COBA7 ‘gift’; Fannie Mae ‘advice’; &, REALTOR U’s Market Study misses land lease communities….
Blog # 492; Copyright @ 8 July 2018; community-investor.com
Perspective. ‘Land lease communities, previously manufactured home communities, & ‘mobile home parks’, comprise the real estate component of manufactured housing.’
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INTRODUCTION. Here’s a combo: COBA7, Fannie Me, & REALTOR University.
\Part I. COBA7-distributed American Flag Decals excite MH patriots coast to coast!
Part II. Fannie Mae ‘splains’ distinctions between chattel capital & real property lending
Part III. NAR’s REALTOR University stumbles around unfamiliar MH territory.
American Flag Decals Everywhere!
Just what I hoped would happen, is happening! To date we’ve distributed several hundred of these 3″X4 1/2″ patriotic decals to COBA7 affiliates via the Allen Letter professional journal & the Allen CONFIDENTIAL! business newsletter, as well as enclosures in most correspondence leaving our office during the past couple weeks. Result? Phone and email requests ordering American Flag decals featuring the slogan: I STAND FOR THIS FLAG!
And hey, if you haven’t ordered your supply to distribute to friends, business acquaintances, and family members, it’s not too late to do so! Just phone me @ (317) 346-7156 or email: firstname.lastname@example.org Use credit card to order soon.
100 American Flag decals for $150.00 (S & H included). And frankly, if you’d like just one decal for personal use, simply ask for it as well.
A Few Takeaways from Fannie Mae’s
‘Key Legal Distinctions between Manufactured Home Chattel Lending & Real Property Lending’
Distributed by email on June 29, 2018
“The higher Rate Trigger (i.e. $50,000+) for smaller Chattel Loans is recognition that the fixed costs of originating and servicing those loans are the same as larger loans, but a larger proportion of the total loan amount. INDUSTRY ADVOCATES contend all of the Triggers for Chattel Loans should be even higher and apply to Chattel Loans of $75,000 or less. CONSUMER ADVOCATES contend that raising the Triggers, or the loan amount threshold, will erode important consumer protections.” (EMPHASIS added. GFA)
“In 43 states, a manufactured home remains personal property until the manufactured homeowner completes the ‘Conversion Procedure’ – a formal statutory procedure for electing to convey and encumber a manufactured home as real property. In those states, completing the Conversion Procedure legally converts the manufactured home to real property for all purposes. Thus, absent such a process, a manufactured home will not constitute a ‘fixture.'”
Re-Marketing a Repossessed Manufactured Home. “37 states and the District of Columbia allow the secured party to act as retailer for the sale of its’ repossessed manufactured homes without a retailer license. If the manufactured home is in a community, a retailer affiliate of the community may assist with the resale. Typically the secured party and the community will enter into a ‘Park Agreement’ whereby the secured party pays site rent, and refurbishes and maintains the manufactured home until it is sold in place. The cost of moving the home can be as high as $5,000. Thus, the secured party has incentive to enter into the Park Agreement. If the manufactured home is located on private land and the secured party does not have a lien on the land, typically the manufactured home is removed to the sales lot of the retailer that originally sold the home, and consigned for resale. In this situation, the secured party cannot avoid the cost of a move and an investor may be reluctant to purchase chattel loans secured by homes on private land. A prudent lender will get a landlord lien waiver when installing a manufactured home on private land. Finally, many secured parties list the manufactured home for resale on www.mhvillage.com” (lightly edited. GFA)
The final paragraph, in my opinion, raises a few questions:
• The definition of a ‘retailer affiliate’ working within a land lease community? Is this a casual or formal arrangement, job description? Who’s responsible party?
• Do, or must, Park Agreements always require secured parties to pay rental homesite fees or not?
• Is MHVillage the only marketing platform for repossessed manufactured homes?
REALTOR University Looks at ‘Market for Manufactured Housing’ & Misses Key Role of Land Lease Communities!
