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A Deeper Look at why the GSEs say no to Securitizing Chattel Loans

May 24th, 2016 1 comment

TOPIC

The Duty to Serve (DTS) question for the Government Sponsored Enterprises (GSEs) of Fannie Mae and Freddie Mac regarding originating Chattel (home only, personal property) loans on HUD Code Manufactured Housing has been a topic of discussion for years.

FreddieMacFannieMae-logos-creditBeforeItsNews-PostedMHProNews-

Logos are for editorial illustration purposes only, and are the properties of their respective organizations. Composite image credit, BeforeItsNews.

BACKGROUND

To understand why I say what I do about DTS, the GSEs, MHI and manufactured housing (MH) below, some history will be useful. My experience with MH Affordable Housing and Duty-to-Serve spans nearly 35 years.

Upon entering the mortgage banking business, I worked in the mortgage division for Fleet Bank in St. Louis, Missouri. I made my first HUD Code MH land/home loan back in 1982.

At that time, HUD Regional Offices had to approve each subdivision and the homes that were being constructed within that community. HUD reviewed, approved and retained documentation and complete control of the Architectural & Engineering process.

The Regional HUD Office was located in St. Louis and Chaired by Joy Miller. Fleet was chosen by HUD because of its strong government lending (FHA & VA) platform, national presence with the ability to replicate the program. Fleet provided financing for the consumer’s purchasing HUD Code, single-sectional and multi-sectional, Redman Homes on short wall foundations in a subdivision in House Springs, Missouri. This was a new MH “beta test” community development project. It was one of the first HUD Code MH subdivisions outside of California. It was cutting edge and an exciting step for me right out of college.

At the time, I had no idea that my future in banking would be focused around Affordable Housing. From that point forward, I continued down the path of Affordable Housing which is truly a key for the to Duty-to-Serve.

In my follow-up assignment, I worked extensively at Ft. Leonard Wood, Missouri making over 600 VA loans in two years to accommodate relocating veterans and civil service personnel in the initial phases of the US Military Base Realignment and Closure (BRAC) program. Specifically, on the Ft. Belvoir, Virginia relocation of 2400 families to Ft. Leonard Wood over six years. Brick & mortar site built homes were selling for $35,000-$65,000.

Next stop was in 1995 when I was invited to join an exclusive group of high profile mortgage bankers who focused on Affordable Housing nationally. I had no idea when I was chosen that I was chosen for my HUD Code MH housing experience. The group of 30 members from around the country formed the Underwriting Barriers Outreach Group (UnBOG), lead by Rick Coffman and Matt Miller of Freddie Mac in Washington, DC.

The task force was formed to bring mortgage bankers together to discuss how to create loan programs to provide financing for the underserved, economically or geographically challenged consumers. These borrowers were credit worthy, but did not have down payment of 10% or 20% plus closing costs. Or they could not meet the debt-to-income ratios of 28/36. They needed expanded guideline programs. As a member of that task force, I helped craft the 97% LTV Alt-A, Section 8 Voucher-to-Own, Lease-Purchase and the 105% LTV loan programs.

During that time period, our government leaders on Capitol Hill put mandates on the GSE’s to produce and deliver Affordable Housing programs to the marketplace. The new mandates were tremendously difficult to meet. They were tied to creating and driving home ownership in the United States. The new mandates required that 1 out of every 2 mortgages purchased by Fannie Mae or Freddie Mac had to meet strict affordable underwriting criteria to be considered affordable.

The reason for the formation of the UnBOG group and the push to new loan programs as outlined above to expand homeownership, thus simultaneously answering the DTS mandate at the same time. It was from the UnBOG platform I learned how to write loan programs and how they were developed to serve a diverse and unique new classification of purchasers referred to in those days as “low-mod” borrowers.

In essence, our leaders on Capitol Hill were enforcing the Duty-to-Serve component which had been the focus of the creation of Fannie Mae and Freddie Mac from their inception. Nothing new, just a way to measure and enforce the GSE’s mission of Duty-to-Serve and expand homeownership.

FAST FORWARD

My invitation to UnBOG was to provide insight into the Manufactured Housing space. Specifically, how to create and deliver the MH product from construction loan through permanent end out loan on a product built in an off-site factory versus the traditional on-site method.

By this time, I had already successfully been making construction-to-perm loans on MH for 13 years. The GSE’s felt that a look into the MH industry, what I was doing and how I was doing it, could help them achieve these lofty Duty-to-Serve Affordable Housing goals now being enforced from Capitol Hill.

This point is that Duty-to-Serve is nothing new. It truly is the reason Fannie and Freddie were created.

For the first couple of years, we focused on Fee Simple loans known in the industry as Land/Home loans. Many of the programs coming through the development pipeline at the GSE’s were inclusive of MH Land/Home financing. Land/Home was sort of a no brainer, but subject to several gaps that needed to be closed with regard to title insurance, retiring titles, mortgage insurance, production and travel insurance, method of attachment and the creation of a true real property package upon completion and conversation to the permanent-end-out mortgage. Those topics we can save for another article.

