‘Duty to Serve’ & Dueling Curves….
Blog Column #280 Copyright 2014 19 January 2014
George Allen writes about MHBusiness Matters, Issues & Serious Concerns
Perspective. ‘Land-lease-lifestyle communities, a.k.a. manufactured home communities & earlier, ‘mobile home parks’, is the real estate component of manufactured housing.’
Purpose of this blog. ‘To be the national advocacy voice, statistical research reporter, & communication resource for LLLCommunities, of all sizes, throughout North America!’
How to Input. Critical responses & helpful ideas Welcome for future blog coverage, via firstname.lastname@example.org & Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764
Duty to Serve, DTS, &
‘duty to serve underserved markets’,
Three Ways to Describe the Same Concept
Share Good Ideas With Me at the Louisville MHShow This Week!
‘DUELING CURVES: The Battle for Housing’
New Book on MH, by Bob Vahsholtz, draws closer to Publication
Duty to Serve, DTS, &
‘duty to serve underserved markets’,
Three Ways to Describe the Same Concept
The ‘Newest Old Mandate’ affecting Manufactured Housing; adopted by Congress in 2008; ‘dead in the water’ since 2010; Now to be Revived?!
Bloggers Note. Following material was prepared as a feature for the February 2014 issue of the Allen Letter professional journal. However, given the recent, increasing level of interest in this ‘Newest Old Mandate’, we’re sharing it here first, to bring you up to speed regarding one of the legislative battles likely to be fought this year. Responses Welcome
OK folks, we and our industry’s ‘political wonks’* learned a valuable lesson during the last half of year 2013. As one national advocacy exec put it in a recent issue of a trade publication: ‘No longer deceive ourselves about hoped-for legislative victory, by putting all our eggs (lobbying focus) in one basket, ‘effectively holding everything else (other lobbying foci) ‘hostage’!’ Look what that misguided strategy got us regarding Dodd-Frank and the CFFB = Nothing at all! And don’t expect success during 2014 either…
• wonk = ‘an obsessive student (in this case, national advocacy execs & leaders), grind.’
YOU owe it to yourself to ‘read up’ on Duty to Serve, or DTS. Start with last month’s
issue of The Journal, and MHARR’s column therein. Here’re a few salient quotes from it:
“…DTS, on its’ face, refers to three segments of the housing market – rural housing, ‘affordable housing preservation’ and manufactured housing….”
“Federal Housing Finance Authority (‘FHFA’) @ June 7, 2010, in a proposed DTS ‘implementation’ rule…totally exclude(d) chattel loans – comprising 76 percent of all manufactured home placements – from DTS….”
“…the value of DTS, as a means of spurring an expansion of manufactured home financing…was disputed by some in the industry, as a ‘waste of time’.”
The present day hope? “DTS, with a relatively minor technical correction and a concerted industry effort…still can lead…to the high-volume securitization of as much as 76% of the industry homes titled in the states.” And just what is that minor technical correction? Despite inquiries to the national advocacy body making that claim, no answer has been forthcoming, so is not described here.
YOU owe it to yourself to ‘google’ Duty to Serve, on the internet, and read the aforementioned ‘Notice of proposed rulemaking; request for comments.’ Here’re a few salient quotes from that notice:
“…the proposed rule would, among other things: (1) consider only manufactured homes titled as real property, for purposes of the duty to serve the manufactured housing market….” P.1.
Why exclusion of chattel loans from this rulemaking document? In part, “Since establishment of the conservatorships, combined losses at the two GSEs depleted all their capital and required them to draw about $145 billion from the Dept. of the Treasury, under the Senior Preferred Stock Purchase Agreements…Acting Director reported to Congress that having the Enterprises engage in new products would be inconsistent with the goals of conservatorship….” P.7. As a taxpayer, that’s responsible and easy to understand. As a businessman, it tells me the money honey pot has been closed for the time being.
A hard reality. “According to Home Mortgage Disclosure Act data for 2008, home purchase applications for manufactured homes are denied at three times the rate that applications for site-built homes are denied.” P.11. So, what, if anything, can be done about that sad state of affairs?
Five advantages to personal property mortgages cited by the Manufactured Housing Institute: overall principal loan amount is more affordable due to absence of land in the transaction; no appraisal, survey or private mortgage insurance is necessary, which lowers closing costs; customer does not encumber any real property; tax, titling fees, homeowners insurance, and service warranties can be financed; and transaction is generally faster.” P.11, footnote # 12.
“Organizations representing consumers and manufactured home community residents expressed serious reservations about chattel lending. DFED, for example, stated chattel loans provide low-income families with higher rates, less optimal terms, and reduced consumer protections, as compared to a mortgage loan….” P.17. So, it’s not just federal bureaucrats we’re battling here, but our own homebuyers, mortgagors, and tenants.
Is this a potential solution? “Commenters suggested if FHFA determines manufactured homes, secured by chattel loans be considered, FHFA should require borrower protections such as: 1) capping the annual percentage rate or APR at 3.5 points above the prime rate; 2) banning prepayment penalties; 3) banning yield spread premiums; & 4) requiring lease terms extend five years beyond the term of the loan.” P.19
Manufactured homes are generally regarded as depreciating assets, even in a strong market environment. A 2005 report by Lehman Brothers, estimated the expected annual depreciation rate at three to four percent annually.” P.20.
