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OZY Media's Trailer Park Nation - a Dizzying Mix of Falsehood, Facts, Fables and Fiction under a "True Story" banner?

  • Written by L. A. 'Tony' Kovach

OZY Media is a West Coast based 'new media' start up that has drawn millions in investments and supports a staff of some 17 people. Targeting Millennials, they self proclaim: "OZY is a digital news magazine focused on the new and the next." Based in Mountainview, CA., they've reportedly attracted tens of millions in venture capital and grab some 10 million visitors a month. Ozy boasts of contributors such as: Bill Gates, Condoleezza Rice and Bill Clinton, who see us as a signpost to the future.

Today, MHProNews joins The New York Times, Ad Age, Business Insider and Glass Door among those who have reported on their operation. In our case, we do so because Ozy stepped into it with a controversial series on manufactured housing (MH) they've errantly dubbed "Trailer Park Nation," carried under graphically cool banners that proclaim the claim, "A True Story."






"True Story," really?  How accurate are their MH stories so far? Do their editors care about precision, or is it more about sensationalism and gaining more audience share?


A tip lead me to the first story in their series. No doubt, this is a sad thing that happened to those impacted by this closure. But as I wrote to the edtiors at Ozy Media, such a displacement by legal acts can happen in apartments or conventional housing neighborhoods too.  As the Ozy account read when I saw it, there was a dizzying mix of accurate, clearly wrong and misleading statements. The story was designed to tug at heart strings, as the plight of MH home owners facing eviction from a land lease community closing in Louisiana was spun. We saved that version in screen captures, you can see in the download at this linked here. Let's see check back later and see Ozy Media makes any corrections?


Tom Fath, who we know to be an MH industry professional, had posted this comment.




I reached out via email to Ozy. A reply was not long in coming, which read as follows.


Hi Tony,


I am the editor on the trailer park series you wrote in about. Thank you for reading and sending a note. I'd like to invite you to specifically cite the errors to which you were referring in the note so that we can look into them.





Sanjena Sathian 

OZY Media Deputy Editor

678-571-1072 | @sanjenasathian

OZY on: Facebook │Twitter 


That email from Senjena looked to be a promising start. Here is the Ozy Media 411 on the deputy editor who replied. As you can see, even their bios are designed to attract the millennials their new media brand is focused upon.




Click here or above for Sanjena Sathian at Ozy Media bio.


The PDF reply I sent her read a lot like this:


Hi Sanjena,

Quick Reply to your message.


Please see attached PDF, feedback and follow up are welcome. My phone number is below.





PDF Response to Ozy Media editor linked here.


Here was Ms. Sathian reply.


Tony, thanks for writing. My superiors and I have taken a look at your letter and while it adds a useful perspective, we've decided it doesn't merit a particular correction at this time.





Sanjena Sathian 

OZY Media Deputy Editor

678-571-1072 | @sanjenasathian

OZY on: Facebook │Twitter 

In turn, I shared the following, clearly stating this exchange was for the record.



Pardon me? Are you and other editors are saying false statements and misleading statements are acceptable? 


For the record, please.  Thanks.




To which Sanjena shot back...


Hi Tony,


I encourage you to take a second read of the story. We very much understand the distinction between manufactured homes and mobile homes. This story did not confuse the two, as it refers to a park with those pre HUD standard models, as it points out. 


Your other notes offer context, but are not errors in our story; in the case of this particular park, those provisional assistances were not made.


If I've misunderstood you, please let me know, but I'll need you to point to specific phrases where we got facts wrong, not larger thematic issues you have qualms about.


Thanks very much,



Sanjena Sathian 

OZY Media Deputy Editor

678-571-1072 | @sanjenasathian

OZY on: Facebook │Twitter 


The exchanged went on a bit, and ended with Sathian stating no changes would be made and “have a good one.”


Please note that my lengthy message indicated there was more errant in their article. Do you see any interest on Ozy's deputy editor in learning what that might be? I don't.




One of a number of fact errors or misleading statements in the Ozy Media story.


Errors and Omissions?


According to StateMaster, the highest percentage of mobile and manufactured homes in the nation stands at 18.8% and is found in South Carolina. To say that 25% of the markets in the South East are populated by MHs is thus misleading at best, or factually in error at worst.


Tom Fath's posted comment points out that some 2/3 or manufactured homes are sited outside of land lease communities. Did Ozy Media correct that error? Not as of this writing.


The under-informed reader is also left with the impression that MH is a fire trap, even though my PDF linked from the downloadable reply to Ozy Media clearly linked to facts from a third party National Fire Prevention Association (NFPA) that prove their suggestion to be false.


Bury Your Head In the Sand...


Some in our MH industry's ranks believe that when a bad story hits the media, you ignore it and wait for some thing else to push it out off the headlines. The problem is that this head-in-the-sand pattern has landed MH in the humble state it currently exists, serving a small fraction of the population. Yet hundreds of thousands of home seekers a year might be looking for us if the truth about MH was better understood by the public. There are media professionals – like Ozy? - that bear some responsibility for every errant report that robs singles, couples or families of their piece of the American dream.


With essentially a 4 person team plus volunteer contributors, and has produced a steady stream of more balanced, accurate and news, reports, video and written interviews and commentary. While financial support for our project has grown, we pale next to the tens of millions that flow into Ozy Media. What could MH do with pro-industry media with something more like their budget?


Answer: it would mean billions in new sales to MH, and it would lead to a rebirth in MH for home owners and professionals alike.


Ozy Media - Lessons Learned?


There are lessons to be learned from Ozy Media and their arguably less-than-true-story, published under a banner that is itself an incorrect use of terminology (“Trailer House Nation”) when applied to modern MH. Last I checked, almost every house in the U.S. arrives by truck to the building site; how are our homes trailers and others aren't? MHPros must combat such image challenges armed with the facts.


One is takeaway is that engaging the media matters. Please see tonight's Masthead blog post. News media must be held to account, or some in it will continue to play fast an lose with facts, as one quipped tongue-in-cheek, in a Brian Williams style.


The other is that MH Pros must be willing to invest in image and public education. To Ozy's credit, there are elements in the Ozy series on MH that - properly told - would appeal to millennials as well as other demographic groups. There is an affordable housing crunch in America. We in MH have the best solution for that problem. See the video of this millennial here.


The next to the closing frame – shown below - of the video on Ozy's site in their "Great Eviction" article raises a point every public official should PROPERLY note. When affordable MH disappears, more people will turn to publicly subsidized housing.




MH is a vital housing solution, and the NIMBY and demeaning-articles-by-misguided-media-crowd are harming Americans, existing MH owners and our great industry.


Appreciation and Depreciation


One of the many errors in the Ozy accounts published to-date is that MH always depreciates. This is not so, and is contradicted by studies, include a recent report out of Michigan. CFED's website says, quoting in part: “Appreciation in value can be comparable to site-built homes.” MH goes up or down in value for similar causes as conventional housing, including the availability of financing, location, demand and how well the property is maintained.


Such false or misleading claims by Ozy or others have to be corrected by MH Industry pros. They won't be corrected by themselves.


I can't speak to the quality of Ozy Media on anything other than their series on pre-HUD code mobile and manufactured homes (MH). Their marketing must be pretty good, or it would not be enjoying such rapid growth.


With respect to our MH industry, their deputy editor clearly did not care enough to want to issue either corrections, or to admit any error. Nor did Ozy care enough to allow a reply Guest Letter or OpEd, something other media is often open to doing.


