Ongoing Transition from TPL to Owner Financing

Ongoing Transition from TPL to Property Owner Financing….


Turns out, all the while we were talking of a maybe Grand Conspiracy to kill the MHIndustry, and weathering our own Near Perfect Storm, new HUD Code home shipments slipped to a 60 year nadir; another, albeit undercurrent, was also present and building in volume and momentum….

Some call it a temporary cum permanent supplanting of ‘third party lending’ (‘TPL’) chattel (personal property) lending on new and resale HUD code homes, by the now widespread practice of property owner financing (a.k.a. ‘self – finance’, via either the ‘captive finance’ or ‘buy here – pay here’ method), throughout the 50,000 property landlease (nee manufactured home) community real estate asset class.*1 Huh?

Yes, you read that right; and for that matter, have been reading and hearing about this gradual change in primary chattel lending situs for months now, though it’s been evolving for a decade – this time around. However, during the past 60 days, subsurface frustration, on the part of some TPLs, regarding capital sourcing, lack of secondary markets, new financial regulations, and other aspects of chattel lending, including aforesaid property owner financing, has bubbled to the surface in industry conversations. To better understand what’s happening, here’s one industry observer’s view of the chattel finance timeline:

First official, public recognition of the phenomenon, where property owner financing of new and resale home transactions on – site in landlease communities (‘LLCommunities’) was replacing TPLs, as primary chattel lending sources, occurred at the National State of the Asset Class (‘NSAC’) caucus, in Tampa, FL. on 27 February 2008. One of Five Action Areas identified by the 100+/- caucusing LLCommunity owners/operators, states: “Financing and servicing of new and resale home transactions on – site, and financing of LLCommunities. The first half this action item is in place….” Doesn’t get much clearer than that.

A year and a half later, all TPLs were invited to participate on a Chattel Finance Panel at the 18th International Networking Roundtable in Chicago, IL., during September 2009, declined. Only one representative from one TPL attended. A telling gesture.

So, at the Manufactured Housing Institute’s (‘MHI’) Winter meeting in southern California, later that same month, a small group of the asset class’ largest property portfolio owners/operators decided to retain the services of a Washington, DC – based consultancy to attempt to ferret out additional sources of chattel financing for LLCommunity use. This focused effort is ongoing, and may indeed see fruition during the months, if not year, ahead. Details, however, are CONFIDENTIAL, and otherwise unavailable for publication in this blog posting, at this time.

During the timeframe, January through April 2010, it was recognized there’d been no new chattel finance information articulated since MHI’s former staffer Joe Owens’ penned a seminal chapter, on this subject, in Development, Marketing, & Operation of Manufactured Home Communities, co – authored by George Allen, David Alley, & Edward Hicks, published by J. Wiley & Sons in 1994. So, in short order, more than two dozen MHIndustry experts contributed chattel finance – related ‘How To’ material for the compilation and publication of the Manufactured Housing $$$ Primer, distributed at the Manufactured Housing Congress in Las Vegas, NV. Of the few surviving national TPLs (a.k.a. the ‘Big Four + 1’), only two contributed ‘self – descriptions of their chattel finance products’.*2

June 2, 2010, turned out to be a pivotal day in MHIndustry history, where chattel finance in public and government arenas, is concerned. A national Manufactured Housing Finance Roundtable was sponsored and co – hosted by Congressman Joe Donnelly (D-IN) and Federal Housing Commissioner David Stevens. The event occurred in Elkhart, IN, “…attended by 60 business executives, lenders, politicians, and representatives from federal regulatory agencies – but no GSE’s….”*3 Bottom line? As an industry, we learned once and for all, we’re truly ‘on our own from now on’, when it comes to financing most on – site, new and resale home sale transactions requiring chattel loans! Interestingly; whoever set up that meeting ensured every TPL had a seat at the Roundtable’s ‘square table’, while a greater number of major LLCommunity portfolio owners/operators (i.e. property owner ‘lenders’) also present at the event, were left to sit/stand around the perimeter of the meeting room. Another telling gesture…

Then there was MHI’s Summer meeting in Washington, DC, 13 – 15 July 2010.*4. Dues – paying members, aligned with the National Communities Council (‘NCC’) division, but with strong chattel finance bias, felt ‘less than welcome’ at Financial Services Division meetings. And unbeknownst to the majority of paid registrants at the Summer affair, an off – agenda meeting (Thursday) was requested by FHA  representatives desiring a workshop with TPLs. While this is ‘fine and good’ in its’ own right, it’s ironic the segment of the MHIndustry maybe doing the ‘lions share’ of chattel lending these days (i.e. LLCommunities), was generally not invited to said meeting – with the exception of two senior executives from two large property portfolio firms. Results? Hard to tell. While a request has been made for a copy of the ‘proceedings’ from said meeting, nothing has arrived to date. However, other sources will likely share this information before next weekly blog posting. So, as they say, ‘Stay tuned! (to this blog)’ for more information to come….

