65 Year Historical Perspective to FHFA’s DTS Rulemaking Challenge to Fannie Mae & Freddie Mac

January 21st, 2017

Blog # 430 Copyright @ 22 January 2017; community-investor.com

Perspective. ‘Land-lease communities, previously manufactured home communities, & ‘mobile home parks’, comprise the real estate component of manufactured housing.’

This blog posting is the sole national advocate voice, official ombudsman & historian, research report & online communication media, for North American LLCommunities!

To input this blog &/or affiliate with Community Owners (7 Part) Business Alliance, a.k.a. COBA7, use Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764

COBA7 Motto: ‘U Support US & WE Serve U!’ Goal of its’ print/online media = to “Not only inform & opine, but transform & improve MHBusiness model performance!”
_______________________________________________________________________

INTRODUCTION:

This blog posting was prepared specifically and especially for the Federal Housing Finance Agency Listening Sessions. It is a 65 year look back at manufactured housing finance cycles, plus a challenge to look forward, and collectively decide how to restore reasonable access to chattel capital for financing of new and resale manufactured housing in land lease communities nationwide.

Historical Perspective to FHFA’s Duty to Serve (DTS’) Rulemaking Challenge to Fannie Mae & Freddie Mac

“If you dwell in the past you lose an eye. If you forget the past you lose both eyes.”
An ancient eastern proverb *1

“Use this look back into our 65 year MH$ past, to ensure 20/20 vision going forward!”
George Allen, CPM & MHM

Folk new to manufactured housing and land lease community business models may hold the naive view this industry and realty asset class’ loss of easy access to chattel capital, from independent third party lenders – between the turn of the 21st Century and now – is simply a one time hiatus. Not so. We’ve gone through similar cycles in years past.

(More than a dozen of the following paragraphs, republished two years ago as lead feature in the January 2015 issue of the Allen Letter professional journal, were in turn quoted from the June 2000 issue (pages 45-48) of the defunct Manufactured Home Merchandiser magazine, in an article titled: ‘Looking Back at 50 Years of Manufactured Housing Financing’ by Otto Wantuck, former owner of San Diego-based Amcorp Financial Services.)

Mr. Wontuck’s reason for penning his half century retrospective description of manufactured housing finance cycles? In his words, “…help us do a better job and avoid same ‘pitfalls’ in the future.”

Otto. “The year is 1950. It’s summer in Tulsa, OK., and gasoline is selling for 37 cents a gallon. The young couple (is) from Knobnoster, Mississippi, where they bought a trailer from Sipes Trailer Sales, the local Spartan retailer. They are at the factory to pick up their new home, a beautiful, shiny, silver 8X20 Spartan Mansion aluminum trailer.”

Their Spartan Mansion’s “Sale price, including title and tax = $4,200. Down payment paid to dealer = $840. Balance owing = $3,360. Physical damage insurance for three years = $140. Credit life insurance = $60. Amount financed = $3,560. Finance charge (five percent add-on) = $534. Total note balance = $4,094.”

“The couple will be making 36 payments of $113.74 to pay off the loan. The true interest rate on the loan is 9.2 percent in simple interest. The cost to the lender is about 3.5 percent, resulting in a gross profit, before an administrative cost of almost 60 percent of the finance charges. A very profitable financing operation, indeed.”

Such was the reality of that time period, 65 years ago.

Moving ahead ten years, Otto again: “As of the mid-1960s, banks and savings & loans were unregulated. In their race for deposits, they turned to manufactured housing loans for higher yields. However, they lacked the expertise in originating these consumer installment loans. Entrepreneurs, many coming from manufactured housing finance companies, formed ’service companies’…becoming the loan arm of thousands of federal and state – insured banks and savings & loans.”

Then came the Crash of the 1970s. “By 1973, annual sales volume (i.e. new ‘mobile home shipments’) reached 580,000 – an all time high never to be seen again. However, there was a flaw in the industry growth. The marriage of service companies, financial institutions, and credit (repossession loss insurance) companies did not incorporate the basic checks and balances needed in the world of lending.”

“Competition for loan volume reached a ‘fever pitch’. Prudent lending practices disappeared in the feeding frenzy for profits by service companies. Banks, and especially S&Ls, were screaming for more loan business, since they needed the higher yields to support their marketing of high yield deposits for their customers in CDs and savings accounts.”

“The credit (repossession loss) insurance companies, at great risk, were generally unaware of their extreme exposure to uncontrolled loss. When they finally realized their mistake, it was too late.”

“The crash came in 1974, as losses skyrocketed. Credit (repossession loss) insurance companies pulled out of the business and annual sales of home plummeted to 338,000 units (shipped).”

“Repossessions were pouring in due to bad credit standards and many lenders withdrew from the business never to return.”

Two positive events occurred during the late 1970s; Otto continuing…

• The FHA & VA offered government-insured mobile home loans, and the Government National Mortgage Association offered a mortgage-backed securities program, that eventually provided “…billions of dollars to fuel the industry’s growth in the 1990s.”

• “A national construction standard known as ANSI 119.1 was imposed on the mobile home industry in 1976. (Now the HUD-Code)…greatly increasing the credibility of the industry with lenders, investors, and the general public.”

Interestingly, the debut of the HUD-Code (federally preemptive national building code) is most often cited as ‘the reason’ for the following 20 years fall-off in new home shipment volume, when ‘blame’ should be shared, at least equally, by chattel capital lenders of the time.

Economic Factors of the 1980s & 1990s

Otto again. “The borrow rates for manufactured home loans were three percent higher and could be attributed to higher costs of servicing and default losses.”

“Loan terms in 1980 were up to 20 years and rose to 30 years by 1995. This resulted in no equity lending on most loans for several years, and down payments dropped from 10 to five percent, a grave error.”

“…in 1998 & 1999, delinquency increased from 3.5 to five percent for most lenders, indicating problems. Default losses, including expenses, rose from 30 percent in the ’80s, to 45 to 50 percent in the late ’90s.”

“Pressure (however) increased among lenders to gain or hold on to market share. Loan credit quality deteriorated as the competition heated up. Eventually, in the late ’90s, many of these lenders withdrew from manufactured housing lending, but the damage was already done.”

Summary observation from Otto Wantuck, writing in mid-2000: “I have seen all of these problems before, but I have never seen all of them occur at the same time!” And to this he added this hopeful note: “The days of great ups and downs
in the lending industry are coming to an end.” Alas, probably more of an ‘end’
than even he realized at the time.

(For an anecdotal look at how these tumultuous financial times affected homebuyer/site
lessees, read ‘Upside Down in a Mobile Home Park!’ A fictional tale describing the real world consequences of 1) borrower qualification compromise, 2) questionable down payments, 3) bogus credit and 4) employment histories, plus 5) free-wheeling adjustable rate mortgages, even 6) ‘free site rent for a year’ in (then) manufactured home communities with rental homesite to fill. For a FREE reprint, phone COBA7’s Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.)

How did manufactured housing industry leaders, at the time, view these matters? Now retired, Gub Mix, a former association executive for several western states, and founder of the annual MHI Manufactured Housing Congress, opined circa 2000, in his widely read column, ‘From My Soapbox’,

“…manufactured housing industry devotes an extraordinary amount of its’ resources to sell homes to people who really aren’t qualified home buyers. Why? Because they allow us to sell the ‘old mobile home way’. It’s easier than attempting to sell to qualified buyers who require a lot more effort. Manufactured housing may be the only industry in America who ignores the customer’s desires in their marketing practices. Unfortunately for us, potential buyers are much more savvy these days, and appear to be abandoning us in droves.”

OUCH! But it had to be said!

And, the consequences to annual new HUD-Code home shipments nationwide?

• Year 2000 = 250,550 new homes shipped (Down from 372,843 in 1998)

• 2007 = 95,769 (First year since 1961 with fewer than 100,000 homes shipped!)

• 2009 = 48,789 (The nadir of manufactured housing shipments!)

Furthermore, this is what now retired industry chattel finance maven, Marty V. Lavin, esquire, opined about what he termed, the ‘deeply flawed operating model’ of manufactured housing. In his words…

“During the early 2000s, it became evident the new home sales downturn was unlikely to end! Our long term industry operating model was deeply flawed. The huge number of home shipments enjoyed during the 1960s & 70s, had only been possible given unsustainable chattel loan losses absorbed by industry lenders throughout the period. Once the severity of said losses was fully recognized, in he late 1990s, chattel lending tightened and shipments started a rapid decline, dropping to 50,000 homes shipped per year. Today, only a slight shipment recovery seems possible under the continuing flawed operating model. Not until the industry finds a way to market our homes to a much better credit tier of buyer, is growth likely to occur again. And one must believe industry growth is also unlikely to occur absent many needed industry model changes.” (Lightly edited. GFA)

With all that said though, our focus now must turn to what it’s going to take to restore reasonable access to chattel capital when selling and financing new and resale manufactured homes on-site in land lease communities (a.k.a. manufactured home communities) throughout the U.S. And that’s why the Federal Housing Finance Agency is hosting three Listening Sessions throughout the U.S. this Winter, providing opportunities for manufactured housing executives, land lease community owners/operators, and others, to input Fannie Mae & Freddie Mac, as these GSEs engage in rulemaking and program development that’ll restore reasonable access to chattel capital to this unique affordable housing marketplace.

That’s why it’s helpful to have learned, and now understand, what’s brought the HUD-Code manufactured housing industry ‘to its’ knees’ between 1998 (When 372,843 new homes were shipped), and 2009 (When only 49,789 new homes were shipped); and how we experienced 70,544 new homes shipped by year end 2015 – and just might eclipse 80,000+/- new homes during 2016 – if several thousand FEMA homes are added to the total provided by the Institute of Building Technology and Safety (’IBTS’).

Yet another succinct historical retrospective on this matter was penned, and recently updated, by Dick Ernst, president of FINMARK in Dallas, TX., writing for the Guidebook for Selling & Seller-financing New Manufactured Homes in Land Lease Communities, he observed… *2

“Let’s go back to those ‘go-go days’ of the 1990s, when HUD-Code manufactured
housing was enjoying strong growth year after year, and was the darling of Wall
Street. Large amounts of capital were chasing public (housing manufacturer)
companies’ stock, driving up housing prices, and giving these firms ‘play money’
with which to expand their retail distribution networks. The new buzz within the
industry as ‘vertical integration’.

Retail (chattel) financing was plentiful and financially attractive, because lenders
were paying MHRetailers a premium for their loans and were very aggressive
with their underwriting practices. While some lenders were portfolio lenders (i.e.
keeping chattel loans on their books), the bulk of financing, at the time, came
from active participation in the Asset Backed Securities Market. Lenders were
originating $100w of millions in loans, packaging them, and selling them, while
retaining servicing. Green Tree Financial was the largest ‘player’ at the time, with
more than 30 percent of market share. Other lenders tried to ‘out do’ them, by buying more marginal business, and or paying more for the loans purchased.

The peak of manufactured housing’s gluttony occurred in 1998, when 372,843 HUD-Code homes were shipped to MHRetailers and land lease communities. Marty Lavin (now retired), veteran manufactured housing finance consultant determined as much as one third of the industry’s chattel loans were made to homebuyers having a FICO score of less than 600 points! The soon result was a default frequency of more than 30 percent of loans originated at the time. The industry ended up with a glut of repossessed homes that took three years to absorb and resell.