In 1998, while working for First Tennessee Banks mortgage banking division, which would later become First Horizon Mortgage, I received a call from Freddie Mac asking me if I was interested in working on a new loan program crafted by a captain of the MH land lease community at MHI, a gentleman named Rick Rand. Rick had worked with program development guru Ginger Walters and Freddie Mac attorney Judith Agard to craft a program to serve as the Chattel Loan look-a-like.

The program was designed around a 35-year land lease, which created the real property entity necessary and required by the GSE’s to make a 30 year fixed rate loans on MH HUD Coded homes sited in MHC’s.

It was a brilliant piece of work by all parties, but there wasn’t anyone in the mortgage or banking space interested in the $300MM beta test “pilot program” that 99.99% of bankers had no clue about. It just so happened that I had extensive leasehold estate background from years gone by.

So when I received the call from Rick Coffman from Freddie Mac, my UnBOG colleague, I understood the program immediately.

Needless to saym it was exactly what the GSE’s needed to kill two birds with one stone. First and foremost, it met the Affordable Housing criteria right out of the box for Community Reinvestment Act (CRA) credit. Which meant it could be counted towards the GSE’s requirement to expand homeownership. Second, it answered the DTS question that had been long on the lips of all MHI leaders, pushing for rates and terms more readily associated with brick & mortar housing.

For me, it was just another niche market program that I was going to have to run up the flagpole with my boss, his boss, his boss and so on until I got to the banks president who just happened to understand the program.

Why, you ask did the president of a large bank like First Tennessee get it?

Well, because it just so happened our largest client on the books at the bank was this fellow name Jim Clayton, and his company was called Clayton Homes. You know  – the gent who sold his manufacturing, retailing and MHC communities to the “Oracle of Omaha”, aka Warren Buffet.

There was a program which we launch at First Horizon where we worked out the kinks in origination, processing, underwriting, closing, funding and servicing and – oh, yes – securitization too. Because Fannie and Freddie had their securitization platforms built out years before this “real property” leasehold estate program arrived on the scene.

By the way…pricing was about a ½% above the then 30 year fixed rate pricing.

The program was strong and grew legs. We even added a One-Time-Close (OTC) Construction Loan to the menu as First Horizon was developing Construction-To-Permanent (CTP) and OTC loans at that time.

We then moved it to First Bank where it died on the vine, as it became tainted by those who thought we could utilize this program the same way the other Chattel programs were being used in the marketplace in that GreenSeco era of “No Income, No Asset, No Job, No Money,” no problem loans. The GSEs wanted none of the headaches that came from the mindset that spawned GreenTree, Conseco and the other related chattel lending meltdowns of the late 1990s, and the early 2000s.

MHImanufacturedHousingInstituteLogo-postedIndustryVoicesMHProNews-

The MHI logo is used here for illustrative purposes only, and is the property of that trade association.

WHAT’S THE POINT?

For years MHI has been attacking the DTS issue in hopes of pushing through some sort of chattel lending conduit for as long as I can remember. The Duty to Serve has been on the books since the inception of both GSEs.

The DTS guideline for both GSEs – Fannie Mae and Freddie Mac – in their view is clearly stated to be for real estate secured properties. Chattel loans by definition are not real estate, and most folks in the MH world don’t understand the cost to build the securitization process.

The roots of the issue from the GSE vantage point are several key components.

First, understand that neither of the GSEs have the platform to securitize and deliver chattel product into the market place. There is already a pipeline to buy/deliver loans on conventional housing, but there is nothing like that for the personal property lending space that manufactured housing operates in.

If the GSEs were to spend the millions and millions of dollars to build that secondary market, there was in the past insufficient product flow to support the expense.

Another prime example is that the major purchasers of GSE securities paper are not interested in buying chattel (home only, personal property) loan production.

Those investors, such as Goldman, BlackRock and Raymond James among a host of other institutional buyers of mortgage paper do not have a DTS requirement. They are a behind-the -scenes cause for the “Just say No” by the GSEs on MH chattle lending, not the GSE’s themselves.

The GSEs only buy what they can securitize and layoff out their back door to their institutional buyers. If the institutional players don’t want the paper, who else is there to purchase those MH chattel loans in volume?

It is MHI’s lack of understanding of the function the GSEs have in providing paper to their core secondary lenders, such as Wells Fargo, Bank of America (BOA) and U.S. Bank.

What causes a great part of this problem is the MH industry’s failure to create a program that delivers a standardized product. For example, when the GSE’s buy a loan from Wells or BOA, the home created is attached to the land through a standardized “method of attachment.” That’s commonly called a “foundation.”