“Enterprise assistance to manufactured home communities would not be considered for purposes of the duty to serve the manufactured housing market in the proposed rule.” P.22. Why? Maybe because, “With regard to manufactured home communities, individuals, nonprofit organizations, and policy advocacy groups expressed concern about the lack of tenant protections in communities owned by investors.” P.9
“ROC-USA commented, after 25 years and over $150 million in originations for resident-owned communities, it had ‘not had a single loan lost or charged off.’”p.23
YOU owe it to yourself, to not only become better educated about Duty to Serve or DTS, but to stay well-informed about what either or both national advocacy bodies say and do, ‘in our (your) behalf’, on this sensitive subject during the months to come during year 2014!
Share Good Ideas with Me at the Louisville MHShow This Week!
It’s as simple as this: Look me up at Rishel Consulting’s one day seminar on 21 January (The day ‘before’ the Louisville MHShow actually begins!) at the Crown Plaza Hotel; &/or, anytime on 22 January, as I’m admiring & photographing new HUD-Code homes on display (The BIG QUESTION THIS YEAR? How many of these will be Community Series Homes or CSH Models, desired by land-lease-lifestyle community owners/operators?) and meeting & talking with various product & service suppliers! Don’t wait for the 23rd though, as I’ll be touring LLLCommunities that morning and in meetings that afternoon.
Why look me up? Here, let’s identify at least five good and timely reasons:
FIRST; I’ll be handing out TICKETS, during private conversations (With you?), inviting land-lease-lifestyle community owners/operators, and their product/service vendors – especially HUD-Code home manufacturers, to affiliate with the Community Owners (7 Part) Business Alliance or COBA7, launched last month by GFA Management, Inc., dba PMN Publishing. This is NOT a new, national trade group, simply an opportunity for businessmen and women, associated in one or another fashion with the LLLCommunity realty asset class, to – at a minimum, receive the Allen Letter professional journal each month, the (25th anniversary) ALLEN REPORT (A.k.a. ‘Who’s Who Among LLLCommunity Portfolio Owners/operators Throughout North America!’), and a dozen Signature Series Resource Documents or SSRDs, e.g. annual National Lenders’ Registry, during the course of the year. When you see me, just ask for your TICKET!
SECOND; We’re deep into planning some sort of MHInitiative®2014, with this GOAL: Helping HUD-Code home manufacturers successfully market and sell more new Community Series Homes, or CSH Models, into land-lease-lifestyle communities in the U.S.. Manufacturers now routinely access our exclusive, confidential data base to put their firm’s name, via Direct Mail, in front of the 500+/- known LLLCommunity portfolio owners/operators throughout North America! BUT, the Big Question now begging answering is ‘How to Get This Same Message in Front of the 42,500+/- Mom&Pop-sized LLLCommunities across the country?’ IDEAS? And how many manufacturers are using Lifestylist ‘services’ to ensure product designs are indeed ‘right’ for targeted local housing markets? And, for the first time in decades, they’re calculating ‘affordable’& ‘risky’ Price Points for new and resale homes per local housing market’s Average Median Income or AMI, and prospective homebuyer’s Annual Gross Income or AGI! Do YOU know how to do this? Finally; really would like your creative ideas on how to effect MHInitiative@2014: at the RV/MH Hall of Fame on 27 February 2014; or some other venue later in the year?
THIRD; we’re looking for subject matter and volunteer writers to input the new book, Lessons Learned from LLLCommunity Operations. So, if you’re a capable, successful, experienced owner/operator of one or more land-lease-lifestyle communities, and willing to share one or more personal or corporate LESSONS LEARNED, with your peers, in this book – and have your contribution serve as Your Lasting Legacy, talk to me during the Louisville MHShow – or contact me via means listed at beginning of this blog posting. This is a COBA7 project for LLLCommunity owners/operators nationwide.
FOURTH. There’ll be a national FOCUS Group meeting of land-lease-lifestyle community owners/operators during the first week of April 2014, planned and facilitated by COBA7. If you’d like to have your name on the ‘invite’ list, let me know at the Louisville MHShow. Already have 40 businessmen and women who’ve expressed their desire to participate. In this instance, ‘you’ recommend the agenda (i.e. issues you face); we meet on-site in a clubhouse at a large LLLCommunity for 1 ½ days. Proceedings confidential!
FIFTH. The 23rd annual International Networking Roundtable is scheduled for 10-12 September. If there’re topics you’d like to see covered this year, and presenters you’d like to hear – including your interest in being a speaker, let me know this as well. If you’ve got something worthwhile to share (Not necessarily a sales pitch), with your peers, we’d like to know. Being featured at the annual Networking Roundtable is invaluable, as your name and topic are publicized on the advance brochure, and summarized – along with your contact information, in a Signature Series Resource Document published following the event. Who else gives YOU that sort of exposure in this business? Look Me Up!
WHEW! This is going to be one very busy Louisville MHShow for us this year! Looking forward to seeing you there – or having you contact me otherwise, if not going to be in attendance – and ask about COBA7, when you call or write! GFA
‘DUELING CURVES The Battle for Housing’
New Book on MH, by Bob Vahsholtz, draws closer to publication
It’s not official, but Bob Vahsholtz’s new book about factory-built housing in general, manufactured housing in particular, is drawing closer to publication. The DRAFT copy I just helped edit is chock full of principles & methods, examples & statistics, biographies & corporate histories, all helping carry & support his dual themes of ‘learning curve’, and it’s effect on housing industry fundamentals, over the decades.
We’ll be among the first to let you know when and how this tome will be available for purchase by housing aficionados and practitioners.
George Allen, CPM & MHM
Box # 47024, Indpls, IN. 46247