So, what has happened since then? The asset-backed security business continued to operate, but the cost of doing securitizations became very expensive. Green Tree reorganized under bankruptcy protection, and stopped originating new loans. Clayton Homes, one of the largest scrutinizers in the MHIndustry, ended up selling to Berkshire Hathaway. Ultimately, when the sub prime fiasco hit, the capital markets were shaken to the core and closed down the asset backed security market completely. By 2010, there was no market for manufactured housing.

The MHIndustry and chattel financing look nothing today like they did at the turn of the century. The number of lenders financing ‘home only loans’, or at least the majority of such loans, can be counted on one hand, oft identified as ‘The Big Three’: 21st Mortgage Corporation, CU Factory-built Lending, and Triad Financial Services; plus, Clayton’s in-house arm, Vanderbilt Mortgage and Finance, Inc.” *3

“First came the S.A.F.E. Act (’Safe And Fair Enforcement’…of mortgage licensure), implemented and enforced on the state level.” *4

“Then the Dodd-Frank Act occurred in 2010, soon birthing the Consumer Finance Protection Bureau (’CFPB’) , yet another regulatory agency to enforce mortgage lending laws.” *5

Finally, this hands-on perspective from land lease community portfolio owner/operator Spencer Roane, MHM , of Pentagon Properties:

“The business of owning/managing land lease communities has become capital
intensive during the past 10-15 years. Today we are faced with spending $30-40,000 per new manufactured home we purchase for marketing on-site in our properties. Fortunately, there are many sources today, from which to borrow funds at record-low interest rates.

• Private investors (who) will lend money to community owners, oft from self-directed IRA accounts.

• Local banks, like American Commerce Bank, located on the outskirts of Atlanta, will also lend for home acquisition, seeing this as a means to segue into providing refinance, even new property acquisition funding, in the future.

• HUD-Code home manufacturers, like Clayton, Cavco, Champion, and Legacy, have in-house (Vanderbilt @ Clayton Homes) finance programs that encourage/facilitate community owners’ purchases of new HUD-Code homes. Also include 21st Mortgage Corporation’s CASH Program in this $ mix.

• Excess operating funds within land lease communities, via healthy net operating income (’NOI’) and or refinancing the debt on said property or properties.” *6

Now, with that said, attention needs to focus on what must be incorporated into Fannie Mae & Freddie Mac chattel capital finance programs, relative to manufactured housing, so as to make their loans/mortgages ’safe for securitization’ & ‘attractive to borrowers’ .going forward.

To some, this FHFA, Fannie Mae & Freddie Mac effort to rise to the challenge of Duty to Serve, might just be this nation’s last, best opportunity to preserve & increase the inventory of, and access to, this decades-proven and continuing ready source of truly affordable housing combination known as manufactured housing in land lease communities!

***
End Notes.

1. Quoted from the treatise, AFFORDABLE (MANUFACTURED) HOUSING, ‘From Factory to Family; a Bold Look into the Future of housing & Community’, 2015

2. PMN Publishing, 2016. Chapter # 5.

3. For more detail on this subject, along with contact information, read Signature Series Resource Document: ‘18th annual National Registry of ALL Lenders’, 2016. Available ‘free’ from COBA7 via Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.

4. Quoted from Chapter # 5 of Guidebook for Selling & Seller-financing’, 2016

5. Ibid

6. Ibid

***

George Allen, CPM & MHM, writing for the Community Owners (7 Part) Business Alliance, or COBA7 c/o Box # 47024, Indianapolis, IN. 46247. gfa7156@aol.com

Community Owners to Input GSEs; MHI & MHARRR = NAHB & BSC?

January 13th, 2017

Blog # 429 Copyright @ 15 January 2017; community-investor.com

Perspective. ‘Land-lease communities, previously manufactured home communities, & ‘mobile home parks’, comprise the real estate component of manufactured housing.’

This blog posting is the sole national advocate voice, official ombudsman & historian, research report & online communication media for North American LLCommunities!

To input this blog &/or affiliate with Community Owners (7 Part) Business Alliance, a.k.a. COBA7, use Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764

COBA7 Motto: ‘U Support US & WE serve U!’ Goal of its’ print/online media – to “Not only inform & opine, but to transform & improve MHBusiness model performance!”
_____________________________________________________________________

INTRODUCTION:

Part I. Own one or more land-lease communities? This could be your last opportunity to influence Fannie Mae & Freddie Mac, as they finalize DTS-related rules that’ll return access to chattel capital to us, or continue the impasse endured since the turn of the century, 17 years ago! Do not pass up this unique and timely opportunity! And, why is no one else challenging you to input the GSEs? More to the answer than you likely realize…

Part II. Recent Canadian example of ‘national advocacy consolidation’ is worth talking about here in the states! Picking up where Part I leaves off; recall how very little we’ve achieved politically, given ‘national advocacy marginalization’ in our nation’s capitol these past 17 years. Not saying merger with the NAHB’s BSC is ‘the answer’, just that we sorely need a more effective lobbying arrow in our quiver than is the case at present!

Part III. ‘Hey, Gotta Love the MHARR!’ Takes something significant to get us to pen a headline like that – and Mark Weiss did, when crafting a recent Press Release, laying three of the manufactured housing industry’s key 2017 issues out there in one sterling paragraph! Read and reread what he penned! Then, like me, clip and mount it where you’ll see it everyday. Then ask; ‘Why isn’t anyone else communicating like this?’

POSTSCRIPTS.

This offer still stands, to MHI & MHARR: You’re welcome to contribute an op/ed column, regularly or from time to time, for possible publication in the Allen Letter professional journal. With the demise of The Journal, we – as an industry & asset class – have precious few media outlet opportunities to use these days, to ‘get the word out to our businessmen and women peers’ nationwide.
&
In January’s Allen Letter, COBA7 challenges MHARR & MHI to meet – all three together – to ‘brainstorm’ continuance of the NEW ERA of manufactured housing & land-lease community cooperation into year 2017. Will it happen? Read more here later…
I.

Community Owners Asked Here, to Input GSEs with
Duty to Serve (’DTS’) Rulemaking Recommendations!

OK, we’ve officially been invited to answer this question: ‘What would you, as a land-lease community owner or operator like to see written into DTS Rulemaking being considered and codified at present, by Freddie Mac & Fannie Mae?’ Read on….

Trust me, the GSEs are not waiting around for you and me to respond. Rumor has it, one manufactured housing national advocacy entity is already advising them on matters having to do with leases, etc.. Have YOU been asked, before NOW, to input what YOU would like to see included? For most of us property owners the answer is NO. Why?

With that said, COBA7, during the week following the Louisville MHShow, and after the FHFA Listening Session in Chicago, on 25 January, will be collecting your responses to this suggestion by FHFA (i.e. GSE’s oversight agency), to input both GSEs’ in formal business correspondence. Already we know there are concerns, among LLCommunity owners, about 1) the nature and terms of potentially requisite ground leases; 2) the possible role of mortgage insurance; 3) role of lender recourse; and, 4) identification of potential investors to buy securitized chattel capital mortgages on manufactured homes in this property type. What else should the GSEs write into their DTS rulemaking?

Look at it this way, ‘What do you think it’ll take to help the GSEs feel secure guaranteeing chattel capital mortgages on their way to being securitized and sold on the financial market?’

This is your last opportunity to directly influence DTS Rulemaking at Fannie Mae & Freddie Mac, via the Community Owners (7 Part) Business Alliance, or COBA7! Send your input, this week, to COBA7 c/o Box # 47024, Indianapolis, IN. 46247, or via gfa7156@aol.com.

Such an exciting and rare opportunity for us. Don’t delay letting us know your ideas and thoughts on this vita and timely matter! Who’d have thought, three years ago, when Fannie Mae & Freddie Mac first attended the annual Networking Roundtable (in Peachtree City, GA.), we’d be invited to work this closely with them on a project of mutual, strategic, national interest.

II.

2017 = CMHI/MHICanada & CHBA; MHI/MHARR & NAHB’s BSC?

Is this the ‘consolidation formula for manufactured housing’ in Canada and the U.S. during year 2017? Wow! Based on responses to last week’s blog posting at community-investor.com, one would certainly think so. Here’s the SURPRISE: All commentators favor the idea! Seriously. I’d have bet ‘dollars to donuts’ U.S. MHIndustry aficionados would balk at following CMHI & MHICanada’s example of joining with CHBA in council fashion. And maybe they will. But for right now, sentiment is 180 degrees different – at least in part, evidenced by these and other remarks:

• “NAHB would be a good move, and I used to advocate it when we were MOD builders. Their codes are consistent, believed, trusted and supported by most communities, particularly in rural markets where, too frequently, there is no code, or the enforcement is minimal….”

• “George. I’ve thought about this a lot over the years. The full scope of the MH industry does not fit with NAHB, unless the (land-lease) community business is left out. The communities have more in common with the Realtors. Unless MH is willing to slice its’ small slice of the housing pie (i.e. 5% of national market share) in half, I don’t see any merger working.”

Good point, that latter observation. And with the rising percentage of new HUD-Code home being shipped directly into land-lease communities nationwide (i.e. 25% in 2009; 40+% in 2015; 75% predicted for year 2020), that slice of the housing pie could well become a deal killer or maker. Hmm. Worth thinking about, don’t you think?

But that ‘thought’ is fraught with at least two significant challenges only now beginning to be addressed by the manufactured housing industry and land-lease community real estate asset class:

• Return of reasonable access (Forget easy access) to chattel capital via ‘any source(s)’, especially the two GSEs identified in Part I of this blog posting. It hasn’t happened yet. Maybe with a new national governance administration…No, at present, the two best alternatives remain independent third party chattel finance firm(s) – one in particular; and increasing popularity of lease-option methodology. (NOTE. On Tuesday, 17 January, of this week, between 1 & 4PM at the Crowne Plaza Hotel in Louisville, KY., Spencer Roane, MHM, will be conducting a three hour workshop on L-O, the practical, seller-finance alternative! Only $95.00/aattendee. Reach out to genevieve@secoconference.com TODAY, or phone (770) 871-6889, to register and obtain the handout attendees will want to print ahead of the workshop!)

• HUD-Code home manufacturers, while now knowing how to ID & sell new homes to large property portfolio owners/operators, have yet to figure out how to reach all 500+/- of these sole proprietors and firms, nary to mention the 85% of 50,000+/- LLCommunities numbering 100 and fewer rental homesites apiece! (NOTE. On Tuesday, 17 January, of this week, between 9AM & Noon, at the Crowne Plaza Hotel in Louisville, KY., George Allen, CPM & MHM, will share 35 year trade secrets to this end: ‘How to ID LLCommunities & owners nationwide!’ Audience limited to HUD-Code home manufacturers. $95.00/attendee. Phone (317) 346-7156 to register Monday morning only!

Both the above events are being planned and hosted by COBA7. Do you see what’s happening here? No other manufactured housing national advocacy entity is taking steps, such as these, to promote the sale and seller-financing of new HUD-Code homes on-site in land-lease communities. If we don’t as an industry and realty asset class, do just this sort of thing NOW, then we might as well fold our collective futures in with the NAHB’s Building Systems Council and let the chips fall where they may….

