by 'L. A.' Tony Kovach
With approaching half a year of increasing shipment levels, we are seeing what could be the start of an industry turn around. This is not the time that anyone wants to the lose momentum. We will take a quick snapshot of a real challenge, but also suggest some common sense steps that pro-active industry professionals should consider taking to mitigate the issue we will review.
With the disputed 'recess appointment' of Richard Cordray by President Obama reported in our Daily Business News, the last item slowing the implementation of the Dodd-Frank legislation has now been removed. Cordray has made it clear that non-depository lenders will be on the list for audits (and potentially significant fines).
MHI's Jason Boehlert stated during his address to attendees at the Louisville Manufactured Housing Show that a major personal property (home only, chattel) lender has told him that 54% of all the loans they make will be considered predatory lending under Dodd Frank.
With some 60% of all loans in our Industry being personal property - home only - loans, this means many retailers and communities need to prepare immediately for alternatives, should they lose a significant source of their third party or in house lending programs.
Some in the communities world have turned to rent to own or lease to own 'with option to buy,' as a hoped for escape from the SAFE Act and Dodd-Frank regulations. But as more than one MH lending expert has told us, such programs may be considered 'disguised credit transactions,' which could also result in significant fines, of up to $25,000 per incident.
Regulatory/legislative action
Sources indicate that MHI's leadership is aiming for the Legislative session in Washington DC in late February as the target to have a new MHI executive director in place of the departed Thayer Long. Joe Stegmayer told attendees in Louisville of their ongoing efforts to identify a solid professional to replace Long. There are ongoing efforts at the state and federal levels among association leaders. The point is that one pro-active response to the issue raised above needs to be legislative/regulatory action. That is arguably best accomplished by the active involvement of the maximum number of industry members in the association(s) that make sense for their operation.
Tapping the maximum number of third party lending options
At the Louisville Show, we had 7 different third party manufactured home lenders in our finance forum panel presentations. Forward looking trade shows which present such forums are a great opportunity to gather info, meet with lenders face to face and see what plans they have that can help you avoid the looming and existing issues we face today.
I loved what Dick Ernst, the moderator of our Louisville Finance Forum panel and industry finance pro, said. Paraphrasing, “What we see here is that there are lots of third party lending resources available today. We don't have a lack of lending capability as an industry.” I've invited Dick to find time in his busy schedule to sound off in writing here at MHProNews.com on finance related topic(s) as his time permits.
Attracting more customers with Good Credit
It is ever more important to reach beyond our traditional manufactured home profile buyer and connect with customers ready, willing and able to pay cash or get financing. The tools and resources are available today to do so, with a good Return on Investment for those who make the effort. As a quick aside, we know that some people with good credit and cash already shop and buy our product. That fact alone suggests we can and should be able to attract more such buyers, with the proper effort. The flip side of this fact is a statement to me from a respected association leader, who said, "We have built an industry on the backs of people who are fundamentally not finance-able."
Tying together the various needs
When we fail to define ourselves others will define us. When we fail to respond to threats in the best possible ways, we are asking to be ever more marginalized. Some say privately or publicly, "Our Industry is now like the pimple on an elephants -ss. We have no leverage to speak of, we are too small an industry." We are small, which means we better be smarter and use our resources and time to the greatest advantage.
We need an MH Image building and marketing campaign. We have a program waiting in the wings, the MH Alliance/Phoenix Plan. Two firms have pledged in writing to support pilot projects in two states. Two more sponsors could launch those pilots. Why not your firm, or one that you know and work with?
As dozens of industry professionals from coast to coast who have seen the MH Alliance plan can tell you, such an effort would tie together political and regulatory advocacy, marketing, media relations and more. As marketing professionals, like Walden University's Lisa Tyler have noted, the RV and motorcycle industries benefit from defining themselves through marketing, why not manufactured housing?
Now or never?
We only have the present. The past is gone, tomorrow is yet to be, but how we invest our time and energy now will reveal how tomorrow will look for us once it gets here.
Take a multi-tiered approach. You need to be engaged in multiple options above to be a long term player in this industry today. If you already are, congratulations. In that case, take an industry colleague aside that needs your advice, and help them do the same. In the long run, the more Industry firms who are thinking and acting long term, the better. ##
(Editor's Note: L. A. ‘Tony’ Kovach is a member of MHSpeakerTrainer.org)
