Needless to say this is not always encouraged as it cost the dealership money, and since it is not my money I may have little choice in some deals. I have had customers that have chosen not to pay the additional cost even though they know it will save them money in the future.  But if we offer the right incentives it would make it easier for the customer and I imagine the builder, if everything was Energy Star.  That would actually be easier to sell than the current “hit and miss." That is why I think if a program could be put together that offered incentives that would encourage dealers, banks, governments, electric companies, insurance companies and consumers – beyond what is currently available – we would have much more success than any stand alone program.

If you look at a model where you have a customer who has marginal credit, marginal debt to income, marginal down payment, and currently living in a free and clear home that is 50 years old that averages a monthly light bill of $300-$500, on the surface a bank may say no to a loan based on this customer. But if you could add a CREDIT for down payment from the state and federal government and local utility company, then figure in a credit on DTI for savings on energy bills and a lower interest rate base on an energy DISCOUNT.

Such steps could improve numerous customers lives, adding comfort, space, ease of bill paying, possibly increased health benefits, and while debt load is increased on paper you have reduced $200-$300 a month in energy payments, and reduced oil imports. You also have increased American production with American material and workers.  All of which could mean more business, and may also lead to higher values for resale, repossessions or land/home values.  All of this maybe even reduce or eliminate some of the “mobile home” stigma. 

Being a pair of “boots on the ground” I see some of what we are up against. Every time we turn around there are more rules and regulations against manufactured housing because people don’t understand, have prejudices, and have no incentives to do anything different.  So instead of manufactured housing helping solve some of the lower income housing problems, it just becomes harder to do anything.

If the factory built housing industry did a comparison between a normal 30 year old site built home and a new manufactured home (not even Energy Star) the energy savings would be outstanding.  Then if you take into account the number of 40-50 year old site built homes (circa 1960’s, or older) it would be even greater.  Then when you take into account all of the systems inside of a home that use or save energy and the shipping of materials, the construction of 1 manufactured home has far greater reach than someone who upgrades the insulation in an old home, and every new HUD code manufactured home is inspected and federally certified.  

Imagine if we could find a way to say to a customer “Sir if you spend X dollars for an upgrade it should save you X dollars a month and because of this the bank will allow a 10% increase on your debt to income ratio for buying and/or a credit on you down payment and/or a lower interest rate. Plus the federal government will give you an upfront credit that can be applied to your down payment.  And if you demolish or recycle an inefficient home the utility companies will match that grant.  FHA Title II loans already require that if you are replacing an existing home on a property it must be demolished or utilities be cut off.  Ultimately I would like the Federal government to give homeowners the option and an incentive to save money by purchasing a Energy Star certified manufactured home. Where you could legitimately say to a customer if you purchase a home with these things you would:

  • A) saves money on your electric bill;
  • B) your builder, energy co. and bank participate in a program that offers a grant applicable for down payment for buying Energy Star;
  • C) reduced DTI because you will be saving on electric cost (all participation would be voluntary);
  • D) the government will give you a tax credit for buying energy efficient.

Think of a comprehensive nationwide program that would be voluntary but not piecemeal from one state to the next, with a more definite framework. If you want it, it exists. If you don’t want it, you don’t have to participate.

All of these ideas should accomplish several things depending on the size of any program.

  • First, helping marginal customer get new homes.
  • Second, help low income customers have more disposable income.
  • Third, lower debt ratios for low income households.
  • Fourth, ease overvaluation of real estate.
  • Fifth, eliminate inefficient buildings from the power grid.
  • Sixth. recycle parts of demolished structures (perhaps for the needy, homeless, or veterans).
  • Seventh, increase American dream of home ownership.
  • Eighth, increase US manufacturing and jobs creation.
  • Ninth, save oil and other energy sources on a national level (including transportation of materials).
  • Tenth, eliminate costly weather delays for construction.
  • Eleventh, lead to a recycle business for old manufactured homes.
  • Twelfth, helping customers who currently can’t buy because:

> they spend any down payment on current inefficient homes;

> they have difficulty budgeting for a home because energy cost currently eat up most of their disposable income;

> customers who genuinely want to help the environment and the economy. (in the past 10 years I have seen these customers gain in numbers).