The house is built for a slab or a stem wall foundation that attaches a given residence to the dirt creating a single package of “real estate.” Home, foundation (which again is standardized) are connected to the land, thus creating a single package of real property. That standardization allows the title insurance companies and private mortgage insurance companies to stand behind those loan products too.

Chattel loans on manufactured homes are seen by the GSEs as a hodgepodge of various foundation systems. Mock block in their view is nothing more than a faux exterior wall that doesn’t attach the home to the ground. They see MH as concrete blocks on plastic pads, tied down with cork screw anchors, metal straps and then commonly enclosed by using vinyl skirting.

In the eyes of the folks that buy all the securities from the GSEs, those aren’t true foundations, they don’t believe they’ll stand the test of time, i.e. the 30-year term of a mortgage. Thus, the home – and loan – in their view won’t perform.

This is in spite of the fact that there are thousands upon thousands of successful examples of manufactured homes that have stood the test of time on these foundations.

In a phrase, this is a perceptual issue that calls for insights and education.

But have you ever sat across the table from six “black box” investment bankers and actuaries from Goldman Sachs or Pieper Jaffery and tried to explain to PhD. so-and-so from Harvard, and Phd. so and so from MIT or Yale and argue such topics? Doubtful. But I have. And I must tell you it is exhausting and has often seemed to be wasted time.

One such academic who actually had a hand in creating the securitization business called me aside halfway through one such meeting and said “Titus, let me give you a bit of information from our perspective.” “Yes, sir” I said, all ears. “If it walks like a duck, quacks like a duck guess what? It’s a duck” …meeting adjourned.

In addition to the manufactured home foundation issue – right or wrong – the security buyers still view these homes as ones that can be moved to another location in the middle of the night.

The MH industry fails time and again to realize the GSEs are a conduit to the secondary market buyers.

The GSEs create “real property” securities that are sold into the marketplace. The GSEs don’t even have to service loans. They have four major servicers behind the curtain that can service loans, if necessary, on behalf of the folks who purchase the securities.

The Triad Financial Services and Clayton/Vanderbilt Mortgage and Finance chattel models are different yet similar, as they finance chattel loans that are either held in portfolio or sold at a discount to a note rate buyer looking for yield spread.

The Clayton/VMF model is successful because Mr. Buffet has deep pockets and likes the yield spread. Not to mention Jim Clayton had the brains and financial support to create it. And at their company owned retail centers, VMF only finances paper from Clayton dealers. Plus, Mr. Buffet owns Clayton manufacturing and many of its suppliers as well as its dealer base. He is thus able to finance low credit with higher down payments or he can finance 5% down for consumers with truly good credit scores.

Triad focuses on AAA grade paper from reputable dealers that have a strong track record with Triad’s independent MH retail base. They portfolio and service their loans in house. Don Glisson, Jr. and his team have done a terrific job of navigating the chattel waters for over 30 – sometimes tumultuous – years. Triad’s book of business is the testimony to Don’s success.

If the MH Chattel industry would produce a standardized product model, with a more traditional method of attachment, and pushed the model without deviation through a beta channel and proved that compliance, not circumvention is the new MH mantra, then they would have a secondary market delivery strategy.

Armed with such data, you can then approach the investment banking crowd with proof of your models success. But instead, every time there is a lack of lenders or funding in the MH market, MHI cycles back to the GSE’s and DTS.

But there are powers that be in the good ole boy MH world who won’t learn and/or capitulate to those realities. As was noted in the Masthead blog linked here, the GSEs – as well as FHFA and most importantly our U.S. Congress – will not budge on this issue.

By the way, some of those House and Senate members will upon retirement want to go to work for the GSEs, or with the institutional actors such as Goldman Sachs or BlackRock. So they aren’t going to do much if anything in defense of chattel lending if it causes heartburn for those they may go to work for later in life.

4S=SafeSoundSanitarySustainable-postedIndustryVoicesMHProNews-com-

The answer…is easy…follow in the footsteps of Jim Clayton, Don Glisson, Jr., and Warren Buffet and create a standardized program that delivers a product that can stand the test of time and contain the 4 S’s: Safe, Sound, Sanitary and Sustainable.

But the MH industry, year after year after year, fails to produce anything that the true secondary market is likely to hang their hats on. ##

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

 

 

Editor’s Note: Other well reasoned letters to the edtior Op-Ed style viewpoints are encouraged on this or other MH topics.

Could Long-Term Home-Only Mortgage Loans in Land Lease Communities Rise Again?

December 7th, 2015 No comments

I read with great interest Paul Bradley’s recent article in MHProNews. I agree with Paul that there is an opportunity forthcoming to bring back a program that was created by Freddie Mac – one of the two (2) Government Sponsored Enterprises (GSE’s) – in the early 2000’s. That program had Freddie providing conventional, residential home-only mortgage loans at market rates in selected Land Lease Communities where the residents had a long-term lease.