By contrast, when I contacted Lane Anderson at Deseret News a few months ago about a troubling piece she did that was based upon a flawed story out of the Atlantic. Lane made time and listened. Ms. Anderson then asked me to introduce her to an array of MH industry experts. Lane recently published a far more balanced story on MH that touts our homes as a potential solution for affordable quality living. It is one of the more balanced reports that have come out in recent months from mainstream media.


Engaging the media is necessary and has value. Association executives JD Harper and Jen Hall are examples of recent efforts to engage the media on issues that paid almost immediate dividends. They and all who take the time and effort to reply and hold media to account are all to be commended.


We as MH pros or aficionados also have to be part of the solution, or we are de facto part of the problem. The MH solution Could help millions! It would be profitable. It won't be a cake walk, but as John Bostick likes to say, "Easy doesn't pay well." Let's do what is right and just, which at first will take effort. But the irony is that over time we will see our industry reap the rewards, and out work will become easier, more profitable and more respected, and... like Ozy will be less likely to publish stories that miss-the-mark on so many points. ##



l-a-tony-kovach-mhpronews-By L. A. 'Tony' Kovach.













Correcting Errors in “The Hidden High Costs of Mobile Homes” – Lance George - Daily Yonder

  • Written by Silver, Matthew

In an article entitled The Hidden High Costs of Mobile Homes published in the Daily Yonder, author Lance George, notes the sales of modern manufactured housing (MH) continue to rise, while the remainder of the U S. housing market remains somewhat flummoxed. George says about MH, “High-interest loans, shorter loan terms and some sales tactics turn what could be a good deal into an expensive proposition. Manufactured homes are typically sold at retail sales centers where salespersons or 'dealers' receive commissions, often exacerbating these finance issues. In some cases, dealers resort to high-pressure sales tactics, trapping consumers into unaffordable loans.”

George's remarks begs some follow ups and the retort, “How dare salespersons receive commissions on sales!” Real estate agents and brokers, like many salespersons, make their living from commissions. So it should not be a surprise that the same thing applies to manufactured housing.

George labels loans on MH “unaffordable.” As the GAO and Fannie Mae reports referenced below prove, that statement is incorrect. By comparison, isn't lack of affordability what many parts of the mortgage industry were accused of, ushering in the mortgage/housing collapse and the Great Recession?

Aren't unaffordable home loans - often to those not qualified to buy the house they got – what contributed to decimated values in the entire housing market for much of the past 6 years? Didn't that mortgage meltdown help lead to the creation of the Dodd-Frank Act and the subsequent Consumer Financial Protection Bureau (CFPB), federal boondoggles that have restricted the growth of the MH market, which had no role in causing the Great Mortgage/Housing Bust?


Pine Manor, UMH Properties.

Barney Frank about Manufactured Housing and the CFPB Regulations

Former Congressman Barney Frank sent in a letter to one of his constituents, which included the following comment.

Dear Mr, Cook,

Thank you for your thoughtful letter about the negative impact of the Financial Reform bill on manufactured housing. I'm very proud of the work I have done with the manufactured housing industry for years, and I was regretful to realize that we did have this problem. I do not think it is necessary to include manufactured housing as part of our effort to prevent abusive mortgages practices, and I am now working with my staff to see if we can find away to make a change that would deal with the problem you correctly point out...

(Editor's note, bold emphasis not in the original). The Barney Frank letter is linked here.

Industry Experts Sound Off - Reply to Lance George's Daily Yonder article

Industry finance expert Dick Ernst, a principal at FinMarkUSA, says the absence of a secondary mortgage market for MH makes the cost to originate personal property loans similar to a mortgage loan, regardless of the amount of the loan. This in turn dissuades many lenders from dealing in the MH marketplace. Learn more from Ernst in his article, Deconstructing the High Cost Mortgage Loan.

To sum up, what Ernst demonstrates is that the so called high cost loans are not unreasonable at all, based upon marketplace realities.

don-glisson-jr-president-ceo-triad-financial-posted-mhpronews-com-Don Glisson, Jr., President and CEO of Triad Financial Services, points to one of the reasons site-built houses have lower interest rates. “Government policy keeps mortgage rates artificially low, and if we had access to the same easy and subsidized capital as the site built mortgage industry, our rates would be lower too.”

Glisson elaborated, “He (Lance George) points out our lack of capital access but blames us for high interest rates, when the culprit is our lack of subsidized lending which puts us in an unfair position. He also mentions we have shorter terms, likes it’s a bad thing, when actuality we are helping our buyers build equity much quicker than site built lenders."

While admitting manufactured homes are an important source of housing for millions of Americans, George notes the growth of manufactured home sales as “tepid” for three years. While it is true that manufactured housing is lower than its historic levels, in fact the growth in new manufactured homes has been steadily sustained since for going on six years.

Further, the very regulations that the CFPB has imposed has dried up some access to private capital that could fuel more new or pre-owned manufactured home sales. Some MHCs have turned to rentals instead, in an effort to avoid the regulatory risks and pitfalls. This means that thousands who could have become home owners are now renting instead. Thanks, CFPB.

Fannie Mae Compiled Facts Contradict George's Errant Conclusions

In a 2011 study, Fannie Mae indicated that the payments on manufactured homes is lower by about half versus any other housing option, even given higher interest rates (see chart).


The Federal GAO also Dispels Errors in the Daily Yonder Report

The Government Accountability Office (GAO) reported in July 2014 that HUD has failed to meet major provisions of the 2000 Manufactured Housing Improvement Act (MHIA 2000), including the provision to promote the availability of affordable manufactured homes.


The GAO report stated in part: “Owners of manufactured homes have lower monthly housing costs than site built owners and apartment renters, but high financing costs often keep these homes from being even more affordable. HUD’s Federal Housing Administration (FHA) has two insurance programs for manufactured home loans. Although most manufactured homes are titled or owned as personal property, HUD’s programs primarily insure loans on manufactured homes financed as real estate.” Indeed, industry reports suggest that perhaps 2/3 of new manufactured home sales are financed with personal property – home only or 'chattel' - loans.

Perhaps with that in mind, the GAO report continues. “Additionally, owners of manufactured homes are more likely to have higher-priced financing than owners of site-built homes. The 2000 Act required HUD to review the effectiveness of the FHA programs, but HUD has not developed a plan to do so. Such research would help HUD determine whether and how it might further facilitate the availability of affordable manufactured homes.” (Emphasis added.)

With almost fifteen years since the MHIA of 2000 was passed, HUD continues to drag its feet in performing this review of the FHA. This further hinders the potential growth of the MH market and keeps potential home buyers from even lower rates. The GAO Report is linked here.


The GAO chart above demonstrates the MH is the lowest cost form of housing,

based upon actual monthly payments

George says: “No meaningful secondary market, similar to that used to finance most single family homes, is currently available for factory-built housing. But much of the isolation and disparate treatment for manufactured homes in the finance markets can also be attributed to systemic industry practices and systems.”

George fails to note the obstacle course the federal government has set up to dissuade the growth of the MH market. Tim Williams, President and CEO of 21st Mortgage Corporation, noting George works for a consumer advocate group in Washington, says, “His organization promotes Rural Housing Agency products. I think he should disclose he has an agenda and a conflict of interest.”


Tim Williams, 21st Mortgage Corp.

Penalizing current and potential MH home buyers

A long time industry lender told MHProNews off-the-record that he is seeing a rise in turn-downs on some MH loans, not because of credit or income issues. Rather, the declined loans are because of the 'low' loan balance that would exist after the loan is made. Current CFPB regulations created a situation where most lenders are no longer able to make loans on a manufactured home where the balance is under $20,000 to $25,000 dollars.

