Manufactured Home Shipments

Again we are seeing an increase in housing sales.  Nationwide this year’s year to date is 19.3% higher than last year with unit sales increasing by 5,249 homes.  Overall the housing market is looking good, and we are beginning to be able to take advantage of it.

Maine and Connecticut, +97.4% and +188.2%respectivly, are the two states that have seen the biggest increase in manufactured housing shipments as the housing and job market stabilization is finally planting roots on the Northeastern coast.

Some in the Midwest such as the Dakotas and Wyoming have seen a decrease in manufactured housing sales but this is mostly due to the seasonal and volatile nature of jobs in the Oil industry.  The drop in sales in this region is more reflective of the Oil industry than it is the housing industry.

Overall sales are up nationally and I’ve spoken with several bankers and realtors from my area expressing that the flood of foreclosures that had been on the market has begun to dry up and property values are on the rise.  Due to the rising property values and the shrinking inventory of existing homes in the housing market, new buyers are being forced to either site-build or turn to manufactured housing as a way of becoming homeowners or purchasing their next home.

Advertisement

Selling to Millennials

The housing industry is now onto its next big wave of potential consumers, the Millennials.  The Millennial population (87 million) is the largest generation in America cruising over the Baby Boomers (78 million).  Currently 65% of Millennials are over the age of 25 and have become financially stable yet a very small percentage has purchased a home.  So why, why is it so difficult to sell a home to a Millennial?  Let’s avoid talking about how the economy isn’t phenomenal and how student debt is hurting the middle class and young Americans.  About 31 million Millennials are unfit for home buying because of financial instability, but what about the other 56 million, what are we missing?

One of the most distinct features of the Millennials is they are extremely cautions buyers.  Millennials have grown up during an economic crisis centered on housing and just about every one of them is connected to someone who felt the negative effects of home ownership.  The best approach to counteract this fear of mortgages is to stress that home prices and interest rates are at a low point, making now the safest time to buy.

Another feature of Millennials that separates them from generations before is that being a home owner just doesn’t carry the same significance as it did with their parents and grandparents.  Being a home owner no longer acts as a symbol of status, it is not a badge of accomplishment to Millennials and it generally is not viewed as the gateway to building a family and creating an identity.  If anything Millennials see home ownership as a burdensome commitment.  When selling a home to a Millennial, especially if it is a first home, help them keep in perspective that this does not have to be a forever home and that they do not have to be tied to this decision forever.

Having a quick turnaround on answering questions for Millennials is also incredibly important when making a sale.  Millennials have grown up in a world of instantaneousness.  Do not wait to give the customer gratification.  If a customer asks a question, do not keep them waiting, even if you don’t have an answer for them yet.  Always respond.  Saying, “Hello, I don’t have a solid update yet but I’m looking into this for you” is much better than leaving them waiting.  Also, if you are breaking into the world of Social Media marketing and correspondence with customers make sure you know how to use it.  If you are not an expert with Facebook, Twitter, or other Social Media platforms, either get some practice beforehand or stay away from it.

Most Millennials are eco-friendly and conscientious about their impact on the environment.  When selling new homes highlight the eco-friendly features they have.  If a home has energy efficient appliances, high insulation values, or specialized windows, make a big deal out of it.  Never underestimate the importance of such features to Millennials.  Highlighting these features could steer them away from the drafty existing home market altogether.  Along with energy efficiency, make sure the home has plenty of energy or rather, plenty of outlets.  Most Millennials are not looking for a ton of flair and extravagant designs in their homes, if you provide them with a simple, open concept floorplan that is loaded with outlets so that they can keep their devices charged up and mobile throughout the home, your customer will provide all the flair necessary.

With some practice and a bit of understanding of the Millennial mentality selling to Millennials will begin to feel like selling to all other consumers.  Recognize the need of the consumer, find the product that fits the need, and introduce the product.  The sales methods stay the same, the sales pitches need to change.

Saving the Middle Class

Affordable Housing has been a hot-topic issue since before the housing crisis and has become even more of a burning issue since the fall out.  Affordable Housing has always had its share of the housing market but demand is on the rise.  Overall home purchases are down for the ninth straight year in a row and home ownership has dropped to 65%, the lowest it has been since 1995.