Of course the land-lease communities will likely be left out of this esoteric (’new’) mix. Either LLCommunities will have to entice the NAR, or NAA, to ‘take us in’ – and who knows, maybe they will, if we bring our ‘floor fees (dues)’ with us from manufacturers where we buy new HUD-Code homes. OR, we continue on our own in one or (GASP!) two national groups: 1) MHI’s National Communities Council and its’ few large property portfolio owners/operators; and, 2) COBA7, representing LLCommunities of all sizes, large & small, throughout the U.S. and Canada. What do you think?

III.

Hey, Gotta Love the MHARR!

Did you see and read MHARR’s recent (1/9/2017) Press Release titled: MHARR FORMALLY CALLS FOR CONGRESSIONAL REVIEW & REJECTION OF DOE MAN UFACTURED HOUSING ‘ENERGY’ RULE. (?)

We sure did, especially that last substantive paragraph. It bears repeating and repeating!

“With this MHARR action having now been initiated in Congress…1) to challenge and enjoin any final DOE rule. MHARR is also moving forward on two other pending regulatory matters -2) the Federal Housing Finance Agency’s ‘Duty to Serve’ final rule, which fails to create an affirmative duty for the securitization of manufactured home chattel loans by the GSE; and 3) HUD’s impending ‘Interpretive Bulletins’ on frost-free and frost-protected shallow foundations, that would substantively and improperly alter existing standards, and is insistently being pursued by the current career manufactured housing program administrator and contractors, as a device to assert total HUD control over installation standards and programs in all 50 states.” (#s added. GFA)

WOW – again! That about ’says it all’ where major 2017 issues are concerned, relative to manufactured housing. Hmm. Now one must ask; ‘Why am I not hearing more about these three significant issues of import, from other national advocacy bodies?

Me? I’ve cut out that paragraph and taped it to the side of my office PC, as a constant reminder of what’s going on – or should be going on, in the industry and asset class where we do business. Perhaps you should do likewise….

In the meantime; THANKS MHARR for keeping us informed and engaged!

***

George Allen, CPM & MHM
Box # 47024, Indianapolis, IN. 46247
(317) 346-7156

FHFA’s DTS Listening Sessions; MHICanada/CMHI Regroup; & New Expose’s…

January 7th, 2017

Blog # 428 Copyright 2017 COBA7 @ 8 January 2017; community-investor.com

Perspective: ‘Land-lease communities, previously manufactured home communities, & ‘mobile home parks’, comprise the real estate component of manufactured housing.’

This blog posting is the sole national advocate voice, official ombudsman & historian, research report & online communication media for North American LLCommunities!

To input this blog &/or affiliate with Community Owners (7 Part) Business Alliance, a.k.a. COBA7, use Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.

COBA7 Motto: ‘U Support US & WE Serve U!’ Goal of its’ print/online media = to ‘Not only inform & opine, but to transform & improve MHBusiness model performance!’
______________________________________________________________________

INTRODUCTION:

Part I. COBA7 to represent LLCommunities at FHFA’s DTS Listening Session(s)!

Part II. Canadian national advocacy landscape alters as MHICanada & CMHI regroup in council fashion, with CHBA. Maybe a similar path for MHARR & MHI with NAHB?

Part III. Three expose’s in three months? Yes, and likely more to come during 2017!

Part IV. Guess who’s contemplating acquiring The Journal from Jim Visser?

I.

COBA7, as National Advocate for Land-lease Communities, to Attend & Speak, During
‘Duty to Serve Listening Session(s)’

Community Owners (7 Part) Business Alliance, or COBA7, has accepted an invitation from the Federal Housing Finance Agency (’FHFA’), to attend and comment, at one or more ‘Duty to Serve Listening Sessions’ planned during the next few months.

This is another way COBA7 represents the business interests of land-lease community owners/operators, large & small, from throughout the U.S! During the past few months, COBA7 has participated in public meetings hosted by FHFA, DOE, and other governmental agencies. A report describing the ‘Duty to Serve Listening Session(s)’, in which COBA7 participates, will be published in a future issue of the Allen Letter professional journal.

NOTE. The Allen Letter professional journal and the Allen CONFIDENTIAL! business newsletter are the last two remaining print publications serving the HUD-Code manufactured housing industry and land-lease community realty asset class. If you are not yet reading either or both trade papers, phone the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 to affiliate with COBA7 today, at the Option I, II, or III level.

Why is COBA7 affiliation important to YOU? Simply put; in most federal agency meetings attended to date, the only businessperson in the room (i.e. Someone who ‘makes payroll’ week after week) has been there representing COBA7! Seriously. Everyone else in the room is usually an agency bureaucrat, corporate attorney, or association staffer. So, if YOU want continued ‘business representation’, you’ll support COBA7 as your national advocate!

II.

Canadian Manufactured Housing Industry Reorganizes – Suggesting Possible Pattern for U.S.?

This is ‘breaking news’ with details to follow.

MHICanada & CMHI (’Canadian Manufactured Housing Institute’) have regrouped in council fashion, under the Canadian Home Builders Association (’CHBA’). This occurring in a fashion similar to the present day Building Systems Council (’BSC’), operating in council fashion, under the auspices of the National Association of Homebuilders (’NAHB’), here in the U.S.

Stop and read that paragraph again! Then ponder this present and possible future state of U.S. manufactured housing affairs:

MHI, while not regrouping, does claim via its’ recently revamped website (manufacturedhousing.org), to be REPRESENTING THE FACTORY-BUILT HOUSING INDUSTRY. This an attempt to parlay its’ 10% national factory-built housing share (i.e. 5% @ HUD-Code housing & 5% modular housing), by arbitrarily including panelizers’ 50% market share, and production site builders’ 39%, to achieve 100% market coverage? Not a bad strategy, if they can pull it off – convincing panelizers & production site builders to depart NAHB’s BSC and become direct, dues-paying members of the institute. Otherwise, it’s simply, in this industry observer’s opinion, a national advocacy overreach pipedream

Well, since MHI is already thinking ‘outside the box’ relative to national representation, maybe there’s a parallel option – though some might call it heretical*1:

In the spirit of the opening paragraph of Part II, and given similar perennial antipathy*2 between U.S. manufactured housing’s two oldest national advocates, MHARR & MHI; is ‘regrouping together in BSC council fashion’, under NAHB auspices*3 – or some ‘new’ organization, that much of a stretch in today’s world where we ship but 80,000+/- new HUD-Code homes during all of 2016 – compared to 372,843 shipped during 1998? Think about it.

(I have, and that’s why I’ve made this bold suggestion. Now, is it a good idea? I don’t know. On one hand, it’d be Great to have manufactured housing finally viewed as an integral part of the overall national housing scene! However, if ‘counciling together’ with BSC & NAHB occurs at the cost of autonomy (’independence’…think Federally preemptive building code), then doing so could mark the demise of manufactured housing altogether. What do you think?)

With that said (penned), how much longer are we going to wait, as a divided ‘large vs. small company’ industry, to take – if need be – radical steps, to regain the robust factory-built housing market share of 18 years past? After all, HUD-Code Community Series Homes, when sited within professionally managed land-lease communities, charging market sensitive & homeowner/site lessee ‘fair value proposition’ rental homesite rates, is by far the most competitive type affordable housing/lifestyle combination available anywhere in the U.S. today! And yet, as the ‘Tipping Point’ WHITE PAPER Expose’ clearly pointed out, we’re letting that market advantage slip away!

Furthermore, claiming inflated factory-built national housing market share simply ‘does not make it so’; rather, time is a-passing, if not already past, for us to brainstorm, plan and effect our collective destiny, the sooner the better!

Is anyone at MHI & MHARR really listening? How ’bout proving you are, by uniting and getting this affordable housing/lifestyle ball a-rolling once again!

Land-lease community owners/operators, via COBA7, stand ready to assist!

End Notes:
1. heretical = “one who olds an unorthodox opinion.” Webster dictionary
2. antipathy = ”dislike” Webster dictionary
3. auspices = “favoring influence, protection or patronage” Webster

III.

Watch for Next Expose’ in Allen Letter!

Yes, you read that right. Two months ago it was the widespread distribution of the ‘Tipping Point’ WHITE PAPER Expose’, warning HUD-Code housing producers and land-lease community owners/operators what occurs when:

‘reasonable rental homesite rates & affordable housing values’ are supplanted by ‘higher rental homesite rates & smaller PITI payment’, oft times resulting in

1. Diminished Buying Power for Purchase of New HUD-Code Housing
2. Reduction in Existing Housing Value, &
3. Fewer New Homes Shipped Nationwide

If you did not receive, see, or read this four page expose’, but would like to do so, simply phone COBA7 via (317) 346-7156 and ask for a FREE copy!

Next expose’?

MHI’s website overreach, claiming to be REPRESENTING THE FACTORY-BUILT HOUSING INDUSTRY in toto! Reread Part II of this blog posting for details….also blog postings # 426 & 427 at community-investor.com website. Just left click on blog icon and scroll back thru the archives.

And NOW this one: ‘Freelance Land-lease Community Consultants’, Be Careful Who You Trust & Hire!

This was a challenge dealt with around the turn of the 21st Century, when many portfolio property management (’PM’) executives lost their jobs. All has been relatively quiet for awhile, but during the past six or so months, there’s been a spate of displeasure directed towards mostly noncredentialied (i.e. ‘not certified’), inexperienced freelance PM consultants, promising much but delivering little.

The Good News is, there’re practical ways to protect oneself from these charlatans. Read the expose’ featured in the February 2017 issue of the Allen Letter professional journal. If not a COBA7 affiliate yet, phone (317) 346-7156 to do so.
***

George Allen, CPM, MHM
COBA7
Box # 47024
Indianapolis, IN. 46247

ALLEN REPORT gems; 5 NEW YEAR Resolutions; & ‘PRETNEDER to SUPERHERO’?

December 30th, 2016

Blog # 427 Copyright 2017 COBA7 @ 1 January 2017; community-investor.com

Perspective: ‘Land-lease communities, previously manufactured home communities, & ‘mobile home parks’, comprise the real estate component of manufactured housing.’

This blog posting is the sole national advocate voice, official ombudsman & historian, research report & online communication media for North American LLCommunities!

To input this blog &/or affiliate with Community Owners (7 Part) Business Alliance, a.k.a. COBA7, use Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764

COBA7 Motto: ‘U Support US & WE serve U! Goal of its’ print/online media = to ‘Not only inform & opine, but to transform & improve MHBusiness model performance!’
_____________________________________________________________________

INTRODUCTION: Start 2017 off right! How?

1. With your copy of 28th annual ALLEN REPORT in hand;

2. Five pithy NEW YEAR RESOLUTIONS in mind for corporate implementation;

3. All three national advocates (i.e. MHARR, MHI, & COBA7) admonished to ‘double down’ on lobbying & regulatory reform in behalf of the manufactured housing industry and land-lease communities, large & small, nationwide!

I.

28th annual ALLEN REPORT
a.k.a.
‘Who’s Who Among LLCommunity Portfolio Owners/operators Throughout North America!’

Do you know? COBA7 prints more than 1,000 copies of the seminal ALLEN REPORT each year for three reasons:

• It’s, by far, the most comprehensive, fact-filled retrospective, statistical compendium, and trend tracker published annually, describing what goes on among 50,000+/- land-lease communities, and 500+/- portfolio owners/operators nationwide and throughout Canada! Therefore, it is always in high demand.