How many millions of home manufactured home owners have the value of their homes harmed by such regulations? Since owners don't sell their homes routinely, it may be years before some discover what the CFPB regulations are doing to harm them.

It is self evident that when you can't get financing, the value of those under $20,000 homes will be harmed, just as the value of conventional real estate dropped in the wake of the Great Recession and tight credit standards.

It's issues that impact manufactured home owners and businesses alike that has caused the manufactured housing industry-sought legislation fixing Dodd-Frank/CFPB caused problems. The legislation is styled, The Preserving Access to Manufactured Housing Act - or HR 650 - and seeks to address problems the CFPB won't do through its regulatory authority.

Rep. Jeb Hensarling (R-TX), House Financial Services Committee Chairman, referring to the CFPB asked this week, “Who will protect consumers from the overreach of the Consumer Financial Protection Bureau?” Hensarling is among those on Capitol Hill who believe a bi-partisan commission must be created to oversee the CFPB.

Former HUD Code Manufactured Housing Program Administrator and CFPB staffer, Bill Matchneer, JD - who helped author the the appraisal rules which will soon go into effect – has said in a video interview linked here that the perspective of government officials on manufactured housing is often closer to stand up comedy than the realities of the modern manufactured home and the market place.


So while Lance George laments the lack of access to mortgage lending for MH consumers, he fails to offer a resolution for the problem. Nor does the Daily Yonder article indicate a clear understanding of the issues.

The true “hidden costs” George derides are due to in part to governmental regulation, a lack of adherence to its own rules.  The alleged goals of CFPB policies claim to help home owners and potential buyers, when experts state that CFPB regulations harms millions of them in the MH space. Last and not least, as a reporter, George owes the public and readers of the Daily Yonder  the correct use of terminology. There have been no mobile homes built in the U.S. since June 15, 1976. #

Related articles:

The Dodd-Frank fix, HR 650, is building on an effort that gained significant traction in the last Congress, please see:

matthew-silver-70-70Article Submitted by Matthew Silver, to MHProNews.

The Tiny House Trend – What’s In It For the Manufactured Housing Industry?

  • Written by Sandra Lane

Trends come and go, being influenced by various economic conditions. These include the availability of jobs and financing as well as life status and geographical preferences. A growing number are no longer interested in the McMansions, a larger trend still touted by so many real estate developers. Back in 2001, “oversized” houses might be 3,200 sq. ft. and larger. Today's new trend in housing is the Tiny House movement.

Changing Times

The old Bob Dylan song said, “The times, they are a-changing.” As people have dealt with unemployment, losing homes to foreclosure, moving from one area to another to find work and general uncertainty, the trend to occupy smaller and less expensive housing is emerging.

So, what’s in this trend that could benefit the Manufactured Housing industry?

It’s always a good idea from a marketing perspective to look for new opportunities in housing and new types of clients who can benefit from Manufactured Home living. The Tiny House trend could be one of those opportunities.


Tiny House in the Learning Village of the Container Park in Las Vegas.

Movement Promoters

First, let’s look at the various types of people and organizations promoting tiny homes. The Small House Society was founded in 2002, and the leaders and members define themselves as being “a cooperatively managed organization dedicated to the promotion of smaller housing alternatives which can be more affordable and ecological.”

The Houston chapter of the group says that “This is a group for anyone interested in designing, building, living in, renting, or maintaining a Tiny House and sustainable lifestyle.” The members support each other by sharing resources and knowledge as well as visiting builders and holding Tiny House events.

They state that the Tiny House movement is a return to houses of less than 1,000 square feet, some as small as 80 square feet. Building types include cottages, cabins, trailers, containers, caravans, house boats, tree houses and many more.

The typical Tiny House on wheels (THOWs) may be 8 feet by 20 feet. Livable space may total 120-160 square feet or less. This promotes ease of towing and is exempt from the need for a building permit. The size and design of Tiny Houses depend on the organization and purposes for which the houses are to be used.

A segment featured on Bill Moyers’ PBS program stated that, “Increasingly, these small homes are being considered as models for affordable housing that could serve as a place for the homeless to find some stability and, perhaps, live permanently.”


Tiny Houses are already being used in such varied locations as Portland, Oregon; upstate New York; Austin, Texas; and Madison, Wisconsin, where local advocates for the homeless have constructed communities of Tiny Houses.

The Moyers program also said that “One of the chief benefits of living in a small space (referred to by some who practice it as “micro-living”) is that it’s cheap. An added bonus — and the reason for its initial appeal — is that it’s environmentally sustainable.”

The growing popularity of very small houses among the environmentally-minded set is now being called a movement. There are numerous blogs devoted to them, plus the TV show – Tiny House Nation – for those with access to triple-digit TV channels.

Even HGTV is covering this emerging trend. That channel has a series entitled “Tiny House Hunters” that began in December, following home seekers across the country as they look to downsize. They'll check out “three unique streamlined houses under 600 square feet before deciding on the perfect compact kingdom to call home.”

Cost of Tiny Houses

The president of the Small House Society said that if you build a Tiny House yourself, it could cost as low as $10,000. However, not everyone wants to do that because of time constraints and lack of skills.

The Tiny House Company in Spring - near Houston, Texas - is offering an 8’ x 19’ Tiny House shell on wheels with vinyl siding, faux brick, and a 30 Amp electrical system installed starting at $12,900. This model features side entry and an open floor plan with an 8' x 7' 6" sleeping or storage loft.

In Las Vegas, Nevada, the Downtown Project has acquired three rustic-cabin-style micro houses from the Tumbleweed Tiny House Company and are displaying them in various downtown areas. One such house is in the Downtown Project’s Container Park. The others are parked in an adjacent lot, waiting to be placed.

Kim Schaefer, public relations director for the Downtown Project, said the cabins aren’t a permanent fixture, but are meant to make people think of possibilities.

The house parked at the Container Park’s Learning Village “will receive a lot of traffic and exposure so people have a chance to walk through it and be inspired,” Shaefer said. “As people tour these homes, they will generate ideas and creative solutions.”

The Las Vegas Review Journal tells MHProNews that the models are the 130-square-foot Fencl, which sleeps two; the 117-square-foot Lusby, which sleeps four; and the 144-square-foot Linden, which can accommodate a king-size bed. The houses resemble tiny cabins, with wood interiors and exteriors, functional kitchens, a bathroom with a toilet and shower and even fireplaces in some models.

Tumbleweed manufactures “houses to go” wheeled cabins, ranging from 73- to 172 square-feet, and larger cottages. The cottages range from 261-square-foot studios to three-bedroom models of 884 square-feet. However, these Tumbleweed Tiny Houses do not have tiny prices. Assembled houses range from $50,000 to $60,000.

Glenn Nowak, associate professor of architecture at the University of Nevada, Las Vegas, said, “There is a push toward finding ultra-efficient designs for both living and working. Everything is downsizing as people discover that you can do a lot more in a lot less space and do it more economically. That boils down to smaller, multifunctional spaces and even mobile spaces.”  Stephens said that although the houses are mobile, they are not meant to be moved often.

In marketing and PR terms, the Tiny House movement is arguably outdoing manufactured housing. Yet the size of the market is still, well, tiny.

Are manufactured housing leaders taking notes? On a cost per square foot basis, manufactured housing (MH) offers many similar advantages – though today most MH aren't as mobile as the THOW are – and MH does so for a smaller price tag.