It would seem like this would be a WIN/WIN/WIN/WIN situation.  It is hard to see any down side if everyone looked at all this carefully and got on the same page.  Even contractors of site built homes can benefit if it resulted in more land/home deals with improvements on manufactured housing.  


Blaine Gilless
Ad Mgr
Lane Thomas Housing, LLC
1955 S. Morrison Blvd
Hammond, LA 70403

* Editor's note: at the recently concluded MHI Congress and Expo, a pair of Russians were in attendance, interested in U.S. style factory building for their country. Another attendee wanted to learn about export opportunities for American made panelized homes. 2% of readers are from Latin America, Europe, Asia, Oceania and Africa. Communications with them reveals they are seeking information on investment or factory built home opportunities.

Readers are encouraged to sound off on factory built housing related issues, and can send submissions with Industry Voices Guest Blog in the subject line. Appropriate posted comments on such topics that are topic focused (as opposed to self-promotion) are encouraged as well.

This makes my blood boil…

January 14th, 2012 1 comment

… about the USFA's (United States Fire Administration) "fact sheet" about "manufactured housing."

Stuff like this makes my blood boil and I had to respond thusly, please see below.

I will let you know if they respond to me.

Ken Haynes, Jr.

(Editor's note: Ken was very kind to share this with our readers. This is a copy of the information he sent to the USFA. Frankly, we need more actions like this by industry pros from coast to coast. If every time a government agency, private firm or media misstated facts about manufactured or modular homes, an Industry pro would speak out, we would over time have fewer such errors and over time we would sell more homes too. Let us hereby thank Ken and encourage you and others to do the same.)

Thank you for submitting the following to USFA.

Comment for:

Dear USFA,

I just read your flyer titled, "Live Safely in Your Manufactured Home, A Fact sheet on Manufactured Home Safety."

You should be ashamed of yourselves publishing such drivel without explaining the differences between "mobile homes" constructed prior to the implementation of the Federal Manufactured Housing Construction and Safety Standards Act (HUD Code) developed and enforced by the Department of Housing and Urban Development (HUD), and "manufactured homes" constructed to the specifications of the HUD Code.

The information you have provided in the publication is inaccurate, misleading and slanderous. You have lumped together two completely different types of affordable housing. To make an analogy that you might understand, comparing it to the automotive industry, you are saying that the safety of a Ford Model A is in the same category as a 2011 Ford Fusion because they are both motor vehicles with four tires and a steering wheel.

The truth is that fire frequency and death rates of manufactured homes built to the HUD Code is comparable and even less than site built homes, yet your publication makes absolutely no reference to this fact.

You obviously have no idea of what you are talking about, grouping all factory built housing in the same category.

Are you purposely trying to kill the manufactured housing business with false claims put forth in publications such as this? It seems to me that you are.

In my opinion, this is just another effort to foster the notion that manufactured homes should be forced to have fire sprinklers, but that site built homes should not be forced to have fire sprinklers, thus promoting an unfair and costly expense to manufactured housing, diminishing their popularity and giving an unfair advantage to site-built home builders.

This form should be withdrawn and corrected immediately, a retraction issued, and an apology issued to the manufactured housing industry.


Ken Haynes Jr

401 Shatto Dr

Carlisle, PA 17013


“Pathway Paved Toward Progress”

September 7th, 2011 No comments

With production of manufactured homes continuing to erode by double-digits in 2011, change — real change — cannot come fast enough for the industry or beleaguered American consumers of affordable housing. To have the most beneficial impact on the condition of the industry, however, that change needs to begin with and needs to be led by the federal program that comprehensively regulates manufactured homes and is responsible for the “superintendence” of the industry. And now, after more than a decade of intransigence and seeming lack of concern for the worsening plight of the industry and manufactured homebuyers, hopeful signs are emerging that this long-overdue and much-needed change could be in the offing.