Something that oft happens, when OUTSIDERS write like INSIDERS
In a recent issue of ‘The Journal of the Center for Real Estate Studies’, at NAR’s REALTOR University, research economist Scholastica (Gay) Cororaton, CBE, penned a 30+ page paper titled ‘The Market for Manufactured Homes.’
On the surface, reading US Census Bureau stats, along with data from the Institute for Building Technology & Safety (‘IBTS’), one expects a credible ‘run of the MH mill’ report about our industry, albeit penned by an outsider. Not.
Here’re the first two paragraphs from said ‘review & commentary’ I crafted. If you want the entire document, simply request it, providing your postal mailing address, via email@example.com. No charge for this service. Here goes….
The good news here is, a researcher/writer describes our industry, and the unique factory-built housing we fabricate (i.e. HUD-Code manufactured homes), as a continuing (since 1960s & 70s) popular form of affordable housing in the U.S.! And she uses pre-publication content reviews by Jenny Hodge of MHI, and Marc Lifset, esquire, to try and get the story right.
The not so good news, however, is the 30+ page report is mute about the important role land lease communities (a.k.a. manufactured home communities) play in the U.S. affordable housing scenario. This is an especially troubling omission, as the industry and its’ realty sector work their way through an 18 year paradigm shift (i.e. a NEW ERA), characterized by new HUD-Code homes distributed, less by independent (street) MHRetailers, and more via direct factory purchase, siting/sale on-site, and seller-financing of said homes in land lease communities – likely approaching 40 percent by year end 2018.
The stark reality of manufactured housing statistics – well beyond, and certainly no fault of Ms. Cororaton, is U.S.Census Bureau, some other related federally-mined data is, in this industry observer’s opinion, hopelessly flawed up and down the line. How so? Lack of careful definition and clarity relative to matters like:
• Titling. Difficult to tell whether statisticians are talking of vehicle-like (personal property) titling, or realty-secured titling. Manufactured housing, depending on permanence – or not, of installation, easily goes either way. For example the permanent installation of a manufactured home on realty conveyed fee simple ‘might’ well be titled as realty-secured once it goes thru the conversion process; however, it might not. And installation of a manufactured homes on rental homesites in a land lease community is generally, but not always, subject to vehicle-like (personal property) titling. Most, if not all, federal research documents do not clearly define and differentiate among these alternatives.
• Then there’s further confusion re siting manufactured homes on a rental homesites in land lease communities, compared to similar sitings on a scattered building sites owned and leased to the homeowner by another party. Depending on permanence, or not, of installation-and other factors, is titling vehicle-like or realty-secured? Again, this can go either way.
• Community. And there’s ongoing confusion, using 2016 annual data as a baseline, as to whether all manufactured housing placements cited as being ‘in community'(e.g. 34%), relate to land lease communities (a.k.a. manufactured home communities) alone, versus ‘on private land’ (66%). Would be nice if it did. However, are all homes ‘in community’, subject to vehicle-like titling, or is there a difference within condominium communities, and of late,, resident-owned communities operated by cooperatives? Similar confusion reigns when it’s recognized – again using 2016 annual stats, that 77% of all new manufactured homes are titled as personal property, and only 17% as real estate secured. What’s the titling status of the other 6%?
And the confusion continues, whether outsiders or insiders attempt to sort thru and make sense of the data on hand.
Is there a solution to all this? Sure. But in my opinion, it’d take a massive rethink on this matter, over time, by an elite task force comprised of knowledgeable individuals from the U.S. Census Bureau, HUD, FHFA, Fannie Mae, Freddie Mac, a few NGOs (non-governmental organizations such as manufactured housing advocates), and seasoned executives and freelance consultants with ‘skin in the game’ as entrepreneur businessmen and women. We’d have to literally, ‘start from scratch’ to make this happen.*1
1. A year ago, at Fannie Mae headquarters in Washington, DC., I experienced a rare and insightful look into this sort of project. GSE staff agreed with me about the ongoing data confusion, caused by lack of definition and clarity. We openly talked about solutions. Nothing, however, was accomplished as we all soon realized the massive scope of unraveling this confusion of the past, to create a working template for the future..