Since the housing crisis there has been a strong trend toward apartment rentals, friends rooming together, and moving back in with mom and dad.  The percentage of 25-35 year olds living with their parents is at 36%. This was a slow and steady trend for the least four decades that jumped from 32% to 34% in just the two years of the 2007-2009 recession, and reached its peak in 2012.

Bill Matchneer, a lawyer and former council member for the CFPB, states that manufactured housing is a dire need in the affordable housing market and that its increase in market share is inevitable.  As most of us know the mobile home industry has had a stigma against it from historical quality issues and the disparity of land leased communities.  Due to the HUD code, set in place in 1976 and revised in 1994, the quality standard of manufactured homes has taken tremendous strides in both structural and environmental impact quality.  Bill Matchneer is quoted, “The modern manufactured home is equivalent to site-built at about half the price”.  On the topic of land lease communities, Paul Bradley of ROC USA and organizations like it are helping to increase the quality and appraisal value of homes in land lease communities by assisting residents in the purchase of the community.  ROC USA consults with residents, helping them to form a co-op to purchase the community as well as lending the co-op the necessary funds to purchase at affordable rates.  These co-ops are also given some preferential treatment such as being allowed the first offer when their community is put up for sale.  Studies have shown that communities owned by residents have higher property value, more stable rental fees, and maintain a higher quality of living than their counterparts.  Megan Neff of NextStep, an organization that works through a channel of non-profits, is also helping to increase structural and lending quality by creating a connection between the needs of buyers and the vision of manufacturers.

Datacomp Appraisal Systems, having conducted an appraisal study comparing manufactured homes to site-built homes, came to the conclusion that the old adage of “location, location, location” equally applies to both housing categories.  Datacomp, with no bias toward either industry stated, “When properly sited and maintained, manufactured homes will appreciate at the same rate as other homes in surrounding neighborhoods”.  This revelation of appraisal values is important to understand as the majority of middle-class wealth is comprised of home ownership.  Studies from the Federal Reserve show that homeownership is the cornerstone of middle-class wealth.  The average middle-class home owner has a net-worth of $194,000.00 about 36x that of their renting counterparts who have an average net-worth of $5,400.00.

This information poses some serious questions about the manufactured housing industry.  The first and most obvious question is, “Can manufactured homes save home ownership?”  The second question, only visible when examining what home ownership in America truly represents, “Can manufactured homes save the middle-class?”

West Virginia Housing Institute Inc.’s 2013 Convention

There is an interesting opportunity on the horizon — a housing convention in West Virginia!  The West Virginia Housing Institute Inc.’s 2013 convention will be held at the Stonewall Resort in North Central West Virginia from the 24 – 26 in June.  

Co-Presidents, Kevin Wilfong and George Gunnell, invite you to attend this convention that has said to have an exceptional line up.  The line up for this year’s convention includes:

• Tim Williams who is the head of 21st Mortgage Corp., and he will be presenting on industry financing

• G. Kent “GK” Magelson who is with the American Society of Asset Protection in Las Vegas will be sharing how to reduce your taxes and help to avoid lawsuits

• There will also be housing professionals on hand including legal panel of general counsel – John Teare, board member – Johnnie Brown, expert from Huntington – Jason Stemple, Chief Regulator – Mitch Woodrum, President of West Virginia Coal Association – Bill Raney and an official from Champion Homes.

There will be a second-evening banquet, political action funding raising auction and the statewide meeting.  There is a lot packed into these days but don’t forget to attend the sponsored breakfast on June 26th!

Don’t forget about the recreational fun you get to enjoy while at the Stonewall Resort.  Take a stroll down the trails near the lake and park or how about a two-hour lake cruise with legal beverages and heavy snacks.  You could attend the Phil Fogleman’s special wine-tasting program or play a round of golf at the Arnold Palmer-designed course.

Join this convention in June and fill out this registration form.  Please don’t forget to call the Stonewall to make your reservations.

**Note — the rooms are limited at this location so reserving a room is strongly suggested as soon as you know you will be attending.  Call today 304.269.7400 or 1.888.278.8150.There has been a negotiated rate of $149.18/night.

Breakfast Briefings and Certification Courses!