Even with 'hitches,' Tiny Houses are often positively seen by the media.

In tracking various stories across the United States about Tiny Houses, it seems that prices vary according to manufacturers and whether the home is a do-it-yourself project. However, there are pitfalls associated with some of these DIY projects.

In San Antonio, Texas, as reported on MyFoxNY, a couple had invested 2 1/2 years and $35,000 into building a tiny home from the ground up. They had just moved it to a plot of land they had purchased. Unfortunately, someone stole it. The home was built on top of a trailer, and all the thief had to do was attach it to a truck and drive off.

So, it seems that the quest for smaller living spaces can take many forms, some are mobile and others are located in a fixed location. They can cost various prices, depending on manufacturers, and building materials. Interest in these small structures comes from not only individuals, but city governments, non-profit organizations, and environmental groups.

There is considerable experimenting going on in this search for smaller living quarters and not much organization. Shouldn't this be an opportunity for the manufactured housing industry?

As many MH professionals know, HUD Code regulations allow a manufactured home as small as 320 sq. ft. to be constructed (8' x 40'; Note: some HUD Code builders are also building ANSI code park models).

There could be benefits to buying a manufactured home including quality materials, short delivery time, competitive pricing, and warranties. In addition, financing available on a manufactured home would probably be more favorable that available on a Tiny House.

One of our prominent readers asked, “Where is our industry on this?” That’s a good question. So where does Manufactured Housing stand on the Tiny House movement? ##

(Editor's Note: We'd be keen to hear from all segments of the industry, including manufacturers, on what lessons and opportunities the Tiny House movement presents for Manufactured Housing. Send comments to thisThis email address is being protected from spambots. You need JavaScript enabled to view it., and let us know if your comments are ON or OFF the record. Thank you.)

The Tiny House Trend –  Possible New Market for  Manufactured Housing?

(Photo Credit: Las Vegas Review Journal; Mobile Loaves & Fishes/Facebook)

sandra-lane75x75Article submitted by Sandra Lane to Industry in Focus, MHProNews.

Stop Stressing about 'Captive Finance,' 'Buy Here, Pay Here' loans vs. Successful Manufactured Housing Lending

  • Written by Mountainside Financial

by Josh Ducharme

josh-duscharme-mountainside-financial-manufactured-mobile-home-direct-loans-refi-posted-mhpronews-com-50x50-Are you currently offering captive financing for manufactured homes? Does it make sense given the new regulatory era ushered in by Dodd-Frank? There are common-sense, regulatory compliant options for business owners who want to address the non-compliant captive financing within their portfolio and do it in a way that will free up your cash.

Before I get too far along, let’s take a moment to provide a clear definition of captive finance for those not familiar with the term.

Captive Finance is a form of financing typically offered by a manufacturer or supplier to those who would not qualify for traditional financing. More specifically for the manufactured home (MH) industry, this “home only” chattel or personal property financing is offered by a number of community owners, retailers and manufacturers. Some call it 'buy here, pay here' lending.

There are notable examples in which this model has been utilized with success in the MH industry. For an article which presents a variety of perspectives regarding captive finance, click here.


Billions in Cash Tied Up in MH Captive Financing?

Recent estimates place the amount of captive finance lending in private portfolios at $12-15 billion. These privately held loans were made to facilitate manufactured home sales that would not have occurred otherwise.

Businesses are providing a lending source to customers that can't qualify for 3rd party loans. This practice now requires increased licensure for individuals and businesses under Dodd-Frank. Businesses providing loans without being licensed are out-of-compliance.

The adoption of the new regulations enforced by the CFPB will likely take MH business owners more time to comply with the most recent guidelines. The new law and regulations lack true clarity for those seeking answers. The complexity has many businesses scratching their heads, as state and federal laws are conflicting in some instances.

When attending industry events this year in Kentucky, Mississippi and Nevada, I witnessed several community owners raise their hands when asked “How many of you are still financing your own customers?” As an industry professional, I am personally surprised by the size and scope of this continued practice. A sizable minority are making the choice to continue to conduct business as usual and accept the risk of offering non-compliant financing as unlicensed business or individuals rather than face the added expense, additional systems and record keeping now required.

The awareness of having to act compliantly when selling a manufactured home is spreading. Offering more than one financing option is a key message the new law provides. The experienced staff at Mountainside Financial offers options.

Our refinance and purchase programs offer a great value for the business owner. Although Mountainside Financial would like to be the only financing option for your MH financing needs, that is not realistic for any MH lender. Providing a list of available lending options in your market and allowing your customers to choose the lender is the best practice.

If you do offer captive financing, make sure that it is known so buyers do not become discouraged if they are turned down by traditional lenders.


Fine$ and More Fine$

lady-libertycredit-mauro-parra-miranda-flickrcreativecommons-free-capital-ease-stress-manufactured-housing-financing-mobile-home-loans-mhpronews-com1a-The Consumer Financial Protection Bureau has already started handing out fines. Bank of America recently settled with the CFPB for $700 million. Banks that large spend millions each year on regulatory compliance, yet they still fell short on the government’s expectations for compliance. 

Is it possible in the Dodd-Frank era for a 'mom and pop' size independent to underwrite CFPB compliant “captive chattel finance” if the big banks can’t do it correctly?

The answer, technically, is yes. There are reputable and experienced companies in the industry that provide guidance with this option. For some community owners and retailers, complaint captive financing may be a viable option.

But as a practical matter, the new regulations have made it more difficult and much more costly to comply with the law.

A common opinion I have heard from several independent community owners has been “the CFPB is not concerned with the few loans that I put on my books. The government is more concerned with the larger financial institutions than a small manufactured home community or sales center. The people in Washington that wrote the legislation were not even considering manufactured home owners or the industry when the legislation was written.

On some levels, that view has validity. However a single complaint by a disgruntled customer or competitor are the likely scenarios that would expose a business offering non-compliant captive financing to heightened scrutiny from regulators.

Significant changes are in the forecast

This is not the time to think “it could never happen to me.” As industry professionals, we should be asking “what solutions are available today that protect myImage11-mystery-shopper business and staff?”

As a division of San Antonio Credit Union (SACU), Mountainside Financial provides home-only loans directly to customers for purchase and refinance. Every captive finance loan paid off by a lender – like Mountainside - benefits both the business owner and the consumer.

The consumer can build credit by having their loan reported to the credit bureau. Most privately held loans do not report to the credit bureau and therefore do not help build the consumers credit rating. The business owner that financed residents at the time of purchase can regain capital spent. Add Mountainside Financial to your list of chattel lenders today!

Providing customers with a list of compliant lending options that includes Mountainside shows proof the business is aware of and acting within the current CFPB guidelines.

The Other Side of the Coin

Originating or holding non-compliant captive financing is unsafe business behavior. Such activities continue to get riskier as the CFPB takes more enforcement actions under Dodd-Frank. Lack of licensing or of up-to-date, written policies are among the risks you would face, if and when the business is visited by a regulator.

Do you want your cash tied up in inventory, when you can avoid it?

complaints-gratitude-Is captive financing a good fit for everyone? As with most things in life, the “one size fits all” model sounds great in theory. However, this is rarely the case and captive financing is no exception.

The following list should be considered before choosing to start or continue to provide captive financing:

 MLO licensure

 Training and Education of your staff

 The establishment of legally compliant written policy and procedures

 Ongoing changes in regulations, which can be so complex that even community banks are exiting the banking/lending business.