I was one of a very small group of professionals involved in the manufactured housing industry who worked directly with Feddie Mac to create that program. I know firsthand how well the program worked for residents in three (3) land lease communities that we owned when the program was active.

This was not a simple program to get out of the starting gate. It took well over two (2) years to draft the program, garner internal agency approvals, work through the idiosyncrasies, deal with legal and appraisal issues and partner with a lender to finally bring the program to the market. All of the work involved was not easy to accomplish, yet in the end the program became a reality. And, in my opinion, the program was a success.

People will question why the Freddie program was a success, even though it was not available for more than a few short years. There are many reasons why the program ultimately was cut short by Freddie Mac, but now is not the time to rehash those issues.

What is important is to look at the successes of the program. The template and performance are set for the GSE’s to use, so that time is saved. The success is proven by the number of performing, conventional long-term mortgage loans originated in land lease communities at then current market rates.

As stated above, our firm utilized this lending program in three communities. The home buyers were thrilled to have this loan option available. In fact, after we began to offer the program, rates dropped significantly. Almost every borrower refinanced their loan at a lower interest rate without any issues or penalties!

With complex programs come many questions and concerns. Let me focus on two important issues.

First, under the Freddie Mac program, the mortgages on the homes did not impact the underlining financing of the land lease community. This was a critical issue resolved early-on while we were drafting the program. Documentation was required and provided from the underlining land lease mortgage lender to Freddie Mac, assuring that the community lender would respect the long-term leases of the residents.

Secondly, there is no relationship between the Freddie Mac Program and the proposal by the Uniform Law Commission to title the manufactured homes as “real property.”  Although there were various phrases and terminology utilized in the Freddie Mac program, there is zero connection to the ULC proposal, which is important, as the ULC plan gives current MH personal property lenders heartburn for a variety of reasons.

According to MHI and others, the Federal Housing Finance Authority (FHFA) will soon issue a draft Duty to Serve rule. It could be a great opportunity for manufactured home lending if one of the recommendations suggests a lending program similar to the Freddie Mac pilot. Having another viable lending option would be a positive step in the market place.

I stand ready to work with the parties involved on this or any other lending option once the FHFA rules are known. Feel free to contact me, indicating your interest or support. ##

rick-rand-great-value-homes-manufactured-home-pro-news-industry-voices-guestblogRichard J. “Rick” Rand
President
Great Value Homes, Inc.

9458 N. Fairway Drive
Milwaukee, WI 53217-1321

414-352-3855

414-352-3631 (fax)

414-870-9000 (cell)

RickRand@gvhinc.net

What is it that we Manufactured Housing Professionals want?

September 3rd, 2014 No comments

The industry's politics are what they are. When you get past the politics, what we find is a broad consensus. I do not think that should come as a surprise to anyone! What is it that we manufactured housing professionals want? We want to make a good living, to provide a product/service that is appreciated by our customers and to be respected in the community.

If you took the words 'manufactured housing' out of our discussions, think about the fact that we sell homes for less than conventional builders can. Doesn't that suggest we ought to be able to outsell them? If they are going to do 1 million new single and multi-family starts this year, and we can offer home and site for lower cost monthly, shouldn't we be able to outsell them?

I'm looking at the manufactured housing professional's calendar for 2014. Two industry events were well promoted. Both of those grew in attendance. Two industry events that are coming up have had limited promotion. Word has it those two will be declining a bit or maybe roughly the same. Isn't that a reflection of MH in a microcosm?

Steve Lefler and Modular Lifestyles is doing something different, they are promoting it. And guess what; they are getting results with an upscale product in land lease communities that may have lots of older units in them.

Scott Roberts has invested in improving a once failed location in TX, Brian Fannon is doing the same in MI. Scott's community improvement plan has been around long enough for both he and his customers to see the good results.

Bob Vasholtz puts a finger on one issue in his Dueling Factions. Some individuals are more interested in getting credit than they are in advancing the actual solutions. It is in the solutions where we should all be sharing in the glory and the profits.

We obviously have to invest in our own businesses and locations. Beyond that, as an industry we are very small in size compared to the rest of the housing industry. I believe it would be wise for us to spend more time thinking about ways that we can team up with others via our state associations and move the ball ahead in our individual markets.

My apologies to those who have called or emailed about my previously advanced idea for a collaborative 'solutions' and 'business development' style meeting. It was well received, Tony Kovach tells me it was widely read and some large players raised their hands privately to say we should do this. Perhaps we can organize that event to take place the day before the Louisville Show. That would provide for a one low cost trip to an already well attended meeting. A trans-corporate, trans-associational meeting designed to drive more business and get to the heart of the issues that are holding us back.

In years gone by, I was a leader in some large organizations; these days I'm a modest sized independent that continues to grow. My point is that I can relate to those who are big, small or in between. Let's forget the finger pointing, let's move past the chains that hold us back. In a trillion dollar per year housing market, we can and should do better than we are today.