While there is no doubt that the manufactured housing industry, since its peak production year in 1998, has suffered from numerous problems that have contributed to its decline, including restrictions (both existing and impending) that have disproportionately reduced the availability of financing for manufactured home buyers, bad practices — now corrected — that provided an excuse for such restrictions, the debt crisis that undermined the availability of floor-plan financing for many retailers, the collapse of the mortgage insurance market for lower and moderate-income buyers, unreasonable restrictions on the placement of manufactured homes and a host of others, all of these are inextricably related to the federal regulation of manufactured homes and, more specifically, to HUD’s failure to fully and properly implement the Manufactured Housing Improvement Act of 2000.

That law, as MHARR has often pointed out — through its “Findings,” its sweeping “Statement of Purpose” and specific program reforms — was designed to complete the transition of manufactured homes from the “trailers” of yesteryear to the modern “housing” of today, at parity with all other types of residential construction. Put differently, it was designed to end systematic discrimination against manufactured housing and manufactured homebuyers in connection with regulation, financing and a range of other issues affecting the availability and use of manufactured housing. HUD, however, has not fulfilled this vision over the past decade and the industry, as a result, has been trending downward at a time when it should be doing better.

Fortunately, though, all of this is now coming to a head for proper resolution, because MHARR, instead of limiting its focus to the symptoms of this problem, has consistently worked to address their common root cause — HUD’s failure to fully and properly implement the key reforms of the 2000 law. This effort took on a whole new dimension and heightened level of energy in the Fall of 2010 when forward-looking members of the MHARR Board of Directors, in anticipation of the changed national political dynamics brought about by the November 2010 elections, initiated a bold, multi-front approach to Congress designed to address these overriding issues, hold regulators accountable for full and proper compliance with the 2000 law and, most importantly, begin a process to rectify both the root cause and its various consequences. The overriding goal of this initiative, from its inception, has been to break the 10-year logjam on the implementation of relevant laws (most particularly the 2000 law) and advance the cause of the industry and its consumers in the nation’s capital. And now, after ten months of intensive, aggressive and sharply-focused engagement with Congress, it appears that this effort is beginning to pay tangible dividends.

For the first time in ten years, the HUD program, as a result of this congressional initiative, has come under specific scrutiny by Congress regarding its non-compliance with the 2000 law, including the impact that non-compliance has had on the industry’s smaller businesses. In the process, Congress has realized the need for comprehensive intervention and engagement on these matters, as was demonstrated at a July 20, 2011 mark-up session of the House Financial Services Committee (the authorizing committee for the HUD program) when leaders from both parties called for congressional action to address the “unfair disadvantage” faced by the industry and manufactured homebuyers. It is this ongoing “unfair disadvantage” — which the 2000 law was designed to correct — that lies at the root of nearly all the problems that have fueled the industry’s decline and needs to be corrected by Congress.

Moreover, as this intensive congressional activity has played out, it has been paralleled, as anticipated by MHARR, by significant personnel changes within the HUD program. Those changes have seen the departure of much of the career-level program management, as well as long-term program support attorneys within the HUD Office of General Counsel (OGC). These officials have been replaced by new leadership operating under a newly-appointed Acting Assistant Secretary for Housing-Federal Housing Commissioner. Thus, the entire program management structure that resisted the full and proper implementation of the 2000 law, originated the “interpretations” that have undermined key reform aspects of that law, and adhered to those interpretations notwithstanding clear evidence that they were wrong, is now gone.

What all of this means, effectively, is that much of the heavy lifting to break the logjam of the past decade and change the dynamics affecting the industry and its homebuyers in Washington, D.C., has already been done. Such efforts, moreover, have created a process and opportunity for the industry to unite on the issues and press forward for their resolution.