CFPB and some state regulators openly encourage consumer complaints via their websites. The

FSRoundtable reports that the CFPB received 163,700 complaints in 2013 alone!

Housing-loan related complaints to the CFPB are growing in numbers. Don’t give a disgruntled resident or buyer the opportunity to report your business without having the required disclosures.

Prior to the Safe Act and Dodd-Frank laws, captive finance made good business sense. But today, offering compliant captive financing with the added CFPB andsubmit-a-complaint- state requirements place a significant barrier from a cost stand point alone to business owners.

With the current regulatory environment and oversight, this practice should be viewed cautiously.

The chart below shows that new bank openings have dropped like a rock, due in part to the high costs of regulatory compliance. Banks with dedicated compliance departments are challenged by the new guidelines. Is it unreasonable to expect that the independent community owner and retailer are finding it extremely difficult to navigate the maze of new guidelines?


(Editor's Chart Caption: The NYTimes and Minneapolis Federal Reserve charts above and below demonstrate that even professional lenders and finance companies close or merge due to regulatory burdens. When faced with facts like these, how can an independent MH community owner or retailer seriously believe they can successfully comply with current lending laws?)


Do You Know what others in MH are doing?

Did you know that a number of mid-to-large MH Community operators have ended their captive finance originations, due to their concerns over regulatory risks? The following financing options are currently being utilized to fill spaces and address resident’s needs as an alternative to captive financing today:

  • Traditional lending programs offered by direct

  • Hiring a licensed MLO to handle the finance duties of sales within the community.

  • Lender sponsored community lending programs.

  • Rent Credit Programs: Renting homes with tenant rental credits toward a future purchase.

  • Lease with option: Traditional lease with a purchased “option” to buy the home outright in the future for it’s fair market value at that time.

Although other financing options have developed in response to the increased regulatory requirements, captive finance still occupies an integral place in the industry. What options are you currently utilizing to address the financing needs of your customers? It is important to offer your customer’s multiple options. Among the options that should not be over looked is the programs offered by direct lenders.

As a division of a federal credit union, Mountainside Financial is able to offer among the most competitive rates. This is why you should consider using us as one of your options today.

Why not abate compliance/risk headaches the smart way?

Mountainside Financial operates in 40 states offering refinance and purchase programs for manufactured housing. Homeowners that are currently on the books in a captive finance portfolio should be made aware of their options.

The point cannot be over stated. Refinance programs can be utilized as a tool to free up the community owner’s liquidity for use on other projects. Because all our loans report to the credit bureaus, using us as your exit can strengthen the borrower’s credit, which customers often appreciate.

Many manufactured home communities (aka “mobile home parks”) have homes with loan balances or selling prices of less than $25,000. Many lenders todaysolution won't make loans of that size.

This is another area that a direct lender like a credit union can make a difference.

As a Division of a major Credit Union, Mountainside Financial does not have a minimum loan amount.

What this means is that small balance loans are not a disqualifying factor. We welcome all size loans. This is one of many possible examples of the credit union difference.

The Stop Stressing Solutions!

Mountainside Financial can help you recoup your money invested in captive finance loans, and put you on the path to more business growth, right now, TODAY! Here are 7 Ways we can help you, NOW.

A1) > Stop stressing over non-Dodd-Frank compliant loans! Yes, Mountainside Financial can help you with privately issued loans that may not be Dodd-Frank compliant.

2) > Rent spaces not homes! As much as possible you want to get back to your core business, collecting lot rents and selling, not carrying paper or rentingmoney homes.

3) > Collect full lot rent! Are you using a program that costs you lot-rent participation? Every loan we refinance for your customers means you can now collect your full lot rent!

4) > Free up your capital to buy more homes, fill more vacant sites! Enough said on this one.

5) > Realize the value of your homes now, rather than a reduced value in a few years. Selling a home to a qualified buyer today prevents rehabbing homes that may sell for much less in the future.

6) > Reduce exposure and set your balance sheet free! What's not to love? No dealer package sign up required. Start telling your customer right now.

7) Eliminates licensing and reporting requirements associated with captive financing! Breathe a sigh of relief from the extreme burdens of financing in today’s regulatory environment. Are you taking advantage of all the options available to you and your business?

"Before you utilize your own funds for captive financing  give Josh Ducharme or Jerry Bretton a call  to discuss a direct lending option today 877- 475-6852 Ext. 2607 = Jerry. Ext. 2602 = Josh. ##

josh-duscharme-mountainside-financial-manufactured-mobile-home-direct-loans-refi-posted-mhpronews-com-75x75-Josh Ducharme
Business Development Executive
NMLS #675313
Mountainside Financial, a Division of SACU
60 Lake Street Suite 200 St Albans, VT 05478

Legal Notice: This material is made available with the understanding that Mountainside Financial inot engaged in providing legal advice and this should not be constructed as such. Please check with your association and/or legal counsel for the latest on issues such as steering, quoting rates, captive financing and how they might affect you.

(Image credits – please point your cursor over each image for that image credit. CFPB logo credit – Consumer Financial Protection Bureau log. Lady Liberty credit = Mauro Parra Miranda and flickrCreativeCommons, merged images and text by MHProNews.)

Image Credits:

1) Billions In Cash Tied Up - credit = Google Images/Shutterstock.

2) Cash And Judge's Gavel - credit = The Situationist Wordpress.

3) Lady Liberty - credit = Mauro Parra Miranda/ Flickr Creative Commons.

4) Mystery Shopper- credit= shutter Stock.

5) Gratitude Beyond Thanksgiving -credit= Will Bratt Counsellingwww.willbrattcounselling.

6) Submit A Complaint National - credit = Fedral Trade Commission.

7) 28 Bank Graphic- credit= Nytimes.

8) Minneapolis Federal Reserve Jan 2014 Community Bank Closures.

9) Rent to Own- credit= Shutterstock.

10) Solution - credit= Shutterstock.

11) Money - credit= Shutterstock.

Back to the Future for Manufactured Housing Professionals

  • Written by Jess Maxcy

(Editor's Note: This article was originally published in Manufactured Home MERCHANDISER ~ August 1990 Edition. Consider how the points made then may also apply today.)


jess-maxcy-cmhi-president-published-manufactured-home-merchandiser-magazine-posted-industry-in-focus-mhpronews-com1-WESTERN REPORT

Parity: Equivalent/like in quality, nature or status.

Equivalent: Corresponding or virtually identical, especially in effect or function.

Achieving parity in land use, regulations and financing has been and continues to be a high priority for the manufactured housing industry.

Given the potential for market expansion, the drive for parity deserves focused thought and a significant share of the industry’s energies.

The tendency to view parity simply as “equal treatment” has led many to believe it should be automatically granted, specifically in the areas of land use and financing.

However, when the concept of equivalency is introduced, parity begins to require performance, especially in “effect of function”. It is the equivalency part of the parity definition that has made the road to parity a demanding road without short cuts.

In my judgment, there are four essential segments, each dependent upon the others, required to make parity a reality for manufactured housing:

  • Parity in taxation.

  • Parity in product, design and quality.

  • Parity in land-use regulations.

  • Parity in financing.

In the industry’s drive to achieve parity, the first requirement is to realize that parity requires give and take on both sides of the equation. If we want parity in land use regulations, we must be prepared to give parity in effect or functions.

A review of the steps taken by the manufactured housing industry in California on its road to parity demonstrates the give and take required to secure a level playing field and the opportunity for market expansion.