We are either part of the problem or part of the solution. ##

By Rick Rand, president of Great Value Homes, has been and still is actively involved in small and large scale MHC operations. You can contact him at:

rick-rand-great-value-homes-manufactured-home-pro-news-industry-voices-guest-blog-Richard J. Rand, President,
Great Value Homes, Inc..
9458 N. Fairway Drive,
Milwaukee, WI 53217-1321,

414-352-3855
414-352-3631(fax)
414-870-9000(cell),
RickRand@gvhinc.net

(Editor's Note: While Rick Rand is on the WHA board and serves as MHI PAC Chairman, he is sharing his own opinions, which may or may not reflect that of any given association. Other perspectives are welcome, send letters to the editor or OpEds to: latonyk@gmail.com or tony@mhmsm.com.) 

Who’s in Charge Here?

June 3rd, 2014 No comments

Rick Rand’s excellent proposal for an all-industry conclave at a neutral location is gathering momentum. Such a venue should certainly not screen out the smaller operators who have always been a prime source of innovation, and it is vitally important that the “big guys” also be at the table. Make room for the various associations charged with the thankless task of placating the placating the industry’s many voices.

As a long-retired veteran of manufactured housing, I’m appalled at the conflicts, back-biting and lack of leadership that has always hamstrung our young industry. It was understandable in the early days when the largest manufacturers controlled less than ten percent of shipments and no other industry constituent was in a position make things happen beyond his own company (in those days, the leading players were all men).

Today, though manufactured housing is a shadow of its former self, the product itself is far better, the need for affordable housing is far greater, the leading manufacturers remain profitable, the market for manufactured housing communities is heating up and the stick competition is in disarray. So why are our sales volumes in the dumper?

It is true of course that we, as an industry, have made many mistakes. And we’ll make more.

In a free enterprise system, we learn from our mistakes and keep moving forward. That’s exactly what needs to happen at the kind of meeting Rick has proposed. Pull the tribe together with an agenda focused on the problems we’ve created, the opportunities ahead and agree upon a broad based strategy to deal with today’s challenges. Ideas and innovations are often sparked over a cup of coffee or glass of beer, and contacts have always been the lifeblood of the industry.

But far more is needed than griping about Dodd-Frank and what names we should use for our products. Consider some fundamentals.

Housing is one of America’s least efficient industries. That includes stick builders and us too. Why is that? Well, there’s no serious foreign or domestic competition, no real industry leadership, way too much regulation and negligible innovation. That’s been the case for a hundred years.

Academics and all sorts of advanced thinkers have, for at least that long, looked to industrializing the building process to break out of housing’s quagmire. It has finally happened. The industry we now call manufactured housing has demonstrated the ability to build good housing at roughly half the cost of traditional methods, and we have the black eyes to prove it.

As one result, America’s largest home builder is one of us, and one of the world’s richest men bankrolls MH financing. Something like 20 million Americans live in homes we’ve built and the vast majority of them appreciate the comfort and value those homes provide. There’s ever so much more that could and should be done, but we’ve made a better start than any other tilter at housing’s windmills. Many have tried.

One thing the MH industry agreed upon some 40 years ago was to unite under the HUD banner. That turned out to be a painful process with about as many negative as positive outcomes. We banded together again to reform that process with the Manufactured Housing Improvement Act of 2000 (MHIA 2000), but guess what? Big Brother has its own ideas about “Improvement” which do not include a lot of use for industry committee input.

We’ve got a lot going for us, and yet the squabbles continue. If there’s an industry strategy, it did not emerge from my recent research. What is happening is a plethora of tactics, put forward under various banners, mostly going nowhere.

As an industry professional, you can put forward some ideas for how to deal with these challenges. So can I, and I’ve done so in my recent book, Dueling Curves. It’s not enough.

Maybe at Rick’s gathering of the tribes, some sort of consensus can be reached, on a whole bunch of nifty ideas.

But that’s not enough either.

The single most important objective of such a congress—or whatever it’s to be called—should be to the emergence of industry leadership. Not a task force, committee or agency, but a person of vision who commands the respect of the industry.

A tribal chief who can weave the disparate strengths of the manufacturers, suppliers, financiers, retailers, MH owners and community operators into a strategy we can all salute. Oh well, yes, there will always be a few curmudgeons. No one will be entirely happy with any strategic vision adequate to unite us; not even the leader who ultimately propounds it.

But let me suggest this. Should we fail to unite behind competent leadership, I can suggest who will become take charge of the industry. Well, maybe I shouldn’t name names, but the initials are H.U.D. ##

bob-vahsholtz-author-dueling-curves-battle-for-housing-posted-industry-voices-guest-blog-mhpronews-com-manufatured-housing-professional-news-75x75-Bob Vahsholtz is the author of DUELING CURVES The Battle for Housing Bob can be reached at kingmidgetswest@gmail.com. Web: www.kingmidgetswest.com

What More Can We Accomplish After This Year’s Manufactured Housing Institute (MHI) Congress and Expo?