• To satisfy the need, by Community Owners (7 Part) Business Alliance affiliates (Option II & III levels), for this first of a dozen+ updated Signature Series Resource Documents (’SSRDs’) they’ll receive monthly throughout the year.

• Pristine copies of the ALLEN REPORT are routinely ordered by university & business libraries throughout North America, in addition to the RV/M Hall of Fame library in Elkhart, IN., Library of Congress & National Building Museum libraries in Washington, DC., to name a few repositories of research source data.

What’s contained in the 28th annual ALLEN REPORT? Here’re just ten highlights:

• Year 2016 historical MH retrospective available nowhere else at any price!
• Contemporary statistical primer for land-lease communities in North America.
• Identification of the Top Ten property portfolios in the U.S. & Canada
• State presence, occupancy rates & OERs among 122 LLCommunity portfolios
• This year’s ‘Pride of Young Lions’ identified. Be prepared to be surprised!
• Two DATACOMP references: market rent surveys & # LLCommunities per state
• Exclusive ‘40 Year History of HUD & MHIndustry Partnership’. Nowhere else!
• REIT History (1994 – 2016) in terms of total rental homesite count, year by year
• 122 land-lease community portfolio firms ranked per total rental homesite counts
• Major $ Sponsors of 25th anniversary Networking Roundtable, September 2016.

To order your copy of the 28th ALLEN REPORT, simply phone the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. Price? COBA7 Option II @ $544.95/year.

II.

FIVE NEW YEAR RESOLUTIONS FOR THE MANUFACTURED HOUSING INDUSTRY

These New Year (2017) Resolutions were featured in the January 2017 issue of the Allen CONFIDENTIAL! business newsletter:

• Support the new President of the United States of America!

• HUD-Code housing manufacturers to redouble efforts marketing and selling new homes into land-lease communities, large and small, coast-to-coast! (This is the sole focus of a 9AM-Noon $95. seminar, for HUD-Code home manufacturers, on 17 January at the Crowne Plaza Hotel in Louisville, KY…the day before the Louisville MHShow begins. For information & to register: (317) 346-7156.

• Land-lease community owners/operators to NOT heed the siren call to ‘double one’s rental homesite rates’ during 2017! But rather, assure fair & affordable housing propositions to homebuyer/site lessees, keeping combined monthly PITI mortgage & site rent payments total, at or below the National Average Affordable Housing Market Rent of $849.00/unit – including household expenses (i.e. utilities) where possible. This will not work in some high-priced local housing markets. For more info on this pithy topic, phone (317) 346-7156 & request a FREE copy of the ‘Tipping Point’ WHITE PAPER Expose’. It tells all!

• Emphasize importance of – and provide for, opportunities to receive professional property management (’PM’) training and certification among all land-lease community managers and owners! Everyone to be a Certified Property Manager (’CPM’), Accredited Community Manager (’ACM’), or Manufactured Housing Manager. An MHM training & certification opportunity occurs at Crowne Plaza Hotel, on 17 January, in Louisville, KY. Cost? $250.00/MHM candidate. No tests. And again, on 11 April in Albany, NY. Interested? Phone (317) 346-7156 ASAP.

• Support one or more national advocacy entities, e.g. MHARR, MHI, & COBA7, that best represents ones’ business interests as housing manufacturer, land-lease community owner/operator, or other post-production segment of the industry. For MHARR, phone (202) 783-4087; for MHI, phone (703)558-0400; and for COBA7, (317) 346-7156. Decide WHO will lobby for YOU during 2017!

Yes, year 2017 will have its’ array of challenges and opportunities, not to mention threats and rough patches; but let’s pull together on all five of these New Year Resolutions, enabling our industry and realty asset class to return to financial prosperity and improved public image – as this nation’s primary provider of truly affordable housing & lifestyle!

III.

FROM PRETENDER TO SUPERHERO?

‘What the Manufactured Housing Institute (’MHI’) must do if it’s truly
“REPRESENTING THE FACTORY-BUILT HOUSING INDUSTRY’
per the bold and sweeping website (manufacturedhousing.org) claim.’

(If you haven’t read last week’s blog posting #426, on this highly controversial topic, stop here & do so, by scrolling back through the blog archive at community-investor.com)

For starters, reach out and bring the Building Systems Council (’BSC’) of the National Association of Homebuilders (’NAHB’) into MHI’s Factory-built Housing fold. Reach them in Washington, DC., via www.nahb.org Why? Because that’s where panelizers (50% national factory-built housing market share) and production site builders (39% market share) presently call home! Once that’s accomplished, contact…

Modular Homebuilder’s Association (’MHBA’) located in Charlottesville, VA. (www.modularhousing.com) and invite their residential factory-built housing manufacturers to ‘come on board’ the MHI train.

And finally, to be truly inclusive, solicit the cooperation of the Modular Building Institute, also (same address) in Charlottesville, VA. This entity is an associate member of aforementioned BSC/NAHB, and counts as members, “…companies in manufacturing and distribution of non-residential commercial, factory-built structures”…with a few members also fabricating residential structures, e.g. Clayton Homes.

Plus, there are other trade groups ‘out there’ who claim the same new national advocacy territory as MHI, e.g. the National Association of Factory-built Home Builders. Interestingly, in addition to the four types of factory-built housing already identified (i.e. panelizers (50% market share), production site builders (39%), manufactured housing (5%) & modular housing (5%), the NAFHB adds pre-cut homes (e.g. kit, log & dome homes) to the mix. We’ll stop here and not even go down the road to pre-fab or prefabricated homes….

Now, in case you didn’t realize it, MHI does have a longstanding, albeit very small one, presence representing modular housing (i.e. 5+/-% of the national factory-built housing market share), labeled as the National Modular Housing Council (’NMHC’) of MHI.

This NMHC presence, along with MHI’s 5+/-% HUD-Code manufactured housing national market share, combined, accounts for the 10 percent national market share MHI presently enjoys among factory-built housing fabricators.

Unanswered questions going a-begging: 1) ‘Where and how will panelizers & production site builders fit into the MHI membership milieu?’ And 2) ‘Why does MHI even want to take on this tenfold expansion of its’ national advocacy role, when there’s so much yet to be accomplished (e.g. Return of easy access to chattel capital for new home financing on-site in LLCommunities) in behalf of its’ present membership?’ Answers anyone?

Once these ‘membership-recruiting steps and representation questions’ have been accomplished and answered, MHI will be on its’ way to the presumed goal of REPRESENTING THE FACTORY-BUILT HOUSING INDUSTRY.

Know what’d be simpler, and certainly more helpful to present MHI members? If MHI would narrow its’ focus and concentrate on lobbying and promoting regulatory reform in behalf of the manufactured housing industry! Nothing more, nothing less!

What’s Going On With MHI? More on FHFA, DTS & GSEs…

December 23rd, 2016

Blog # 426 Copyright 2016 COBA7 @ 25 December 2016; community-investor.com

Perspective. ‘Land-lease communities, previously manufactured home communities, & ‘mobile home parks’, comprise the real estate component of manufactured housing.’

This blog posting is the sole national advocate voice, official ombudsman & historian, research report & online communication media for North American LLCommunities.’

To input this blog &/or affiliate with Community Owners (7 Part) Business Alliance, a.k.a. COBA7, use Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.

COBA7 Motto: ‘U Support US & WE Serve U!’ Goal of its’ print/online media = to ‘Not only inform & opine, but to transform & improve MHBusiness model performance!’

______________________________________________________________________

INTRODUCTION: Have you noticed? Ever since COBA7 was founded in early 2014, MHI has redoubled its’ membership recruiting efforts (That’s a good thing); hired more staff (To what end? Little to no change in services); and now lays fallacious claim to more housing representation than warranted. Why? Maybe out of fear of losing ground to the other two national advocates for manufactured housing in general, land-lease communities in particular.

Why not be content with being primary LOBBYIST for HUD-Code home manufacturers, already controlling more than 85 percent of manufactured housing national market share? Encourage MHARR to continue to OPPOSE INCREASED REGULATION of smaller, regional home manufacturers! And, leave COBA7 to focus on PRODUCTS & SERVICES, such as statistical research & reporting, information sharing, print & online communication, interpersonal networking & realty deal-making, as well as professional property management training & certification of LLCommunity owners/operators throughout North America?

Perhaps year 2017 will come to be viewed as the ’shakeup year’, when national advocate identities are established, foci identified and prioritized, to the greater good of the industry and its associated realty asset class!

Here’re additional details…

I.

What’s Going On With MHI?

This, directly from the Manufactured Housing Institute’s (’MHI’) rejuvenated website:www.manufacturedhousing.org

“MHI – REPRESENTING THE FACTORY-BUILT HOUSING INDUSTRY”

When one accesses the ‘Who We Are’ prompt, there’s this misleading message: “The factory built housing industry produces about 70,000 homes a year and contributes about $2.6 billion to the U.S. economy.” NOT. That’s just the number, and production value, of new HUD-Code homes shipped annually (i.e. 70,544 during year 2015) – and not inclusive of three other types of factory-built housing; all four of which are described here:

• Panelizers. Command 50 percent of national (new housing) market share. These builders use factory-fabricated ’sheathed external & open interior’ wall panels when building new homes on-site

• Production site builders. Garner 39 percent of national market share. These are the site builders who routinely use factory-built components (e.g. pre-hung windows & doors; floor & ceiling trusses, & more) when building new homes.

• HUD-Code manufactured housing accounts for roughly five percent of national market share, where this type factory-built housing is concerned. And…

• Modular housing accounts for another five percent of national market share where this unique type factory-built housing (i.e. using modules) is concerned.

This is bold overreach on the part of MHI, claiming it represents ALL factory-built housing; when in reality, it might claim just 10 percent of the national (new housing) market share; 10 percent comprised near equally of HUD-Code and modular homes.

Perhaps this of overly broad boast is indicative of an emerging, albeit unfortunate, self-centered mindset at the institute. How so? As you read Part II (following here), listing the plethora of recent Press Releases, blog postings, and commentaries describing ‘FHFA’s DTS Rulemaking & GSEs’, pay close attention to quoted content from MHI’s HOUSING ALERT, dated 19 December 2016. It’ll likely surprise, if not shock, you.

II.

More on FHFA/s DTS Rulemaking & GSEs

In just seven days, including one weekend, no fewer than eight public pronouncements!

12/13 = MHI’s Press Release, couched as a HOUSING ALERT, on this timely topic.

12/14 = MHARR’s Press Release. In our opinion, an apt counterpoint to MHI’s alert.

12/14 = Six pre-Webinar Questions posed to FHFA by Ken Rishel of Rishel Consulting

12/16 = FMHA Memorandum summarizing DTS Rulemaking information to date…

12/18 = Blog Posting # 425 @ community-investor.com, summarizing and comparing published views of three national manufactured housing advocates: MHI, MHARR, & COBA7.

12/19 = FHFA receives business model summary from a land-lease community portfolio owner/operator, describing 60 new HUD-Code homes financed within four properties, during the past decade, with only four defaults. Secret to Success? “Every one of (the) buyers/borrowers was qualified, based on their 10-15% down payment, rental history, and strict adherence to minimum front and back end debt-to-income ratios.”