Parity in taxation

Essential to laying the foundation for land use reform is ensuring equivalency in taxation. Manufactured homes are now taxed as real property by local governments rather than as personal property by the State Department of Motor Vehicles. This reform has eliminated the argument used by local government officials that manufactured home owners “don’t pay their fair share.” Additionally, taxing manufactured homes as real property means that taxation policies no longer assume an automatic depreciation in value.

Taxation reform and effect

In 1979, state law provided for taxation of manufactured homes installed on permanent foundations as real property. Sales taxes on real property manufactured homes were


State law also provided for local property taxation of all new manufactured homes sold after July 1, 1980.

In 1980, registration, titling and taxation functions for manufactured housing were transferred from the State Department of Motor Vehicles to the State Department of Housing and Community Development.

In 1981, the Manufactured Home Escrow Law was amended for more consistency with real property escrows.

As a result of parity in taxation, local and state government officials were willing to consider parity in other areas. Their first concern centered on quality and compatibility.

Parity in product, design and quality

The manufactured housing industry, especially over the past decade, has developed homes and communities that blend the best style, amenities and quality into a price that is affordable in comparison to site-built housing.

Parity with site-built housing

is now an accomplished fact. In an ever increasing number of examples, manufactured housing now outperforms site-built housing:

• Manufactured home quality is backed by the shelter industry’s most exhaustive and reliable inspection system and consumer warranty program.

• Every manufactured home is inspected by federally-certified agents.

• “Developer Series” manufactured homes are specifically designed to be sited in subdivisions and planned unit developments.

• Both land-lease and real property manufactured housing developments are being

designed with the ambiance of traditional residential communities.

Product, design, quality advances

In 1958, California adopted the nation’s first statewide health and safety standard for manufactured homes. In 1969, California adopted the nation’s first factory-built housing

law, combining the benefits of factory production and transportability with construction according to conventional housing standards.

In 1971, state manufactured home standards were expanded to cover structural design and fire safety.

In 1976, the preemptive National Manufactured Home Construction and Safety Standards became effective. From 1980 to 1990, the industry has responded to new laws allowing the integration of manufactured homes in single-family neighborhoods with a variety of new design features:

• Recessed foundation systems. • Conventional roof pitches.

• Homes capable of accepting

attached garages.

• Redesigned facades and exterior


• Introduction of “Developer Series” homes specifically designed for subdivisions and new planning concepts in land-lease communities.

Given parity in taxation, product quality and compatibility, industry leaders and local and state government officials were ready to take the next step on the road to parity by jointly developing land use and zoning reform.

Parity in land use

Central to the issue of land-use parity is the requirement that manufactured housing be “equivalent in effect and function.”

In “effect”, manufactured housing must carry its fair share of the tax burden and must meet all reasonable siting requirements (set-backs, foundation systems, etc.) and permit procedures.

With a commitment to the parameters established by the need for equivalency, the journey toward land use reform and non-discriminatory zoning was begun.

Land use parity chronology In 1961, the Mobile Home Parks Act established a statewide preemptive development standard for communities.

In 1979, a state law allowed manufactured homes to be sited on a permanent foundation system outside manufactured home communities.

In 1980, a state law limited local governments from applying development standards that prohibit the siting of manufactured homes on single-family sites. A manufactured home land-lease community is permitted land use on land planned and zoned for residential use. The law includes planned unit development, condominiums, cooperatives and rental communities.

In 1984, a state law permitted manufactured homes in land- lease communities to be placed on permanent foundations.

In 1987, a state law prohibited the enforcement of conditions, covenants and restrictions adopted on or after January 1, 1988, to ban manufactured homes on single-family sites.

In 1988, a state law required cities and counties to permit manufactured homes on all single-family sites. This law also prohibits imposition of any planning or development process or requirements on a manufactured home that is not identical to those imposed on a site-built home.

Parity in financing

The manufactured housing industry has achieved significant reform of finance policies during the past decade. While parity in financing is still a goal requiring focused attention, financing flexibility has been improving.

Most banks readily finance manufactured homes as personal property with terms up to 25 years.

Manufactured homes are eligible for insurance under government-backed programs, such as the Department of Veterans Affairs (VA), the Federal Housing Administration (FHA) and the Farmers Home Administration (FmHA).

Furthermore, the Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corporation (FHLMC) will buy loans backed by manufactured home real estate.

These government-backed programs have led to an increasing awareness and willingness by lending institutions to finance manufactured home real estate on the same terms as they finance site-built homes.

To fully develop the potential of an expanding market – manufactured homes in real property subdivisions, planned unit developments, scattered urban sites and in land-lease communities with long term leases – full parity in financing must be obtained.

Parity in product, design, quality and land use coupled with advances in land-lease manufactured housing and community design, have significantly increased lending security for real property manufactured homes placed on permanent foundations and personal property homes sited in modern land-lease communities with long-term leases.

To expand this emerging market, the industry must convince the financial community of its need for new loan programs that are equivalent to those being used in the site-built market.

Financial parity chronology

In 1979, a state law allowed state-chartered savings and loans on manufactured homes.

In 1980, a state law authorized the California Housing Finance Agency (CalHFA) and the Department of Housing and Community Development (HCD) to use certain existing

housing grant and loan programs for manufactured home developments.

In 1987, a state law increased the maximum amount and term of Cal-Vet manufactured home loans to $90,000 for a home on private property and $70,000 for a home in a land-lease community.

In 1989, private mortgage insurance became available for manufactured homes on permanent foundations.

With parity comes responsibility

As is so often the case, with success comes responsibility. As we gain parity in land use, zoning procedures and financing, it is incumbent upon our industry, and each of us as individuals, to design, produce, sell to properly qualified buyers and site homes that are, in fact, compatible or superior to those site-built homes found in residential neighborhoods that represent a new market for manufactured housing. ##

jess-maxcy-cmhi-president-posted-industry-voices-mhpronews-com-By Jess Maxcy, President California Manufactured Housing Institute

(Editor's Note: lest some lose heart that 2 decades later, we seem to be barking up the same tree, let's not forget that we have had numerous advances that may seem small, but when pulled together, gives us the fact-based stories that can take us further down the very path that Jess exhorts in this classic column of his.

City Scapes at the Mills of Carthage – an example of urban MH infill.

The video below is an interview with a Realtor who has become an MH believer. You'll see how her local MH retailer helped make this happen. The video will be featured on in the days ahead.

CBS News Video – featuring millionaires calling our homes 'trendy.'

NBC News Video – featuring the most entry level manufactured home in a market out-performing a conventional site built house in a hurricane wind test.

We have the facts and the true stories needed to make our case. We need to better promote these - individually and collectively – to reach the potential factory crafted homes has in America.)

An analysis of The Atlantic's - The Case for Trailer Parks - Manufactured Home Industry commentaries

  • Written by L.A. "Tony" Kovach

In Alana Semuels' The Case for Trailer Parks, The Atlantic picks up on a prior MH report made in 2011 by Derek Thompson during the IBISWorld flap which headlined - incorrectly - that Manufactured Housing (MH) was “a dying industry.” Semuels' article weaves between the sensationalistic, to 'cutesy-humorous' and complimentary-to-the-MH-Industry. No one is quoted from the manufactured housing finance or production sectors by The Atlantic, while pro-CFPB and not-for-profit sources are cited often in her report.

One comment made to MHProNews about the subtext to Semuel's headline was that it's an example of the 'good, bad and ugly' from their latest foray into manufactured home focused journalism. Quoting The Atlantic, "Houses made in a factory are a cheap and energy-efficient way for poorer Americans to become homeowners—plus, these days, the mass-produced units can be pretty spiffy."