Well, there you have the 2 ½ year timeline; realizing of course, property owner financing goes all the way back to near year 2000 and before. Frankly, many of us recall a similar spate of property owner financing, occurring during the late 1970s, when we filled thousands of recently – developed but vacant rental homesites, with mostly resale homes sited as rental units and or ‘contract sales’. That time around, we were reeling from the effects of implementation of the new HUD Code, in 1974 – 1976, when new home shipments plunged from a record high of 575,940 new ‘mobile homes’ in 1972, down to 250,000+/- homes shipped per year, for the next two decades plus. This time around? Are memories so short we don’t recall shipping 372,843 new manufactured homes during 1998, by ‘turning our customers upside down’, financially; then by year 2000, experiencing our own ‘housing bubble bust’ eight years ahead of the one presently paralyzing site – built housing?

So, where does all that leave us today? Depends on who you ask. All I can offer is my opinion. But for what it’s worth, and sad to say, TPLs, like the no – show GSEs (referring to aforementioned 2 June 2010 Roundtable in Elkhart, IN.) are going nowhere, Title I ‘PR’ and hype notwithstanding, for the time being. On the other hand, LLCommunity owner – financing, of new and resale HUD Code homes on – site, where the property owner has deep enough pockets, or sufficient local lending contacts, to engage in self – finance, of either the ‘captive finance’ or ‘buy here – pay here’ method, is doing better than OK. But given uncertain implementation of the federal S.A.F.E. Act (‘Safe And Fair Enforcement of Mortgage Licensing Act’), and other related regulatory legislation of late, there’s been a noticeable retreat, by generally smaller LLCommunity owners/operators, and portfolio folk, from the public scene. Makes sense. When you get right down to it, LLCommunity owners/operators are the last private and practical source of truly inexpensive durable housing, flexible affordable lending/borrowing, and professional property management! You’ve gotta ask yourself: ‘Where else can a would be homebuyer go, to purchase a 3BR2B resale home for $20,000.00. – 50,000.00 (depending on what’s available in the local housing market); and, with a modest down payment, plus whatever amount ‘works for them’ to make dual housing and rental homesite payments each month, become a bona fide homeowner?’ Answer? Nowhere else in the non – subsidized rental payment or conventional homebuying world! And in this unique ‘affordable housing environment’ (i.e. manufactured housing in landlease communities), homebuyers, oft with credit scores within the 580 – 620 range, build equity as well! We are indeed a National Treasure well worth preserving!


Hey; more and more ‘blog readers’ are communicating thoughts, opinions, and ideas to me via this website, email (, phone (317) 346-7156, and c/o Box # 47024, Indianapolis, IN. 46247. Become one of my many valued information resources and contact me with your input today! The more you help me, the better informed we will all be during the weeks and months ahead!


If you own one or more LLCommunities, and read this blog, you should be planning to attend the 19th annual International Networking Roundtable in Phoenix, AZ. @ 15 – 17 September 2010. More than 50 have already registered, and max allowed is 200. So, don’t delay. While there’s a Roundtable brochure on this website you can use, also phone and I’ll send you one. This is the premier annual educational, networking, and deal – making event for all landlease community owners/operators in North America!


You’ve probably already noticed, I frequently reference news notes, stories, and statistics published in the Allen Letter professional journal @ $134.95/year; and occasionally, the Allen CONFIDENTIAL! (Most of what’s contained in the latter periodical can’t be reprinted here or elsewhere. Subscribe and learn why….) @ $950.00/year. If not already a subscriber, to either or both monthly business newsletters, phone the MHIndustry HOTLINE: (877) MFD-HSNG or 633 –4764 to do so. Also able to subscribe via this website. Join the hundreds who read the AL each month, and the dozens of top corporate executives who read the TAC! ‘first thing each month’!


FLASH! Do you have personal access to the Urban Land Institute’s Urban Land magazine? Well, the July/August 2010 issue, on page # 62, carries this feature: ‘Today’s Manufactured Home Community’. Contains lots of inside information about this unique income – producing property type. Unfortunately, ULI does not sell single copies of their professional publication, but a reprint of this article will appear as a reprint lagniappe in an upcoming issue of the aforementioned Allen Letter professional journal. Just one more reason to subscribe today….

End Notes.

1. For a more complete description of this phenomenal change, read the July 2010 issue of the Allen Letter professional journal, available by phoning (317) 346-7156.

2. Ibid., and GSE: government – sponsored enterprises. Also, to order your copy of the Manufactured Housing $$$ Primer, phone the above number @ end note # 1.

3. For additional information on MHI’s Summer meeting visit our blog archive for week of 18 July 2010.


George Allen, Realtor®, CPM®Emeritus, MHM
Consultant to the Factory – built Housing Industry &
the Landlease Community Real Estate Asset Class
Box # 47024
Indianapolis, IN. 46247

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