12/19 = MHI’s HOUSING ALERT. Summarizes its’ earlier Press Release of 12/13, and from all appearances, takes full credit for the recent DTS rulemaking progress – wholly ignoring contributions by other manufactured housing national advocates attending same FHFA’s public meeting, and their respective submissions of comment letters. Lest you think we exaggerate:

• “The final rule is the culmination of a multi-year effort by MHI to educate Fannie Mae, Freddie Mac, and FHFA on the fundamentals of the manufactured housing finance market….” No one else advised FHFA on these matters? Several did!

• MHI efforts included the following: “Extensive discussions with consumer groups initially hostile to manufactured housing loans…but in press reports are now being referred to as ‘advocates’ for chattel lending.” How ’bout MHARR’s meetings with consumer group leaders? And COBA7’s affiliate ROCs*1?

• MHI again, “Participating in working groups with the GSEs, to educate them about chattel loan operations issues….” MHARR & COBA7 also participated.

• MHI and again, “Submitting an extensive comment letter that rebutted concerns about the risk of chattel loans…&…made an aggressive argument for a stronger duty to serve rule.” One among more than a thousand such comment letters…..

12/19 = Web Conference re Duty to Serve. More than 120 individuals participated in this hour long conference. Rulemaking, as it applied to the three underserved markets (i.e. manufactured housing, affordable housing, rural housing) was presented at length. This webinar to be followed by three Listening Programs, sponsored by FHFA; in Chicago on 25 January; Washington, DC., on 8 February, and in San Francisco, CA. For more information and to register, visit www.fhfa.gov/dts

Yes, it’s truly been a hectic and exciting week, since the FHFA (that’s short for Federal Housing Finance Agency) announced, 13 December 2016, that ‘GSEs Will Receive Duty to Serve Credit for Manufactured Housing Chattel Loans’. And yes, there’s much work to be done, as GSEs now select and assemble the ‘nuts & bolts’ of the chattel capital programs to serve manufactured housing in land-lease communities throughout the U.S.

But, you know what would HELP a LOT going FORWARD? If the three national manufactured housing advocates, i.e. MHI, MHARR, & COBA7, would ‘work together’ to influence and assist FHFA and GSEs in this timely and important task of converting policy into procedure – instead of grandstanding separately. Will it happen? Only if YOU, as a member of one or more of these entities, suggest – no, insist, they do so for your business benefit and theirs! Your request falls on deaf ears? Then perhaps it’s time to align with another of the national advocates – for the greater good of the manufactured housing industry! Think about it. How many other times will such a challenge and opportunity be presented to us? Let’s not squander this means to positively influence our collective business future!

If you’d like to make your opinions known on this heady topic, i.e. access to chattel capital for manufactured housing sited within land-lease communities, write gfa7156@aol.com and let us know soon! GFA

End Note.

1. ROC = resident-owned communities via ROC USA.

***

George Allen, CPM & MHM
Box # 47024, Indpls, IN. 46247
(317) 346-7156

FHFA = DTS Rules for GSEs; Bold Suggestion; 17 January Opportunities, & More!

December 16th, 2016

Blog # 425 Copyright 2016 COBA7 @ 18 December 2016; community-investor.com

Perspective. ‘Land-lease communities, previously manufactured home communities, & ‘mobile home parks’, comprise the real estate component of manufactured housing.’

This blog posting is the sole national advocacy voice, official ombudsman & historian, research report & online communication media for North American LLCommunities.’

To input this blog &/or affiliate with Community Owners (7 Part) Business Alliance, a.k.a. COBA7, use Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764

COBA7 Motto: ‘U Support US & WE Serve U!’ Goal of its’ print/online media = to ‘Not only inform & opine, but to transform & improve MHBusiness model performance!’

______________________________________________________________________

INTRODUCTION: Today’s blog content?

Exciting NEWS about FHFA, DTS, & GSEs!

Then a bold & smart SUGGESTION for large LLCommunity portfolio owners/operators.

At least five EVENTS to make this year’s Louisville MHShow ‘the best ever’ for YOU!

A minor correction to COBA7’s Official MHShipment ‘#s & $’ Report for October 2016.

I.

FHFA Finalizes Duty to Serve (’DTS’) Rule

(to provide DTS credit, to Fannie Mae & Freddie Mac, for purchasing chattel capital manufactured housing loans!)

Here’s how the three manufactured housing industry and land-lease community national advocates responded to this historic, and what was intended to be & is, encouraging news:

• “GSEs Will Receive Duty to Serve Credit for Manufactured Housing Chattel Loans” Press Release from the Manufactured Housing Institute (’MHI’)

• “FHFA Final Duty to Serve Rule Continues to Fail Chattel Borrowers” Press Release from the Manufactured Housing Association for Regulatory Reform (’MHARR’)

• Federal Housing Finance Agency (’FHFA’) Issues Guidelines; Government Sponsored Enterprises (’GSEs’) Fannie Mae & Freddie Mac to Now ID Nuts & Bolts to Make the Program Work!” Press Release from the Community Owners (7 Part) Business Alliance (’COBA7′)

There’s certainly more to this story than just these salient headlines. Indication of ‘more work to be done’, comes from MHI chairman Tim Williams, president of 21st Mortgage Corporation, when he states, in MHI’s press release, “I am pleased FHFA is including chattel loans in the DTS framework, in order to encourage Fannie Mae & Freddie Mac to open a wider range of opportunities for aspiring manufactured (home) owners. The bottom line: done right, this could make becoming a manufactured home owner more affordable.” (Lightly edited. GFA)

But just how far is this DTS Rule from being ’shovel ready’ – as a soon to be erstwhile president described federal projects with high expectations but low practicality? At this point we simply don’ t know…

According to MHARR’s press release, The final rule, “…will leave a significant majority of manufactured home purchasers – as they are now – a captive market for the higher-cost loans offered by the finance affiliates of industry’s largest corporate conglomerates. The final DTS rule…offers far less than meets the eye, and should now be addressed and rectified by Congress.” And if that doesn’t arouse your curiosity, this will: “…the final rule represents a ‘bait – and -switch’ scenario. It lists chattel loan support as a permitted activity, but then specifically enables the GSEs to avoid that activity entirely if they wish.” Whoa! Let’s hope ‘that’ does not happen, again.

Where to go from here? Well, fortunately for land-lease community owners/operators, COBA7 has served as a sounding board of sorts, for the FHFA, during 2016. And already they’ve reached out to talk about this matter. So, continue to be updated as to progress, here, and in the Allen Letter professional journal, and the Allen CONFIDENTIAL! And remember, The Journal is no longer being published. But know, MHARR & MHI have been offered white space in the monthly Allen Letter for their views on this and other MHIndustry topics. Will they avail themselves of this public and trade media outlet? Guess we’ll have to wait and see….

In the meantime, and this is a very short fuse opportunity: If YOU want to participate in the FHFA Shareholder Webinar, on Monday, 19 December, at 2PM ET, you need to go, right now, to FHFA.gov/DTS and register! COBA7 affiliates have been informed of this rare and important opportunity to be on the cutting edge of emerging manufactured housing industry finance policy and procedure!

Furthermore, if not already receiving and reading the Allen Letter professional journal each month, do so by contacting COBA7 via the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 & affiliate at the Option I level ($134.95/12 months). Also know, the 28th annual ALLEN REPORT, a.k.a. ‘Who’s Who Among Land-lease Community Portfolio Owner/operators Throughout North America!’, will be enclosed with the January 2017 issue of the Allen Letter going to Option II (%44.95/12 months) & III affiliates.

II.

A Bold Suggestion for Property Portfolio Executives

Let’s begin with what comes across as a MHIndustry trivia question; but in reality, is an indicator of a liaison that worked well ‘for decades several decades ago’, but is a near lost art today. The question:

Ever heard the name of Jim Boyts?

Hmm, let’s see. He was inducted into the prestigious RV/MH Heritage Foundation’s Hall of Fame in 2010, several years after he died. How ’bout Skyine Homes? Sure, you should know that firm well, it’s one of our industry’s venerable pioneers. Think industry icons Art Decio & Terry Decio; and now, Richard Florea.

OK, so what’s the big deal about Jim Boyts and Skyline Homes?

Throughout the 1960s, 70s, 80s, & into the 90s, Jim was the firm’s liaison to more than 30 states. His actual title was Director of Marketing Services. Skyline was a member of every state MH association where the company had active business interests. And they purposed to have Jim Boyts as the firm’s representative to every one of those state MH associations. He was, in effect, the manufactured housing industry’s ‘interstate statesman’ until he retired. Why wasn’t the practice continued? Stop and think of the dates, the dawn of the 21st Century, and all the turmoil and ‘economic downturn’ that came with it.

On a personal note, I knew Jim Boyts well. He was, at times, a mentor, devil’s advocate, supporter, and advisor. In my opinion, there hasn’t been anyone like him since he retired. But even then, he stayed in touch, reading my columns in The Journal, the Manufactured Home Merchandiser magazine, even the Allen Letter professional journal.

Point to this recitation? I think it’d serve property (i.e. land-lease community) portfolio owners/operators, and many state MH associations, well, if they, in early 2017, designated one business savvy executive to be their active liaison with said trade bodies wherever the firm has business interests.

Why? Well, as a ‘player’, i.e. association board member, they are a team member, maybe even leader; and no longer viewed as an outlier by other corporate members of said association. Plus, by being active in other state MH associations, they enable cross-pollination of ideas and concerns among states. And the list goes on…

So, at least the 20 largest property portfolio firms should seriously consider this suggestion, as we go into year 2017.

III.

Where Will You be on 17, 18, 19, 20 January 2017?

17 January @ 7AM – 4PM. Manufactured Housing Manager (’MHM’) professional property management training & certification program at the Crowne Plaza Hotel on Phillips Lane in Louisville, KY. Only $250.00/MHM candidate. No testing. Taught by Katie Hauck, MHM, & Kathy Taylor, MHM. Call (317) 346-7156

17 January @ 9AM-Noon. Special Presentation for HUD-Code home manufacturers. Two foci: ‘How to ID land-lease communities, owners, operators, in all four property categories’; &, Open Discussion of How to Best Sell New Homes to LLCommunities.
Facilitated by George Allen, CPM & MHM. Only $95/registrant. Call (317) 346-7156

17 January @ 1PM-4PM. Lease-option Methodology for Land-lease Community Owners/operators Selling & Seller-financing New HUD-Code Homes On-site! Cost? Only $95.00/registrant. Contact genevieve@secoconference.com

18 & 19 January. Louisville MHShow at State Fairgrounds: Google Louisville MHShow to get more information and to register in advance. Start off the ‘MHShow experience’ by attending the 8-9AM panel, ‘How to Buy New Homes at the Louisville MHShow!’ The info shared here could save you $ and make this the best MHShow ever for you….

20 January, 9AM. Presentation & Open Discussion of New HUD-Code Home Installation & Foundations in Frost-susceptible Climates. If you’re confused about this timely and complicated topic, you owe it to yourself to be present! Led by Frank Bowman, executive director of the Illinois Manufactured Housing Association. No cost to this opportunity.

IV.

COBA7 MHShipment ‘#s & $’ @ October 2016

Oops! One minor mistake to the subject document. Geesh! I hate when that happens. No excuses – though it’d be nice to be a large enough firm to employ a fact checker to help.