Breakfast meetings are coming to your area soon.  The most immediate one coming up will be on March 6th, 2013 at the Sky Harbor Community Center in Cheektowaga, NY.  Here you will be able to meet, receive valuable information and network!

At this particular breakfast, members will have the opportunity to learn about the new Federal and State Regulations.  The legislation could have a negative impact our industry so we need to stay informed.  There will be NYS Building Code Division representatives discussing new codes and what codes have been updated.  Financial information will also be discussed.

Registration and breakfast begins at 8:30am and the meeting follows from 9:00am to 12:00pm.  The registration fee is $30.00 per person and is nonrefundable.  The registration form can be found here.

If Cheektowaga is not local enough for you, there are other meetings!  On April 3rd there will be a meeting in Riverhead and on May 15th one will be held in Rochester.

Another convenience for members is that certification courses has been scheduled in conjunction with the regional meetings.  A Continuing Education Course will be held the same day as the meeting.  Other courses will be held the following day.  Here is information on those courses and more can be found on the NY Housing website.  You may also contact at the Association Office for more information.

3-Hour Continuing Education Courses

• March 6 Buffalo: Sky Harbor Community Center

• April 3 Riverhead: Glenwood Village

• May 15 Rochester: Harper Park

3-Hour 21B Introductory Course and 6-Hour Mechanics Certification Course

• March 7  in Buffalo, NY: Sky Harbor Community Center

• April 4 Riverhead: Glenwood Village

• May 16 Rochester: Harper Park

MHI Weighs in on CFPB Housing Finance Proposed Rules

MHI or the Manufactured Housing Industry has worked to represent the concerns of our industry over the past few months in response to a number of proposed housing finance rule makings.  These proposals were release by the Consumer Financial Protection Bureau or CFPB.

A previous article mentioned that, “MHI is concerned that a number of new regulations currently being developed by the CFPB could further limit access to and the availability of credit in the already finance-constrained manufactured housing market. In addition to efforts to amend the Dodd-Frank law through legislative measures in the House and Senate (H.R. 3489 & S. 3484), MHI is actively advocating the industry’s concerns before key staff at the CFPB.”

The next section highlights some of the most significant rules that MHI has the most concern with.  MHI wants you to know that, “MHI staff is working to ensure final rules adequately reflect the price sensitivities and unique challenges inherent to the manufactured housing market.”

(The following is from the MHI news wire.  The information is quite important so please read further)…

Appraisal Requirements for Higher-Risk Mortgages

Implements Dodd-Frank provisions that an appraisal (including a physical inspection of the interior of a home) be conducted on homes with mortgages considered “higher-risk.” Under the law, qualified mortgages (QMs) would be exempt from the “higher-risk mortgage” definition and thereby exempt from appraisal requirements. In general, if the loan is not a QM and has an APR that is 1.5 percentage points over prime, it is considered “higher-risk.” Based on input from MHI, the rules proposed by the CFPB and others would exempt any loan “solely secured by a residential structure,” such as manufactured homes, from the higher-risk mortgage definition. Based on the unique difficulties of appraising manufactured homes, MHI is working to expand this definition to include any manufactured home loan secured by real property.

• Click here to view the proposed rule.
• Click here to view MHI’s comments.
• Click here to view a summary of the appraisal proposed rule.

Equal Credit Opportunity Act Amendments— Requires creditors to provide consumers free copies of all written appraisals and valuations developed in connection with an application for a mortgage. The proposal would require creditors to notify applicants in writing of the right to receive a copy of each written appraisal or valuation at no additional cost. With respect to new manufactured homes, most lenders develop a maximum loan amount based on the manufactured home’s invoice price. In the proposed rule, the CFPB indicates that “valuations such as manufacturer’s invoices for mobile homes” would not be considered a “written appraisal or valuation” and would not have to be provided to consumers by lenders. In addition, publicly available valuation lists (such as published sales prices or mortgage amounts, tax assessments and retail price ranges) are not items considered that must be provided to consumers.

• Click here to view the proposed rule.
• Click here to view MHI’s comments.