Image credit: Frontier Homes – published in The Atlantic.

Presuming someone clicks on the photo gallery labeled "New Manufactured Homes," Atlantic readers get an idea of what "spiffy" means in modern MH. But was “cheap” supposed to mean low cost or shoddy?

Semuels writes, "The snobs among us may judge these pre-fab homes as shoddily built, cheap eyesores in a country that’s increasingly eschewing the suburbs for walkable urban areas.

But pre-fabricated homes just might be part of the solution to America's affordable housing crisis."


Photo credit – Primavera-Foundation – published in The Atlantic.

Not-for-profit consumer advocacy groups are indeed embracing modern manufactured homes as a key part of the solution for Americans facing generally lower incomes, rising rents and a need to fill an estimated 20 million new housing units needed in the U.S., per Census Bureau projections. The Atlantic gets that right.


Image credit, CBS News – click here for their video report.

The Atlantic's “Cheap” or CBS News' “Trendy”?

Apparently, Semuels didn't see the CBS News video report featuring working class, middle class and millionaires living in modern manufactured homes, with individuals in the millionaire-class asserting manufactured homes are appealing and "trendy."

The manufactured home is probably the most cost-effective way to provide quality affordable housing,” said Donna M. Blaze, the CEO of the Affordable Housing Alliance, which helped provide manufactured homes for Sandy refugees. “Most of our new units are light years ahead of the apartments for rent in today’s market.”  


Photo credit Manufactured Housing Institute (MHI) published in The Atlantic.

Stacey Epperson, CEO of NextStep and a site builder-turned MH believer, is cited for their organization's support of modern MH. So was a home owner Wanita Ordway, retired, and her husband Kevin - a carpenter - are described as a working-class family who are clearly delighted with their manufactured home. Wanita said her home is so energy efficient, it was too efficient to qualify for their local utility company's energy audit.


Photo credit: Frontier Homes – published in The Atlantic.

It’s just a wonderful option for people who cannot get a conventional home,” Wanita said. “If you get past the stereotype of a mobile home, these are just as well-constructed as a stick home.

Joe Stegmayer - CEO and Chairman of Cavco Industries, a leading producer of manufactured and modular homes featured on NBC's American Dream Builders - said:

The Atlantic article makes some very good points about the quality and value of factory built homes.  Unfortunately the article does not provide information about the variety of borrowing options for homebuyers such as FHA, VA, USDA and conventional mortgages. Nor does it provide a balance view of personal property or chattel lending.”


Photo credit - MHI - published in The Atlantic.

ROC USA's CEO was quoted, “These are homes that travel down the highway at 55 miles-per-hour, which site-built homes don’t,” said Paul Bradley, the president of Resident Owned Communities USA, a group that works to help residents of mobile-home parks or manufactured-housing communities buy their own land. “You can inarguably buy very good quality, very energy-efficient HUD-code homes that are better built than site-built ones.Bradley penned a popular reply to correct the IBISWorld/Atlantic report made in March of 2011.

CFED's (Corporation for Enterprise Development), Doug Ryan said, “The biggest problem is with how the loans are done,” alleging, “It’s about as enjoyable as buying a used car.” the reason cited by The Atlantic is higher rates for personal property loans, and the CFPB's report was referenced.


Photo credit - MHI - published in The Atlantic.

At Odds with Reality?

"One premise of the article is spot on: that manufactured housing represents America's best housing value at a number of price points," said Tyler Craddock, Executive Director of the Virginia Manufactured and Modular Housing Association (VAMMA). "Unfortunately, the article fails when it accepts at face value that the changes wrought by Dodd-Frank and other federal initiatives are entirely positive for the industry or its consumers. The failure to include insight from any number of industry experts is a disservice to the reader and presents an impression of the industry that is at odds with reality."


Photo credit - MHI - published in The Atlantic.

To balance the record on points Tyler Craddock raised, MHProNews turned to manufactured housing finance expert, Dick Ernst, the newly elected chairman of MHI's Financial Services division and president of

"Overall, it is a pretty fair piece but the glaring point that this article and consumer advocates fail to connect the dots on is the point of no secondary market!" Ernst exclaimed, adding, "All they have to realize and say is that 90% of all residential mortgages are backed or sold to GNMA, Fannie Mae and Freddie Mac.  Why...because it locks in the cost of funds and eliminates the need for the originating lender to put a substantial hedge on loans that may run 15-20 years.  If the conventional mortgage market had no secondary market their housing sales would drop to a level that would create severe economic hardships in the economy!"

"I also found it interesting that the New Hampshire Housing Agency (a government agency using presumably bond money) still charged the consumers mentioned an 8.875% loan which is still almost 500 basis points over a prime conventional loan.  Consumer advocates need to stop hammering the industry and help establish a viable secondary market for home only transactions with the GSE's!" Ernst stated.


Photo credit - MHI - published in The Atlantic.

Ernst is referencing a fact that the Government Accounting Office (GAO) also pointed out in their report last summer on manufactured housing, namely the lack of a secondary market.

The Housing and Reform act of 2008 (HERA 2008) required the Government Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac to fulfill a "Duty to Serve" (DTS) the manufactured housing, and establish a secondary market for MH that would include home only loans. But when the GSE's went into receivership under the FHFA, those portions of the law weren't implemented. Meanwhile, other forms of government backed lending which were actually involved the financial melt-down of 2008 continued on.


Photo credit - MHI - published in The Atlantic.

Reality or Cheap Stand up Comedy?

Lots peoples' impressions of Manufactured Homes (MH) are based on cheap standup comedy lines they’ve been hearing all their lives.” So said William “Bill” Matchneer, JD, recently retired from the Consumer Financial Protection Bureau (CFPB) and a prior Administrator of the Manufactured Housing Program at HUD. “From experience, I know how hard it is to break through those attitudes.  But modern MH products really are comparable to site-built housing, and are infinitely better than the Section 8 housing that really is for poor people.  

Matchneer elaborated. “As always, the challenge is getting the general public to realize that modern MH really is a good housing option.   There are lots of clever national PR firms that could probably help, especially for younger couples All you need is cash.”   


Photo credit - MHI - published in The Atlantic.

But we already have an image campaign...?

Spoken as if giving a planned response in a classy comedy routine, Martin V. “Marty” Lavin, JD - a MHCommunity owner, attorney, consultant & expert witness who was a prior chair for MHI's Financial Services division - said: “What the article shows more than anything is that we can pass as an industry on spending the money for an Image Campaign, but we must never, ever think an Image Campaign on MH is not happening. The media is doing it for free!

A legal claim under Disparate Impact?

The refusal of lenders to loan on manufactured homes in a land-lease community seems to me to cause a disparate impact on at least three protected classes;  age, disability and family status.  The industry is not making this argument and I truly believe this is a talking point we should make for our cause.observed Amy Bliss from the Wisconsin Housing Alliance, in a longer OpEd on The Atlantic's article, linked here.


Photo credit - MHI - published in The Atlantic.

Spawn of the CFPB...

I suspect that the CFPB report will spawn several of these types of “stories” and I am not sure what we can do to make sure they are correct BEFORE they get published,” an industry lender to MHProNews, off the record.Most journalist don’t want to consider the facts as they would just get in the way of a sensationalist story, which is what sells I guess.

Indeed, the New York Times and others have published articles on this topic. If more publicity leads others to dig deeper into a better understanding of modern manufactured homes, that could be a good for the industry and millions of potential consumers. Manufactured homes are arguably a key part of the solution to America's affordable housing crisis.