May 13th, 2014 No comments

Like many others, I attended the 2014 National Congress & Expo two weeks ago in Las Vegas. I also chose to attend the National Communities Council Spring Forum held all day Tuesday prior to the opening reception. There were some exceptional programs! The attendance was very high according to reports from MHI. While there was an eye brow-raiser (or two…) on the agenda, off-agenda items that were pretty interesting and overall the Spring NCC Forum and MHI's Congress and Expo featured seminars with speakers focused on current industry topics and issues. Numerous vendors on hand shared their services, displayed their products and provided opportunities for deal making.

What should not come as a surprise was the number of new individuals who attended the Congress.

Many professionals from all facets of the housing, finance and investment sectors were on hand to listen and learn about the manufactured housing industry. This is another great indication on the positive future for the industry.

Today, there is something in the neighborhood of Two (2) Billion Dollars chasing the manufactured housing industry! That's Billion with a capital B!

Those dollars may or may not be invested in our sector; only time will tell. What we need to realize is that there is capital willing to invest and grow in manufactured housing. With new capital much can change, improve and set the stage for a brighter future of the industry.

Yet, even with the large amount of new capital looking to invest in the industry, manufactured housing will still be a very small piece of the roughly One (1) Trillion Dollar annual U.S. housing market.

The questions I continue to ponder are;

  • what can we do to grow the manufactured housing industry’s share of the overall housing industry?

  • How do we get to the root of the obstacles that continue to impede the MH Industry’s growth?

Flying home after Congress and Expo, those nagging questions bugged me. Below is a thought that came to mind that may provide a profitable starting point.

Why not host an – August 2014? – organizational networking/deal making opportunity event that is Trans-Associational?

Why not consider a location near a fine newer MHC property that breaks the stereotypes – such as Saddlebrook Farms in Grayslake, IL – where the potential for new development could better be understood by those who only know the 1 or 2 star MH properties? Would love to hear suggestions on other possible sites that fill the bill.

That property would also feature great looking, residential style product that is ground set, so this would shatter the 'mobile home' image for potential investors who only know the entry level product.

As you can see, I am not suggesting replacing any current event, such as the upcoming MHI annual meeting, NCC Fall Leadership Forum or other association or industry functions.

Rather I am suggesting something totally fresh and different.

Let’s bring the stakeholders and potential investors to the table at the same time with professional facilitation and the opportunity to participate.

The focus of the meeting would be how to get those multi-billions moving ahead, as well as advance the MH Industry as a larger and viable part of the overall housing market.

What makes this concept different than other current programs is that interested parties are invited regardless of current relationship issues or biases. Bringing goal and solution oriented individuals from differing backgrounds, all committed to growing the manufactured housing industry could be groundbreaking.

Please do not misunderstand; while I'd like to be involved, I am not volunteering to take the lead in this event due to my current business obligations. I am putting the idea out in this public forum for discussion.

The way this gets done is for

  • commercial real estate brokers and appraisers,
  • commercial RE lenders and brokers,
  • MH finance companies (personal property and Mortgage lenders),
  • Any – or all – HUD Code manufactured housing and modular builders,
  • developers
  • Suppliers and other service vendors

to pay for the costs of the meeting, mixers and main meals.

Pick a place that is nice clean convention location, and keep the entry fee really low.

Let's put an asterisks next to this one. What if we make it easy for the hundreds (or thousands?) of owners of MHCs who are looking to exit due to age, health or other reasons to come at a pre-event day to discuss their properties face to face with those who may want to buy them?

Might this be a good way to facilitate the capture of more of that circling capital which would also facilitate the improvement of languishing communities and the sales of more homes in them?

There also ought to be an ability for the event organizers to bar this or that person or group at will, so that the Ishbel Dickens/NMHOA or Industry naysayers don't get in. That keeps this focused on business and solutions.

Just think about the number of organizations who would want to take part in an event of this nature. Here are a few who I believe would join the effort.

rick-rand-industry-voices-mhpronews-com

There probably are others who should be included on this list. These are the organizations that came to my mind while thinking about who the stakeholders are in the future of the MH Industry.

One more critical point. Let's tackle the creation of a vibrant, efficient resale market for manufactured homes. This is absolutely critical for the future of our industry, the benefit of our residents and lenders as well as our homes' broader acceptance.

By being trans-associational, this could also prove to be fertile ground for meeting with and recruiting new members.

As to a target date, based on the interest being shown about the industry, sometime in the near term would be better than delaying. By doing it in the summer, a successful meeting could position the 2015 trade shows for dovetailing with this concept.

The location must be close to a major airport so that there is easy access to the event. As noted, having some newer and older MH communities nearby would be beneficial so that participants can take a charter actually view the new homes and better understand the true breadth of the MH product and variety of community lifestyles.