On post-production matters, the industry has done well in identifying the key issues that need to be addressed, namely private and public financing, including, most importantly, repeal or reform of the Dodd-Frank and SAFE Act provisions affecting manufactured housing which have hamstrung consumers’ ability to qualify for and obtain manufactured home purchase loans. MHARR has — and will continue to — fully support the ongoing effort to address and resolve these problems. Conversely, MHARR expects that the rest of the industry will fully support its effort to ensure the full and proper implementation of all reform aspects of the 2000 law, in order to eliminate the industry’s “unfair disadvantage” and remedy the key problems affecting both the post-production and production sectors of the industry.

In order to advance such cooperation, and given the complexity of the issues involved in Title VI reforms (i.e., 2000 law reforms), MHARR has researched all the available documents and information generated during the 12-year effort leading to the passage of the 2000 law, and has condensed that information into a series of straightforward, easy-to-read one-page Fact Sheets that explain the key 2000 law reforms in a concise manner, as well as the importance of the full and proper implementation of each such reform. The entire set of these Fact Sheets will be officially published and released after congressional lawmakers return from their Summer recess in early September.

In MHARR’s view, the industry can and should present a united position on all of these key reform issues in order to eliminate the industry’s “unfair disadvantage” and restore its prosperity and growth.

Written and submitted by Danny Ghorbani


MHARR logoMHARR is a Washington D.C.-based national trade association representin Danny Ghorbani

the views and interests of producers of federally-regulated manufactured housing.

Chattel Lender Lowers Rates to 4.5%: Best ever for home only Manufactured Housing Loans

August 12th, 2011 No comments

CU Factory Built Lending, has again rolled out a new loan product with eye-popping low rates for manufactured homes in leased land communities. This leading industry’s lender provided this out of their Seattle office.

Their new floor rate is 4.5%. This is a “step-up loan”, not an adjustable rate loan. The low starting rate is locked in for the first five years, then “steps up” to the higher rate for the remaining term at 7.25% fixed.. This lender’s loan products are always fully amortized. The terms are very flexible and not too difficult qualifying; for example, a guideline that there be no mortgage defaults.

For example, a used 1980 multi-sectional in-community home-only could qualify with 10% down. Assuming top tier credit, the applicant can get a 20-year loan at 4.75% for the first five years, and 7.5% for the remaining 15 years. With 20% down, the start rate would be 4.5%, stepping up to 7.25% after 5 years.

Better yet, for a 10-year loan, with 20% down, the first five years will be fixed at 4.5%, and the remaining years fixed at 6.25%. The borrower may pay the monthly payment based on the higher rate, resulting in an accelerated principal reduction, and saving thousands in interest.

We are told this new “One Step Program” loan product is available in all CUFBL states. Cash-outs and refinances are also eligible, case-by-case. In CA, the older “pre-HUDs” are eligible, but with a 1% rate adder.

This will make financing new and used MH chattels much easier. Our industry needs a good shot in the arm. # #

post submitted by:

Dave Shanklin
Mobile Brokers Acceptance
(916) 962-7128


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.

Manufactured Housing Institute President and CEO Comments on Research Report on State of the Industry

June 24th, 2011 No comments

Arlington, VA. – Thayer Long, president and CEO of the Manufactured Housing Institute, issued the following statement on in the IBIS World, Inc. research report falsely characterizing the state of the manufactured housing industry.

“Since 1989, manufactured housing has accounted for 21% of all new homes sold. Due to the most significant economic and housing crisis in generations, over the past five years the pace of new manufactured homes sold in the US has declined by 57%.

However, the pace of new single family site-built homes sold in the US has declined by 76% since its peak in March 2005. Buyers purchased 322,000 new site-built homes in 2010, the fewest annual total on record going back 47 years.

Over the past five years, excesses in the site-built housing market contributed to one of the greatest economic disasters in generations. Buyers assumed more debt and more house than they could afford, and this behavior was supported by the marketplace.

Manufactured housing, having undergone its own subprime bubble over a decade ago, learned these lessons well. As a result, manufactured housing remains the best housing value proposition in the marketplace, a feat accomplished in spite of tougher self-imposed industry lending standards. Over 19 million Americans live in a manufactured home, and the market share of manufactured housing is back on the rise over the past two years, with shipments increasing in 3 of the past 4 quarters.