Grading the Atlantic MH article?

The photos of various model homes were nicely done, but that too lacked balance, as there was no photos of homes that represented the entry level “shade and shelter” models, only more mid-level or residential style manufactured homes were shown.

As published, did Alana Semuels' mix of

  • whimsy,

  • accuracy,

  • interesting quotes,

  • improper terminology and

  • wide-misses-of-the-mark

cause the Atlantic column to live up the peer-reviewed standards of sound academia? What grade would you give it?

Please see the original article, linked below, and other resources related to this topic and answer those closing questions for yourself. ##

Links to related articles:

by L. A. 'Tony' Kovach

latonykovach-louisiville2015-mhpronews-business-building-seminars-1L. A. "Tony" Kovach

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Deconstructing the High Cost Mortgage Loan

  • Written by Soheyla Kovach

by Dick Ernst

dick-ernst-75As many in the manufactured housing industry know, the new Dodd Frank Regulations, specifically the Home Owners Equity Protection Act (HOEPA), which for the first time includes Purchase Money Transactions is very problematic for the manufactured housing industry. The reasons are more obscure than even those that know and understand finance have considered.

On the surface the regulations declare that any loan carrying an APR higher than the following formulas will be considered High Cost Mortgages.

Formula A Loans under $50,000 with an APR higher than APOR (Average Prime Offer Rate) plus 8.5% will be considered High Cost.

Formula B Loans over $50,000 with an APR higher than APOR plus 6.5% will be considered High Cost.

Most professionals in the mortgage finance or manufactured housing finance believe the designation of a loan as High Cost is the new term for Predatory. Predatory loans are those loans made by loan sharks and others charging consumers exorbitantly high interest rates in order to generate large profits for taking high risk loans.

The result is that very few loans of what now is termed a High Cost Mortgage Loan are originated! Lenders do not want to be branded as predatory and furthermore no investor wants to buy High Cost Loans.

The truth of the matter as it pertains to manufactured housing loans could not be further from the truth in this interpretation or branding. Manufactured Housing Lenders would prefer to charge consumers the lowest possible rate because that would lead to more homes being sold and more financing opportunities.

There are a number of facts that everyone must understand before examining my illustration in deconstructing the High Cost Mortgage Loan interest rate.


  1. The manufactured housing chattel (home only business) does not have a secondary market. This means that lenders must portfolio their loans. This subjects each lender to various money costs, various interest rate risk and risk tolerance. Having a secondary market establishes a firm cost of funds rate. There is no better example than the benchmark used in the formulas above. The APOR is a treasury number that is essentially established from Freddie Mac for the best or prime mortgage rates for a given week. The Federal Government backs or provides a secondary market for approximately 90% of all mortgage loans originated in the country! Fannie Mae and Freddie Mac do not offer a secondary market for home only transactions. FHA Title 1 and GNMA do offer a market but have made the cost or price to participate unreasonable and just a fraction of those loans are made.

  2. When considering cost of funds one must consider that depository institutions often have lower costs of funds but also have much lower tolerance for risk. So the manufactured housing customer who has less than a 650 credit score is generally not going to find a loan with a depository.

  1. That leaves private financial firms to borrow money to fund their operations. Imagine going to the bond market to raise money to fund your business of originating manufactured housing loans. What rates to you think the market would charge? Certainly higher than those investment opportunities that have little or no risk.

  1. Now that you have borrowed the funds for the loans, consider borrowing funds for generally 5 years and then using those funds for loans that have terms of 15 or 20 years. The rate you charge the borrower has to include an interest rate hedge. How much will rates rise over 15 years? Remember that manufactured housing loans tend not to prepay because of refinancing opportunities. Refinancing occurs when there is a robust secondary market influencing rates. With no secondary market…..little or no refinancing. Lenders then could be holding a loan for the full 15-20 years.

  1. Every lender has to establish loss reserves. Since those numbers are proprietary consider that on an FHA Title 1 Loan they charge an upfront mortgage insurance premium of 2.25% and then charge an annual premium of 1%. And that is only covering 90% of the loss. The originating lender eats the other 10% plus any additional loss if the home sells for less than the appraised value.

  1. Low balance loans have limitations on points and fees that can be charged. The Mortgage Bankers Association has testified that their costs of origination run in excess of $5000 per loan. Keep in mind this includes the cost of compliance which is probably the largest cost item in the equation. Manufactured housing lenders indicate their costs for a volume operation is in the range of $2500-$3000 per loan. Points and fees allowed do not cover the cost of origination!

  1. Servicing costs are not determined by the size of the loan. There are a myriad of fixed costs that any loan servicer has regardless of loan size. Consider the average mortgage loan is $222,000. The GSE’s allow .375% to .50% annually for loan servicing. Conservatively for a manufactured housing lender to recoup the same servicing dollars represents a substantial increase over the GSE numbers. Lenders would also argue that their costs are higher because of the need for interpersonal contact with the consumer instead of automated notices.

Therefore when reviewing the Deconstruction of the High Cost Mortgage Loan for manufactured housing, consider the facts above and realize that for a lender to make loans there has to be a profit margin. They cannot make loans at a loss.

Perhaps our consumer advocacy friends will join us in convincing the GSE’s to make a secondary market for manufactured housing loans so lenders can fix their cost of funds and remove the interest rate hedge so we can make a better cheaper market for our manufactured housing consumers.

Loan Assumptions:

Loan Amount $30,000

Term 15 years

Life of Loan 8 years

APOR =3.25% + 8.5% = 11.75% max APR (APOR as of 10/21/14)

Sub 640 FICO customer.

Cost of Funds (generally for 5 yr. money)  5.00%

Interest Rate Hedge- 2.00%  Comments:  Most MH loans have a much lower repayment or payoff occurrence. Refinances are very limited generally because of the lack of exit strategy.

Reserves for Losses 1.25%  Comments: Using FHA Title 1 as a Government insured loan on a home only transaction calls for 2.25% upfront + 1% annual (assume 8 yrs. on the books) generates $2750 dedicated for losses (90%) with lender responsible for 10% of loss plus any amount of additional loss if home sold for less than appraised value.   To generate the equivalent dollars would require 1.25%annually dedicated for loss reserves. Average recovery on repossessions is 50% of UPB.

Unrecovered Origination Fees   .50%   Cost of origination and compliance= $2500 per loan (assume all 5pts. allowed in points and fees are dedicated to origination cost.  That leaves $1000 to be recovered over 8 yrs. = roughly .50% per year added to rate.

Servicing Fee 3.50%    GSE's allow mortgage lenders .375% to .50% annually for loan servicing. Avg. mortgage $222,000 = $845-$1100 per year for servicing.  Cost of servicing a loan is not determined by size of loan. MH lenders incur the same if not higher costs to service because of higher requirement for personal contact and less automated servicing as it relates to delinquent accounts.  On a $30,000 loan 3.5% annual generates the same servicing dollars as the average mortgage.

Total Costs 12.25% Before Overhead and Profit objectives.  This is already over the high cost loan threshold!


Manufactured Housing Borrowers are not paying the following typical costs associated with a mortgage loan which can add potentially thousands of dollars more either being borrowed and financed or paid out of pocket!

Application Fees

Credit Report Fees

Title Insurance

Mortgage Insurance

Closing Agent Fees


Dick Ernst 
This email address is being protected from spambots. You need JavaScript enabled to view it., 972-503-3201, or cell 214-335-270

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