I believe that an event like this will assist in not only promoting the Manufactured Housing Industry but also could be a catalyst for additional new capital investment and future financing opportunities.

We must not lose sight of a key goal of the meeting; how to advance the MH Industry as a larger and viable part of the overall housing market.

Please feel free to comment below or email me with your thoughts. The future of the MH Industry is ours to create. ##

rRck RandRick Rand is the president of Great Value Homes, and has been involved in small and large scale MHC operations. You can contact him at:
Richard J. Rand, President, Great Value Homes, Inc.. 9458 N. Fairway Drive, Milwaukee, WI 53217-1321,

414-352-3855
414-352-3631(fax)
414-870-9000(cell),
RickRand@gvhinc.net

Why Retailers and Community Operators should go to Tunica!

March 19th, 2014 No comments

As I read the digital 2014 Tunica Show brochure and business building and profit protecting seminar line up, it became crystal clear why Retailers and Community Owner/Operators ought to be in Tunica next Wednesday morning through Friday at noon (March 26-28)!

Retailers and Communities can get free:

  • Networking with your peers,
  • Compare Manufacturers side by side, over 80 homes will be on display!
  • Compare products and services needed by your business side by side,
  • Get the latest on Manufactured Home Lending available TODAY, from all the major lenders all under one roof.
  • Get expert guidance on Commercial Lending on MH Communities,
  • Get marketing and sales tips in the Dominate Your Local Market 2.0 Seminar, featuring manufactured housing marketing and sales veteran, L. A. “Tony” Kovach.
  • Compare CRM products in a free panel discussion with Scott Stroud and myself, and learn why they are a key to growing your sales in 2014 and beyond.
  • Get success tips on MH Communities (MHCs) from pros with successful firms who know!

Let me give you a quick snapshot of the last bullet point above, which will provide the reasons you need to grab your business cards, and have your photo ID so you can enter the Tunica Show, free!

In the last decade, as the numbers of retailers and shipments declined, manufactured home communities (MHC) have of necessity become on-site-home leasing and selling operations.

Communities have always had to do the types of services and duties that developers and multi-family operations have provided in the conventional housing world.

Tunica has become a magnet in recent years, attracting more communities as well as more retailers than in prior years.

Here is the line up of on the panel for MHC Lessons Learned, to be held Thursday, 10:00 AM – 10:55 AM on March 27th.

Success Tips from Manufactured Home Community Owners & Executives!

For anyone in or thinking about getting into the land-lease community business, this panel discussion is for you! Hear practical tips from community operators that can help you operate your community more professionally and profitably.

jenny-hodge-national-coummunities-council-ncc-industry-voices-manufactured-housing-pro-news

Jenny Hodge, Vice President of the National Communities Council (NCC), will be your panel moderator.

You can learn more about Jenny in this month's MHProNews exclusive interview A Cup of Coffee with…Jenny Hodge.

tammy-fonk-8-2013-cbre-posted-mhpronews-industryvoices

Among those on the three person MHC panel is Tammy Fonk, an Associate with the CBRE MH/RV National Group. Tammy was born and raised in the MH industry with two family owned communities. She operated the family owned company's sales and marketing business as well as having an active role in day to day community operations and resident relations. As a member of the MHRV Team, Tammy now works closely with public and private investors on building business relations and opportunities to enhance the Manufactured Housing Industry as well as the RV Resort and Marina properties in North America. Tammy works with owners and buyers of small, medium and larger communities in addition to representing large portfolio owners.

maria-horton-newport-pacific-capital-posted-industry-voices-manufactured-housing-pro-news-com

Maria Horton is a regional manager with West Coast powerhouse, Newport Pacific. Maria's bio is linked here, but having met her, let me tell you what her resume doesn't say. This is a warm, delightful engaging professional! You will love to hear here insights and experiences on this panel discussion.

rick-rand-great-value-homes-l-sam-zell-equity-lifestyle-properties-els-chair ... layton-clayton-bank-chairman-industry-voices-manufactured-home-pro-news

Rick Rand (l), Sam Zell (c), Jim Clayton (r)

Last and not least, is Rick Rand, who made quite a stir recently with this guest column. Rick was the subject of another MHProNews.com interview, A Cup of Coffee with…Rick Rand.

If online registration for the Tunica Show is closed by the time you read this, don't worry! You can bring your business card and a photo ID, retailers, communities, builder-developers, realtors and installers will be able to sign up at the door, free with those credentials!

Let me close with a tip of the hat to L. A. Tony Kovach. Dennis Hill recently gave Tony quite the well deserved public shout-out, for his key role in the come back of the Louisville Manufactured Housing Show.

Community Operations executive Ted Gross, with Continental Communities praised his session as being the best marketing presentation he had seen since coming into the MHC business.

We've worked with Tony about 90 days now, and let me tell you from first hand experience his deep passion for the MH Industry.

Tony cares about the success of people, operations and loves to see happy consumers enjoying our product.