HOEPA High-Cost Mortgage Revisions — Dodd-Frank expands the types of mortgages subject to the protections of the Home Ownership and Equity Protection Act (HOEPA); revises and expands the triggers for coverage under HOEPA; and imposes additional restrictions on HOEPA “high-cost mortgage” loans, including a pre-loan counseling requirement. Because the fixed costs (such as servicing and origination) and the lack of secondary market access, low balance manufactured home loans are particularly susceptible to classification as high-cost under the revised HOEPA guidelines. Due to liabilities associated with a high-cost/HOEPA mortgage, lenders will not originate these loans—potentially further stifling the availability of credit in the manufactured housing market. MHI has urged the CFPB to significantly broaden the APR and origination points thresholds that define HOEPA high-cost loans and ensure that fewer low-balance manufactured home loans are captured by triggers that currently do not fully account for the price pressures in the manufactured housing market.

• Click here to view the proposed rule.
• Click here to view MHI’s comments.

Loan Originator Compensation Rules —Implements changes made by Dodd-Frank to Regulation Z’s current loan originator compensation provisions, including a new additional restriction on the imposition of any upfront discount points, origination points, or fees to consumers under certain circumstances. The rule implements a very narrow exemption for manufactured housing retailers to “exclude employees of a manufactured home retailer who assists a consumer in obtaining or applying to obtain consumer credit, provided such employees do not take a consumer credit application, offer or negotiate terms of a consumer credit transaction, or advise a consumer on credit terms (including rates, fees, and other costs).” Unfortunately, the provision provides no meaningful relief to the industry.

MHI has maintained the position that the exemption for manufactured home retailers should be based upon the compensation received in the home sale. If the compensation received is no greater than what the retailer would have received in an all-cash transaction, then the individual retailer/seller should not be considered a loan originator. Unless clarifications are made, MHI is concerned that lenders may be forced to consider sales commissions earned by a manufactured home retailer as compensation and gain for purposes of calculating a loan’s APR or points and fees. This may cause the loan to fail the test for a “qualified mortgage” or a HOEPA/high-cost mortgage.

• Click here to view the proposed rule.
• Click here to view MHI’s comments.

RESPA & TILA Mortgage Servicing Guidelines – The rules implement Dodd-Frank provisions regarding mortgage loan servicing. Specifically, this proposal implements Dodd-Frank sections addressing initial rate adjustment notices for adjustable-rate mortgages (ARMs), periodic statements for residential mortgage loans, and prompt crediting of mortgage payments and response to requests for payoff amounts. The proposed rule would provide an exemption to small servicers—defined as those that service 1,000 or fewer mortgage loans and service only mortgage loans that they originated or own—for the periodic statement requirements.

• Click here to view the RESPA proposed rules.
• Click here to view the TILA proposed rules.
• Click here to view MHI’s comments.
• Click here to view a summary of the new servicing requirements.

For more information, contact MHI Vice President of Government Affairs Jason Boehlert at  jboehlert@mfghome.org.

A Survey and other Important Information

Some very important information has been coming down the pipeline and I wanted to share it with you immediately.

The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued a final rule  about extending anti-money laundering (AML) and suspicious activity reporting (SAR) requirements to non-bank residential mortgage lenders and originators (RMLOs – Additional information is here about defining a RMLOs, etc. FINcen Final AML Rule for Non-Bank Mortgage Lenders 2-17-2012).  Now by August the RMLOs will be required to implements AML and SAR programs.

MHI working with McGlinchey-Stafford to create templates to assist lenders, community owners and retailers in becoming compliant with this rule.  We are asking MHI members to complete the survey in a PDF (NOLADB-#998207-v1-MHI_Member_Questionnaire_for_AML_and_SAR_Programs) or in a Word document MHI_Member_Questionnaire_for_AML_and_SAR_Programs.

In addition, we are requesting that lenders and also MHI members that could possibly be considered RMLOs such as community owners/operators, manufactured housing retailers, etc. to complete the survey.

Please follow the directions and note the information within the survey is kept strictly confidential.  Please return at your earliest convenience.  You can return your survey to Marc Lifset at mlifset@mcglinchey.com or by fax at 518.432.7290.  Feel free to contact Marc if there are any questions about the survey.  Your assistance will help us all more easily comply with this new regulatory requirement.