The error? Using Dr. Stephen C. Cooke’s ‘production value’ formula, the 7,154 new HUD-Code homes shipped during October 2016, are valued at $308,523,404. And the 67,043 new HUD-Code homes shipped YTD are ‘production valued’ @ $2,881,000,000.
All the rest of the reported data is correct. Look to see the official COBA7 MHShipment Report to be part of January’s issue of the Allen CONFIDENTIAL! business newsletter.

Again, if not already affiliated with COBA7, one of three national advocacy entities serving land-lease communities and the manufactured housing industry, simply phone the Official MHIndustry HOTLINE: (877)MFD-HSNG or 633-4764. The longer you wait to do so, the longer it’ll be before you’re tapped into the best source of statistics and information available to everyone in the MHBusiness.

Remember, the 28th ALLEN REPORT will be enclosed in the January 2017 issue of the Allen Letter professional journal, at the Option II or III level of affiliation.

***

George Allen, CPM & MHM

COBA7 Joins MHARR & MHI as National Advocate for Land-lease Communities & Manufactured Housing

December 9th, 2016

Blog # 424 Copyright 2016 COBA7 @ 11 December 2016; community-investor.com

Perspective. ‘Land-lease communities, previously manufactured home communities, & ‘mobile home parks’, comprise the real estate component of manufactured housing.’

This blog posting is the sole national advocacy voice, official ombudsman & historian, research report & online communication media for North American LLCommunities.’

To input this blog &/or affiliate with Community Owners (7 Part) Business Alliance, a.k.a. COBA7, use Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.

COBA7 Motto: ‘U Support US & WE Serve U!’ Goal of its’ print/online media = to ‘Not only inform & Opine, but to transform & improve MHBusiness model performance!’

_____________________________________________________________________

INTRODUCTION. Yes, businessmen and women respond to just about every weekly blog posting at community-investor.com. Do you? Part I, following, contains recent responses. Part II is, in truth, an historic announcement, as COBA7 announces as new national advocate for land-lease communities in North America, and HUD-Code manufactured housing.

I.

COBA7 Affiliates Respond to New Year Resolutions & ‘Tipping Point’ WHITE PAPER Expose’

“Excellent resolutions. I have one more. The election of Donald Trump presents the industry with a unique opportunity to put pressure on our federal regulator (i.e. HUD) to fully implement the Manufactured Housing Improvement Act of 2000 (a.k.a. ‘MHIA@2000′), and stop the expansion of industry-smothering regulation. We need a unified industry effort to get the federal program heading in the right direction. I am not talking about uniting MHI & MHARR, but I’m advocating for convening a coalition of industry leaders to develop a strategy to specifically deal with HUD. Much the same way it was done in getting MHIA@2000 enacted.” – now 17 years ago! This from one of the most respected association executives in the manufactured housing industry.

And on the heady and timely question of increased regulation, less regulation, or deregulation of manufactured housing, this ‘vote’:

“I vote to deregulate completely. We have the manufacturing capability to comply with locals (building codes) and most rural county regs.” Someone from the manufacturing segment of the MHIndustry.

And then there’s this, relative to the ‘Tipping Point’ WHITE PAPER Expose’. “I agree with your White Paper argument. I had the same individual ask me last week: “How do you explain to your residents that rents should be 2X where they are, because low rents are one of the largest issues out industry faces?” I said, “I don’t think it’s one o f the big issues – frankly, a strong value proposition for the consume is a far bigger issue.” Really, an industry that provides a strong value proposition thrives, those that don’t, go extinct. The HUD-Code and land-lease community (industries) are not thriving, in my view. ” This from the owner/operator of one of the largest property portfolios in North America.

As an appropriate aside to this response, know ‘value propositions’ with one’s homeowner/site lessees is a key challenge identified in the 28th annual ALLEN REPORT, scheduled for distribution as a lagniappe in the Allen Letter professional journal during January 2017. So, if you’re not affiliated with the Community Owners (7 Part) Business Alliance, or COBA7 at the Option II or III level, do so NOW, before the New Year. This year’s ALLEN REPORT, a.k.a. ‘Who’s Who Among Land-lease Community Owners/operators Throughout North America!’, is the largest one compiled and published during the past 28 years! To affiliate, phone the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.

II.

COBA7® Declares Its National Advocacy Role for Land-lease Communities, Large & Small, Nationwide!

Post production segments of HUD-Code manufactured housing (e.g. suppliers, finance firms, state associations, & LLCommunities) are stepchildren to this type factory-built housing – or so it seems – when one examines the focus of MHARR & foci of MHI.

The Manufactured Housing Association for Regulatory Reform, since 1985, has limited its’ membership, and legislative/regulatory focus, to matters of concern to small and mid-sized regional HUD-Code home manufacturers. 100 percent of MHARR’s income is from member manufacturers. MHARR’s offices are in Washington, DC., and it enjoys the industry wide reputation for being manufactured housing’s ‘watchdog’ in the nation’s capitol.

The Manufactured Housing Institute, or MHI, throughout the history of manufactured housing, has claimed to represent business interests of all segments of the HUD-Code manufactured housing industry, including the largest of HUD-Code home manufacturers (Controlling an estimated 80 percent of national market share); most state MH trade associations; land-lease community owners/operators; personal property & realty finance firms; independent (street) MHRetailers; OEM/after-market suppliers of products and services. The majority of MHI’s income is from member housing manufacturers, by way of floor dues. MHI’s offices are in Arlington, VA.

Given the continuing, and now, 17 year paradigm shift, beginning at the turn of the 21st Century to this present day, the land-lease community post production segment, in particular, can no longer afford stepchild status! Despite MHI’s National Communities Council (’NCC’) division being in place since January 1996, this unique realty asset class, during the past six years – upon the disappearance of 10,000+/- independent (street) MHRetailers – has ushered in a NEW ERA, one where property owners/operators are openly viewed as the next generation of MHRetailer & lender, and deserve an effective level of national advocacy not heretofore and presently provided.

To this end, the Community Owners (7 Part) Business Alliance®, a.k.a. COBA7®, a for profit division of GFA Management, Inc., dba PMN Publishing – eventually to become a not for profit entity, was launched during January 2014, to serve land-lease community owners/operators in seven distinct ways:

• Ongoing statistical research relative to the realty asset class; highlighted annually in the ALLEN REPORT, a.k.a. ‘Who’s Who Among Land-lease Community Portfolio Owners/operators Throughout North America!’

• Updating & distribution of 12+ Statistical Resource Documents, or SSRDs, covering every aspect of LLCommunity operations, e.g. realty & personal property $ finance; 40 freelance consultants of all types; directory of print & online media; official MH lexicon; ‘GSEs, Federal Agencies, & NGOs’; professional property management certification alternatives; an Industry Briefing Sheet; directory of national advocacy entities; directory of all factory-built housing firms; an official paradigm shifts list, dating from 1970s to present day; directory of real estate brokerages serving LLCommunities; and Official State of the MHIndustry Report.

• Preparation & distribution of a weekly blog posting at community-investor.com; and, two subscriber-supported monthly business newsletters, the Allen Letter professional journal, & the Allen CONFIDENTIAL!

• Plan & facilitate superb interpersonal networking and educational offerings, to include deal-making opportunities.

• Instruct & certify professional property management training via the Manufactured Housing Manager®, or MHM® program

• And as need be, function as national advocate for land-lease communities nationwide and in Canada; as well as providing ombudsman and historian services.

Revenue to operate COBA7® comes from a variety of sources that include: registration fees for annual Networking Roundtable; paid affiliation with COBA7® at one of three levels depending on degree of ‘products & services’ land-lease community owners/operators desire from the coalition; MHM® tuition; paid access to exclusive 500+/- name data base of portfolio owners/operators, various consulting assignments, e.g. pre-due diligence inspections, Mystery Shopping, & expert witness work testimony.

Years 2016 & 2017. A presidential election with its’ surprising results, presents business opportunities otherwise not available, let alone envisioned six months ago. So, during this time of expected change, starting as it will be, ‘from the top’, something similar should occur throughout the HUD-Code manufactured housing industry. Why? For the aforementioned NEW ERA to continue and grow, i.e. increased volume of new home shipments going directly into LLCommunities, large & small, throughout the U.S., owners/operators must seize control of their business environments and destinies!

And what might those steps entail?

1. MHARR & MHI to formally accept and recognize COBA7® as a primary national advocate for land-lease communities, large & small, nationwide! For example, MHI charges dues of state MH associations, and others, but has not, to date – despite invitations to do so – affiliated with COBA7, to receive its’ newsletters, Signature Series Resource Documents (e.g. ALLEN REPORT & various directories), and other land-lease community products & services.

2. COBA7® to immediately identify and reach out to all federal agencies and regulators presently affecting land-lease community operations, e.g. DOE, HUD, FHFA & its’ related GSE. Furthermore, COBA7® plans to be present at all future public hearings and meetings of these agencies, especially when LLCommunity matters are on the agenda. For example; in a recent DOE hearing, COBA7 was the sole entrepreneur MH business present.

3. MHARR, MHI, & COBA7® to soon meet, to discuss and brainstorm measures needed to restore manufactured housing to prosperity, likewise among land-lease communities, large & small, nationwide. A possible point of initial focus might be the timely and shocking message conveyed in the ‘Tipping Point’ WHITE PAPER expose’ distributed in a late November blog posting at community-investor.com, and the December issues of the Allen CONFIDENTIAL! and Allen Letter. COBA7 & representatives from SECO (Southeast Community Owners) will be at the Louisville MHShow, 18-20 January 2017. How ’bout MHARR & MHI? Want to meet informally to plan how to grow and perpetuate this NEW ERA of cooperation between manufactured housing producers and land-lease community owners/operators?

As they say, ‘The ball is in your court!’ Now is time for action!

New Year Resolutions for 2017 & Much More!

December 1st, 2016

Blog # 423 Copyright 2016 COBA7® 4 December 2016; community-investor.com

Perspective. ‘Land-lease communities, previously manufactured home communities, & ‘mobile home parks’, comprise the real estate component of manufactured housing.’

This blog posing is the sole national advocacy voice, official ombudsman & historian, research report & online communication media for North American LLCommunities!’

To input this blog &/or affiliate with Community Owners (7 Part) Business Alliance® a.k.a. COBA7®, use Official MHIndustry HOTLINE: (8777) MFD-HSNG or 633-4764.

COBA7® Motto: ‘U Support US & WE Serve U!’ Goal of its’ print/online media = to ‘Not only inform & opine, but transform & improve MHBusiness model performance!’

INTRODUCTION. Hang on! This is going to be a three part ride through 1) planning for the year 2017; 2) bracing for the coming ‘continued regulation’ vs. ‘deregulation’ of manufactured housing; and, 3) triple opportunity for specialized personal and professional education in Louisville, KY., on 17 January 2017. Ready? Well, here goes…

I.

What Are Your New Year Resolutions?

Year 2017 is but a few weeks away, making this the ideal time to reflect upon, and articulate, New Year Resolutions to guide one’s thinking and actions during the next 12 months. And year 2017 is poignant (‘biting, painfully acute’), as we move deeper into the ‘17 year paradigm shift’ we’ve endured since year 2000. The difference this year? Since we know we’re well within a NEW ERA for this industry and its real estate asset class, land-lease communities (a.k.a. ‘New Breed of MHRetailer & Lender’), why not reflect the changes, to respective business models to date, in the New Year Resolutions identified and codified? For starters, here’s the way I see them:

• Support the new President of the United States of America!