I don't personally know of anyone who gives more time away for the benefit of the industry.

Tony's consulting and banner ads have helped our company's growth and presence in MH significantly! On MHProNews, he brings out the articles, experts and tackles the topics others shy away from, and is a friendly, peace loving professional and family man.

When you think about it, Tony's efforts to inspire our industry to do more and grow at shows like Louisville and Tunica are part of the rising tide of sales in our industry. You may or may not know it yet, but he makes you money just by being here and spreading the good word about our industry on sites like ManufacturedHomeLivingNews.com and here on MHProNews.com.

These are among the reasons why I'll be voting for him as MHI Supplier of the Year, and I hope others that read this will consider doing the same.

We will be at booth 13H in Harrah's Convention Hall. Change your plans! Make your travel arrangements! Fly, drive or hitch a ride, but we hope to see you in Tunica for the 2014 Tunica Manufactured Housing Show! ##

brad-nelms-coo-manufactured-homes-com-posted-mhpronews-comBrad Nelms
COO
ManufacturedHomes.com

Why the Continued Conflict?

March 8th, 2014 No comments

One has to ask themselves why this conflict continues? You ask what is the conflict and why do we as an industry need to concern ourselves with this issue? The answers are simple; the conflict is the continued divide between MHARR and MHI. The reason we must concern ourselves is obvious; industry unity will bring us further and faster than continued disunity.

I am not alone in asking this question about the root causes of the conflict.

Recently individuals from both inside the industry and the regulatory sector have written about the approach and tone of the messages sent by the Manufactured Housing Association for Regulatory Reform's (MHARR) President and CEO, Danny Ghorbani.

There is no reason for messages of the nature like the one linked here to continue.

Just this week the industry received some well needed good news that Pamela Beck Danner, JD, was appointed as the new Career Administrator for the HUD Manufactured Housing Program.

Rather than just leaving the message as a congratulatory letter, Danny stated that MHARR will challenge HUD’s change to the law regarding the position to being a career vs. non-career administrator.

Even if HUD has inappropriately changed the law, why send this widely distributed mixed message? Why not just congratulate Pamela and then quietly send HUD an objection that would not be widely distributed?

Continuing this pattern of creating conflict is not beneficial to anyone involved in Manufactured Housing regardless of which area of the industry one is involved in. Are these the types of messages that we want as we work to accomplish our industry goals? I think not.

Just think how much more our industry could accomplish by working together! It is critical that as an industry we focus on the target and develop a cooperative effort to move our goals forward.

Both organizations do not always have to agree; in fact we may agree to disagree. Even in that case, we must show our public unity and spend our collective time working on the core issues.

By not working together some think we weaken our message. By contrast, when we work together we can send a more powerful message to Congress, the Regulators and all others involved that we stand together to accomplish our collective goals.

Clearly MHI is moving the ball forward in this regard, on both the regulatory and legislative fronts. One might ask, if MHI can do it alone, without Danny Ghorbani/MHARR, will MHARR and Danny become politically irrelevant?

I have been in the Manufactured Home Community and Home Sales businesses for over 32 years. During this time I have worked with manufacturers that were members of both MHI and MHARR. In fact, some of the manufactures whom I purchased homes from were only MHARR members. Naturally, I have spent a great deal of time with the principals of these companies along with Danny discussing many issues.

We have developed close personal relationships from working together. From our times together I have learned much about many issues, some which I was not aware of previously, others that could affect my business. There have been issues on which we have not agreed upon, yet we never treated each other rudely or without mutual respect.

That is the type of relationship which both organizations must strive to maintain, especially in today’s difficult times.

Those of us in the business are all very conscientious of whom we choose to work with or purchase products from today. Our decisions are influenced by many factors; company history, price, service, product mix, warranty and personal relationships. I am about to purchase new homes to place in my communities. One consideration that I would be remiss to not consider in my decision making process is which manufacturers support the industry's goals that I support.

In addition, I have very strong reservations on working with a supplier who supports continued conflict and inappropriate messages being distributed by MHARR's CEO. Why would one work with a supplier who is not aligned with our industry's or my personal goals?

This is no different than one deciding to no longer buy homes from a manufacturer who lacks in timely, quality post-sale service and warranty support.

To financially support a manufacturer who through his association dues allows this discord and strife to continue in this small industry is questionable at best. We need to vote with our wallets! Maybe that will get the attention of those who fund the emailed or print messages that slow or harms our industry's message in Washington, DC.?

Maybe that would stop this avoidable and counterproductive multi-decade conflict. ##

rick-rand-great-value-homes-manufactured-home-pro-news-industry-voices-guest-blogRick Rand
Great Value Homes
Milwaukee, WI.

(Editor's Note, Rick stresses he is writing as an industry business professional, and not on behalf of any association. Rick was recently interviewed, see A Cup of Coffee with…Rick Rand., and is also in a video interview shown on the paged link here.)