Americans can realize the dream of owning their home at an affordable price, without sacrificing quality or the level of amenities they desire. The manufactured housing industry is very much alive, and very much here to stay.”  # #

From an MHI Press Release 6-24-11

Lending Is the Key to Selling Manufactured Housing

June 24th, 2011 1 comment

In a conversation with Industry In Focus Reporter Matthew Silver for, Mark Dillard, Executive Director of the Manufactured Housing Institute of South Carolina (MHISC), Dillard said lending is the biggest piece of the puzzle in terms of selling manufactured housing.

“We’ve been going to regional credit union association meetings and trying to reach a couple dozen people at a time. There are always a few people who show interest, and out of that we often will get one person who is ready to jump in. Credit unions don’t typically hold the paper when they make loans. Some of the mainstream lenders, like CU and US Bank are encouraging credit unions to make the loans, and then they buy the paper if the bottom line looks good to them,” he says.

“A lot of the retailers have a relationship with the banks in their towns so we put together a power point presentation that the retailer can present to lenders, and leave it with them. It’s everything from the lifespan of a modern day manufactured home to the quality features and construction techniques that go in to making them,” he added.

He says a lot of people outside the industry tend to think manufactured housing is still in the Dark Ages. They do not realize the technology that has made advances in medicine, construction, electronics, automobiles, energy efficiency, and so on, has come to the manufactured industry as well. He notes, “But the bottom line is, whether they can make money. We’re going to combine forces with some of the credit union reps and retailers and go talk to the banks.”

He says a couple of months ago representatives from Wachovia Bank came to the office. “It’s been a while since a big bank like that has come to us,” he noted. “They’ve been purchased by Wells Fargo and they gave us the impression that manufactured housing is going be a significant part of their portfolio.” When you get several lenders competing for loan business, that can help spur the industry.

Recently, the association has been running TV ads in larger markets, promoting the energy efficiency of manufactured housing while showing some very attractive homes. The calls came to MHSCI. The pitch is consumers can receive a $750 tax rebate from the government for buying Energy Star appliances. ”You hit close to home when you talk to people about saving money on their energy bills and getting a check from the government,” says Dillard.  It was a grant from the South Carolina Energy Office through the U.S. Department of Energy. “Whether or not they take an interest in the energy savings, people are at least seeing a very positive image of a manufactured home,” stated Dillard.

“Getting people inside a manufactured house is the real coup. They get inside and see the island in the kitchen, and the Jacuzzi in the bathroom, and the fireplace, and you can see the surprise on their faces,” he notes.

Another initiative Dillard is pursuing involves insurance companies that insure coastal areas. He says the whole U.S. Southeast coastal communities provide a challenge to insurers, whether it’s site-built or manufactured homes or commercial buildings. “In our previous initiative we took executives of national insurance companies on factory tours to show them houses being built, so they could see firsthand the  construction techniques and materials used in building manufactured homes.

“For our current initiative, we discovered in talks with the state insurance department that many people buying property insurance are over insured. We’re putting together a pamphlet to distribute to retailers for consumers to understand how they may save money when they buy property insurance,” he says. Insurance companies move in and out of the state on a regular basis, which keeps the premium high. “The state director of insurance has offered to contact insurers who do business in the southeast and suggest they do business here because we have a high density of manufactured housing,” he states.

South Carolina has just over 20 percent of its population living in manufactured housing.

He says one of the helpful things in this work is the resource of other associations.    “When you talk to other state directors, it’s almost like you’ve met your long lost twin. We all have similar issues and challenges, and even similar days at work,” he notes.

But he also adds that the last ten years have been especially challenging in the industry. He says twenty years ago if a problem came up, you had resources to deal with it. These days with a shoestring budget you have to be creative and resourceful.

In noting that one in every five South Carolinians lives in manufactured housing, he says, with a laugh, “It just shows what a good executive director I am.”  # #

Contact Mark Dillard at