• HUD-Code housing manufacturers to redouble efforts to market and sell new homes into land-lease communities, large & small, coast-to-coast! Part of this will require manufacturers to teach LLCommunity owners/operators how to specify, order, install, market, sell, affordably price, and seller-finance homes they buy from factories.

• Land-lease community owners/operators to NOT heed the siren call to ‘double one’s rental homesite rates’ during 2017; but rather, offer fair and affordable housing propositions, i.e. Where possible, keeping combined monthly PITI mortgage & site rent payment ‘together’, at or below the National Average Affordable Housing Market Rent of $849/unit – including household expenses where possible. Of course, this will not work in some high-priced local housing markets.

• Emphasize importance of – and provide opportunities to receive, professional property management training & certification, for all on-site land-lease community managers overseeing 75 or more rental homesites. Everyone to be a Certified Property Manager, Accredited Community Manager, or Manufactured Housing Manager.

• Support one or more national advocacy entities who best represent one’s business interests as housing manufacturers or land-lease community owners/operators, within and outside Washington, DC.

• And what other one(s) might be added to this august 2017 list? (317) 346-7156.

II.

Manufactured Housing Faces Another Fork in the Road?!

Last Week You Learned of the Imminent Danger of Manufactured
Housing Going from being Affordable to Non-affordable
&
Now, This Weeks Message, Has to Do with Manufactured Housing, Maybe Going from being Regulated to Non-regulated!

Here goes…Chalk the following paragraph up to being rumor, truth, or mix thereof…

A few Fall seasons ago, HUD realized, as regulator of manufactured housing, it was not receiving enough income from label fees to cover expenses, so they (reportedly) sought relief from manufactured housing regulatory duties altogether. The Government Accounting Office (‘GAO’) interviewed HUD-Code home manufacturers to gauge their reaction(s) to the query, ‘What if HUD went away?’ At that point, ‘the MHIndustry’ stepped in surreptitiously (Did you ever read about that? I didn’t.). Next thing we knew, there was a major increase in HUD inspection fees at all factories. And at that point, the ‘threat’ – or was it an ‘opportunity’, for deregulation, went away. And enhanced federal regulatory oversight began…recall how (2007) new home installation & dispute resolution legislation, moved quickly from back to front burner, during years 2015 & 2016.

Fast forward to today. The parties to the decades old MH regulatory brouhaha are:

U. S. Department of Housing & Urban Development or HUD. Relative to manufactured housing, the federal regulatory agency. An agency, until the recent presidential election, appeared hell bent on extending their oversight and enforcement reach into every corner of manufactured housing fabrication and land-lease community installation, including dispute resolution and its’ minimal number of disputes to resolve..

Manufactured Housing Institute or MHI. Self-professed national advocate for all segments of the HUD-Code manufactured housing industry, including land-lease communities nationwide. Enjoys a reputation for being conciliatory, where regulatory matters are concerned. In large part responsible, since the mid-1970s, for turning the ‘lemon’ of HUD-Code housing regs into ‘lemonade’, as the turn of phrase goes, using the federal preemption nature of HUD’s national building code to its advantage. Though some now question whether the industry’s recent avoidance of deregulation might be akin to suffering from Stockholm Syndrome, i.e. empathizing with HUD regulators (‘Its’ captor’), versus seeking ‘freedom from regulation’ altogether.

Manufactured Housing Association for Regulatory Reform or MHARR. Since 1985, the manufactured housing industry’s champion (a.k.a. The Washington watchdog!’) for less federal regulation of the factory-built housing product. Seemingly, a would-be champion of deregulation – unless they too fear the unknown consequences of free market enterprise, where the future of manufactured housing is concerned.

And therein lies the rub…

Will, under a new president with a penchant for less federal regulation of business and otherwise, the manufactured housing industry be faced with wholesale deregulation, similar to what was described – but did not come about, in the opening paragraph of this recitation? The quickest path to deregulation would appear to be: Press for bureaucratic change within HUD’s present day manufactured housing program.

Or, will the manufactured housing industry be better served, by not ‘rocking HUD’s bureaucratic boat’, in a quest for installing less regulatory-minded bureaucrats within HUD’s manufactured housing program? Now there’s a sensitive question begging a wise answer.

Hmm. Sounding like a ‘Damned if you do & damned if you don’t’ scenario with each sequential paragraph…

What do you think? I, for one, would truly like to know. I’m conflicted. And frankly, nothing would please blog readers more, than to have elected leaders within MHI & MHARR, comment as to which course of action is best for the present and future of the manufactured housing industry:

• Unchanged HUD-Code regulation of home fabrication and new home installation

• Scaled back regulation of home fabrication and new home installation

• Complete deregulation of home fabrication and new home installation

What say YOU? Well, we distributed a DRAFT copy of this blog posting to several ‘deep thinkers’ in the MHBusiness. Here’s one of the answers we received:

“Having received some advantages of HUD regulation, over local building codes, my money is continuing under HUD regulation, but with more representation/involvement by all segments of the MH industry – certainly not relying completely on either of the two current national lobbyists.”

Interesting how this comment echoes MHARR’s recent call for better national representation of all post-production segments of the MHIndustry, certainly better than what is evident today. So, one more reason to expect, during the weeks ahead a major announcement from the Community Owners (7 Part) Business Alliance, or COBA7, a division of GFA Management, Inc., dba PMN Publishing.

If you’re not yet affiliated with COBA7, but would like to be, use the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.

III.

Pre-Louisville MHShow, Day of Education!

January 17, 2017

Three Seminar Sessions Designed Especially for You!

All day, 17 January 2017, at the Crown Plaza Hotel on Phillips Lane, Louisville, KY., the Manufactured Housing Manager, or MHM, professional property management training & certification program. Taught by Katie Hauck, MHM, & Kathy Taylor, MHM. Cost? Only $250.00 MHM candidate. No testing. Starts at 9AM and ends at 4PM. Tuition pays for copy of Landlease Community Management text, monograph of contemporary writings, as well as MHM certificate & MHM lapel pin. Register via genevieve@roane.com or phone (317) 346-7156.

Morning of 17 January 2017, at the Crown Plaza Hotel on Phillips Lane in Louisville, KY., George Allen, CPM & MHM will lead a three hour seminar (9AM-Noon) designed for HUD-Code home manufacturers who want to learn How to Identify Land-lease Communities in all four major segmentations of the realty asset class. Open discussion relative How to Best Market & Sell New HUD-Code Homes to this Emerging Market.
To register, phone (317) 346-7156. Cost? Only $95.00 per registrant

Afternoon of 17 January 2017, at the Crown Plaza Hotel on Phillips Lane in Louisville, KY., Spencer Roane, MHM, will lead a three plus hour seminar (1PM – 4PM) introducing attendees to the basics and fine points of Lease-option Methodology, relative to seller-financing new and resale manufactured homes within land-lease communities. To register, contact Genevieve@roane.com or phone (317) 346-7156. Cost? Only $95.00 per registrant.

Then, stay over, and attend the Louisville MHShow, 18-20 January 2017.

***

George Allen, CPM & MHM
Box # 470-24, Indianapolis, IN. 46247
(317) 346-7156

The Manufactured Housing Industry Tipping Point!

November 23rd, 2016

Blog # 422 Copyright 2016 COBA7® 27 November 2016; community-investor.com

Perspective. ‘Land-lease communities, previously manufactured home communities, & ‘mobile home parks’, comprise the real estate component of manufactured housing.’

This blog posting is the sole national advocacy voice; official ombudsman & historian, research report & online communication media for North American LLCommunities!’

To input this blog &/or affiliate with Community Owners (7 Part) Business Alliance®, a.k.a. COBA7®, use Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.

COBA7® Motto: ‘U Support US & We Serve U!’ Goal of its’ print/online media = to ‘Not only inform & opine, but transform & improve MHBusiness model performance!

INTRODUCTION.

This WHITE PAPER cum expose’ has been in the making for two decades. Its genesis going back to the mid-1990s (Read End Note # 9 for details). It’s only been, however, during the past 12 months, the manufactured housing ‘tipping point’ between manufactured housing being ‘affordable’ & ‘no longer affordable’, has become obvious to those who’re watching. And frankly, a real threat to not only the industry’s gradually recovering new home shipment volume, but the future of the manufactured housing industry and its’ land-lease communities going forward. So, as you read now…

Be Aware & Beware (that),

‘The Manufactured Housing Industry
Tipping Point,’

occurs when

‘reasonable rental homesite rates
& affordable housing values’

are supplanted by

‘higher rental homesite rates
& smaller PITI*1 payments’,

oft times resulting in

1) Diminished Buying Power for Purchase of New HUD Code Housing

2) Reduction in Existing Housing Value &

3) Fewer New Homes Shipped Nationwide

***

Stop here and ask yourself: ‘Is diminished buying power for new homes, reduction in existing housing value, and fewer new HUD-Code homes shipped nationwide, what we need or want for today’s recovering manufactured housing industry, its’ land-lease communities with vacant rental homesites to fill, and fewer prospective homebuyer/site lessees nationwide?’ Hopefully, your answer, like mine, is a resounding ‘NO’!

So, why is this even a question in today’s economic, business, and consumer climate?

To well answer that timely, telling, and challenging question, begin with a look at the larger U.S. housing picture, ‘compared with’ what we’re told in a column featured in the last surviving, advertising-supported, manufactured housing trade periodical.

First, this ‘big housing picture’, quoted from Multihousing Professional magazine, page # 38, for September/October 2016:

“More than one in every three people in the U.S. struggles with the high cost of housing – the highest level ever recorded, according to the State of the Nation’s Housing, from the Joint Center for Housing Studies of Harvard University report for 2016. The number of people living in households that pay more than 50 percent of their income for housing has grown to 114 million, according to the study.”

Lessons to be learned? Keep manufactured home monthly ‘PITI mortgage payment & site rent’ below the debilitating 50% threshold! Examples to follow will do so, using the 30% Housing Expense Factor or HEF. But remember this, ‘household expenses’ (e.g. water, sewer, heating, electricity), while they should be included within said 30% & 50% housing expense thresholds, are not generally factored into calculating PITI mortgage payments throughout the manufactured housing industry, and within land-lease communities! Consequence? By the time all household bills (mortgage, rent, & household expenses) are paid each month, households pay well beyond the 30% HEF, oft approaching that debilitating 50% threshold!

Back to our ‘housing picture’, with this manufactured housing and land-lease community related view, quoted from The Journal, page # 14, for October 2016:

“We believe the approximate national average for lot (site) rents in the U.S. is around $275 per month. That’s a ridiculously low number in a U.S. housing market that offers a median single-family option at $170,100 and an average three-bedroom apartment rent of $1,290 per month. We believe lot (site) rents could double and still remain highly affordable.” P.14. Quoted from Frank Rolfe’s COMMUNITY CONSULTANT column. (Emphasis added. GFA) Source of data provided in this paragraph? None provided by the columnist.

Well, let’s see how this view pencils out, using the following data reference points:

National Average Affordable Housing Market Rent = $849/unit*3

National ‘Area Median Income’ or AMI*2 = $52,000+/-*4

Land-lease Community site rent now = $275/month*5

Land-lease Community site rent doubled = $550/month*6

Standard ‘Housing Expense Factor’ or HEF = 30 percent*7

Chattel Capital Mortgage Terms = 9.5% @ 20 years

As we work through the following examples, keep in mind National Average Affordable Housing Market Rent is pegged at $849/unit – whether it be for a conventional garden style apartment unit, or manufactured home on a rental homesite in a land-lease community. In examples to follow, combined ‘home payment (i.e. PITI) and site rent below $849/unit, while certainly ‘affordable’, represents less ‘buying power’ or ‘less home & value’; than when combined PITI & site rent payment are above $859/unit, representing more buying power…

In the first instance, Using $52,000 AMI, a 30% HEF, and ‘low’ site rent of $275/month (See end note # 5), that leaves $1,025 to buy a new manufactured home (Compared to the present day $849/unit average), for around $122,181/month (figuring back in, a 10% down payment). However, ‘doubling’ the site rent to $550/month (See end note # 6), leaves only $750/month to buy a new manufactured home for around $89,400 (figuring back in, a 10% down payment). Clearly, a smaller ‘affordable housing market payment’ capability’ (i.e. PITI & rent), a.k.a. less ‘buying power’; ‘less home’; and, over time possibly, fewer new manufactured housing shipments nationwide.

As a related aside; to be competitive, savvy land-lease community owners/operators keep monthly ‘combined PITI & site rent’ payments 15-20% below (a.k.a. Schwep Rule of Thumb) or $50.00 below (a.k.a. Schrader/Smith Rule of Thumb) similarly-sized conventional apartment unit monthly rent rates, in the same local housing market.*8

In the next instance, using a more reasonable $36,000 AMI (Characteristic of the ‘newly wed & nearly dead’ traditional manufactured housing dual market), a 30% HEF, and again, ‘low’ site rent of $275/month, leaves $625/month to buy a new manufactured home (Again, compared to present day $849/unit average), for around $74,500 (figuring back in, a 10% down payment). However, ‘doubling’ the site rent to $550/month, leaves only $350/month to buy a new manufactured home for around $41,720. Here it is even clearer, how low to middle income individuals and households, with an AMI anywhere near $36,000, when faced with escalating rental homesite rents (i.e. ‘doubling’), as proposed in the reference cited in end notes # 5, will be faced with attempting to purchase a new manufactured home, using a monthly combined ‘PITI & rent’ payment well less than the present day National Average Affordable Housing Market Rent rate of $849.00/unit. In fact, it likely takes the prospective homebuyer/site lessee completely out of the new home market, able only to purchase – or rent, maybe, a resale unit in a land-lease community. Hence the result of ‘doubling’ site rent rates.*9

Point to all this? It’s this industry observer’s earnest and considered opinion:

The manufactured housing industry in general, & the land-lease community realty asset class in particular, are already at the ‘tipping point’ between continuance of a 70 year reputation as this nation’s primary source of non-subsidized, affordable housing and lifestyle; but once again (Recalling ‘the turn of the century & departure of easy access to chattel capital) endangering the industry’s gradual return to new home shipment prosperity!

For example:

1998 = 372,843 New HUD-Code homes shipped nationwide!

2000 = 250,550 Shipment slide & 16 year paradigm shift began…

2009 = 49,789 Community Series Homes debuted, & 25% of new home shipments went directly into (then) manufactured home communities nationwide by year end.

2015 = 70,544 Now 40+% of new HUD-Code home shipments go directly into (now) land-lease communities nationwide!

(2020) = Estimated 100,000 new HUD-Code homes to be shipped, with 75% going into LLCommunities! However, if the siren’s call for continued escalation (i.e. ‘doubling of’) rental homesite rates becomes regimen nationwide, expect new home shipment recovery to, once again, slow precipitously.

Is this what we want? Is anyone out there listening? What are you going to do about it?

***
End Notes

1. PITI = Principal, interest, taxes, insurance – but not including household utility payments.

2. AMI = Area Median Income, often pigeonholed by postal zip code, can be same $ amount as AGI or Annual Gross Income for a prospective homebuyer or household

3. U.S. Census Bureau

4. REIS, Inc., 2nd quarter, 2016

5. The Journal, October 2016

6. Ibid, end note # 5 doubled in size

7. George Allen, Book of Formulae, Rules of Thumb, & Helpful Measures, PMN Publishing, Indianapolis, IN., 2012, page # 39

8. Ibid, pages # 11 & 12.

9. There’s yet another ‘take’ on the matter of escalating rental homesite rents. Simply put: Until the REIT wave of 1994-95, (then) MHCommunity owners/operators oft used a 3:1 Ratio to estimate appropriate rental homesite rates in various local housing markets, e.g. Conventional 3BR2B apartment rent = $900/month; then 1/3 of that = $300/month, as starting point for one’s homesite rent. Well, as fledgling REITs struggled to satisfy Wall Street analysts lust for increasing dividends month after month after month (by trimming operating expenses, etc.), they eventually started raising rental homesite rates in a near flagrant fashion. To the point that, today, some – but – not – all large property portfolio firms appear to default to a 2:1 ratio, e.g. Apartments rate @ $900/month? Then land-lease community site rent @ $450/month. And all this would be understandable, and likely acceptable, except for one recent development. Specialty ‘market rent surveys’ describe SMSA (Standard Metropolitan Statistical Area) local housing market rents characteristic generally of ‘institutional investment grade’ land-lease communities (i.e. 200+ rental homesites), not including all the such properties located in and around the subject city. Result? Higher published ‘market rental homesite rates’ than would be the case if/when all LLCommunities were polled and reported. Negative consequence? Artificially high site rental rates published for various SMSA cities, provide ‘cover’ for all property owners to likewise raise their rents to match large property portfolio owners/operators. Remedy? Clearly label rental market surveys as being focused on ‘institutional investment grade LLCommunities’ only.

George Allen, CPM®Emeritus, MHM®Master
COBA7
Box # 47024, Indianapolis, IN. 46247

(317)346-7156

2017 = Year of COBA7, & Tipping Point WHITE PAPER, a must read!

November 18th, 2016

Blog # 421 Copyright 2016 COBA7 @ 20 November 2016; community-investor.com

Perspective. ‘Land-lease communities, previously manufactured home communities, & ‘mobile home parks’, comprise the real estate component of manufactured housing.’

This blog posting is the sole national advocacy voice; official ombudsman & historian, research report & online communication media for North American LLCommunities!’

To input this blog &/or affiliate with Community Owners (7 Part) Business Alliance®, a.k.a. COBA7®, use Official MHIndustry HOTINE: (877) MFD-HSNG or 633-4764

COBA7® Motto: ‘U support US & WE serve U! Goal of its’ print/online media = to
‘Not only inform & opine, but transform & improve MHBusiness model performance!

_____________________________________________________________________

INTRODUCTION: Year 2017 is when the Community Owners (7 Part) Business Alliance®, or COBA7®, grows into the expanded role of national advocate devoted to the research, communication, networking & deal-making, training/certification, and historian needs of land-lease community owners/operators nationwide and in Canada!

The year begins with publication of a WHITE PAPER exposing the ‘tipping point’ manufactured housing & land-lease communities approach, at their peril, between supplying ‘affordable & non-affordable’ housing to prospective homebuyers and present day homeowner/site lessees. No one else is willing to ‘break this story’ to you, so read!

In January, the 28th annual ALLEN REPORT, a.k.a. ‘Who’s Who Among Land-lease Community Portfolio Owners/operators Throughout North America!’ will be distributed to Option II & III affiliates of COBA7® via the January issue of the Allen Letter professional journal. Not yet an affiliate? Phone (317) 346-7156. This is the gold standard among statistical reports purporting to describe LLCommunities nationwide.

On 17 January 2017, COBA7® hosts the one day MHM® class, as well as two seminars tailored for HUD-Code home manufacturers, and LLCommunity owners desiring to learn more about lease-option methodology. Read Part I following here…

During Spring 2017, plan to participate in the 2nd annual Two Days of Plant Tours & Home Sales Seminars, at the RV/MH Hall of Fame in Elkhart, IN. Designed for LLCommunity owners/operators desiring to sell and seller-finance new HUD-Code homes on-site in their properties. More to follow during the months ahead.

And there’s more, much more, but we’ll stop the INTRODUCTION here, for now…

I.

PRESS RELEASE * PRESS RELEASE * PRESS RELEASE

Dated 20 November 2016

COBA7® Launches Four Major Initiatives to Warn & Help MHBusiness in Year 2017!

FIRST

‘Be aware & Beware’! The Manufactured Housing Industry (is approaching its’) Tipping Point in local housing markets; where and when ‘reasonable rental homesite rates & affordable housing values’ are being supplanted by ‘higher rental homesite rates & smaller PITI mortgage payments’, resulting in:

Diminished Buying Power for Purchase of New HUD-Code Housing

Reduction in Existing Housing Value, &

Fewer New HUD-Code Homes Shipped Nationwide!

Yes, that’s the dire message this December expose’, a White Paper, will be communicating to the manufactured housing industry and land-lease community real estate asset class nationwide, by way of its’ national advocacy entities, trade press, and otherwise. A Press Release will also be sent to the administrator of HUD’s manufactured housing program.

For a FREE reprint copy of this White Paper, after 1 December, simply phone the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 and request it!

SECOND = latter three parts of the COBA7®s four part MHInitiative for year 2017.

The threefold Press Release message will see its’ first exposure as part of the pre-Louisville MHShow on 17 January 2017, at the Crown Plaza Hotel near the Kentucky Fairgrounds in Louisville. Here’s what’s planned to date:

Manufactured Housing Manager®, or MHM®, one day professional property management training and certification class, beginning at 8AM & ending at 4PM. No tests. Taught by Katie Hauck, MHM® & Kathy Taylor, MHM®. More than 1,000 MHM®s now own/operate LLCommunities throughout the U.S. & Canada. Only $250/MHM® candidate.

Morning of 17 January. Special three hour seminar program for HUD-Code home manufacturers to include: ‘How to ID land-lease communities among all four major property segmentations’, ‘How to Sell New Homes to LLCommunity Owners/operators’, & open discussion of the ‘tipping point’ warning contained in the Press Release. Only $94.95/registrant. Led by George Allen, CPM®, MHM®

Afternoon of 17 January. Special three hour seminar program for land-lease community owners/operators desiring to learn lease-option methodology as a means of seller-financing new HUD-Code home transactions on-site in their properties. Only $94.95/registrant. Taught by Spencer Roane, MHM®

For information, and to register, for one or more of these three events on 17 January, simply phone the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.

Finally, it is hoped the Press Release threefold message will be picked up and scheduled, by meeting planners selecting programs for the annual MHCongress in Las Vegas, 26th International Networking Roundtable, and 7th annual SECO Summit in the South – the manufactured housing industry and LLCommunity asset class four major national/regional trade shows.

This MHInitiative is planned for the 17th of January, to stimulate more participation in the Louisville MHShow that begins, in the same location, on the 18th of January 2017.

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George Allen, CPM®, MHM®
Box # 47024, Indpls, IN. 36247
(317)346-7156