Get Over It!

Blog Posting # 609 @ 23 Oct 2020; Copyright 2020: Educatemhc.com

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

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INTRODUCTION: Something quite different this time around! The Federal Housing Finance Agency (‘FHFA’) – sponsored Listening Session (16 October 2020), relative to ‘underserved market of manufactured housing’ – in time, will be viewed either as a ‘same-o, same-o’ exercise in nothingness; OR, a ‘line in the sand’ of factory-built housing history!

This was the third Listening Session, on this timely topic, to occur during the past five or so years. And frustration and disappointment with the FHFA and Government Sponsored Enterprises (‘GSE’s’) Fannie Mae & Freddie Mac ‘lack of Duty to Serve (‘DTS’) program progress, was strikingly evident in several key presentations! And those sentiments are what we’re bringing to you today in this blog posting.

‘Get Over It!’ is the edited composite of MHI, MHARR & EducateMHC critiques of the FHFA, Fannie Mae & Freddie Mac, as presented at said Listening Session. After you’ve read through this blog, please take time to reach out to those who commented in your behalf, and assure them of your continued support, and share recommendations regarding how to proceed. All of our business futures depend on getting the FHFA and two GSE’s off dead-center, where chattel capital (personal property finance) for home-only loans is concerned!

Get Over It!

MHI, MHARR & EducateMHC Critique FHFA, Fannie Mae & Freddie Mac
at 16 October 2020 Virtual Listening Session

More than a dozen panelists and nearly 100 registrants participated in the FHFA (Federal Housing Finance Agency) – hosted Listening Session on Friday, 16 October 2020.

What follows here are synopses of presentations orated by representatives of the Manufactured Housing Institute (Dr. Lesli Gooch), Manufactured Housing Association for Regulatory Reform (Mark Weiss), and EducateMHC (George Allen). For more information on these presentations, contact the responsible individual.

I.

Let’s begin with the shortest of the presentations, the one by EducateMHC. Knew it was important for me to ‘set the stage’, as a businessman with equity interest in the activities of the FHFA and both GSEs – and how, on two previous occasions (not counting two earlier Listening Sessions in Chicago & St. Louis), I’d witnessed their actions and inactions, relative to manufactured housing and land lease communities. Specifically…

• Year 2010. 100+/- Midwestern businessmen & women met in a downtown Elkhart, IN. office building (I was there), and were told by FHFA & two GSEs: “You are now on your own, relative to personal property (chattel) capital!” This, following year 2009, when only 48,789 new HUD-Code homes were shipped, in large part, due to lack of easy access to home-only financing’, which had disappeared due to MH industry’s financial finagling, i.e. 300,000 repossessed homes valued at $1.3 billion, per Consumer Finance Protection Board.

• Year 2014. When representatives from FHFA, Fannie Mae & Freddie Mac, participated in lively panel discussions at the annual Networking Roundtable I hosted, in Peachtree City, GA. Why important? That event marked the ‘return’ of FHFA and both GSEs, in a rudimentary fashion, to the industry and realty asset class. This has been followed by further meetings, ever since, with industry and realty asset class representatives.

So, what does all that mean today? Well, to be gracious about the matter, one might say the latter event, and three Listening Sessions since then, demonstrate FHFA and GSEs ongoing interest in working with us to cultivate and secure more sources of chattel capital for new home sales. However, there’s a continuing ‘dark side’ to that perspective, and that’s what I attempted to communicate during my presentation, in the following fashion…

“Ongoing recalcitrance pursuant to Congressional fiat, on the part of the FHFA and GSEs Fannie Mae & Freddie Mac, to secure realistic, appropriate, and ongoing access to chattel capital for (manufactured) home-only loans is, in my opinion, profound benign neglect – by definition: “…an attitude or policy of ignoring an often delicate or undesirable situation one is held to be responsible for dealing with….”

What might be remedies for this pattern, now sad culture, of profound benign neglect?

• Once and for all ‘Get over it!’ – the chattel capital lending debacle of 1998 – 2003! Begin a new and helpful chapter via GSE’s tangible and overt support of manufactured housing and land lease community lending! Stop pretending progress!

• Reverse 12 years of minimal activity, relative to GSE’s Duty to Serve (‘DTS’) plans and programs – to date, appearing to be languishing and, in a word, ineffective.

• During year 2021, buy many seasoned chattel manufactured housing mortgages, to stimulate a much-needed secondary market for selling these specialty loans; in the end, freeing up capital for additional manufactured housing sales and financing.

And yes, there’s more that could be said – specifically; but why waste time elucidating measures likely to be, once again, ignored; until FHFA & GSE’s ‘Get Over’ what happened two decades ago?!

II.

MHARR “…has rebuked FHFA, as well as Fannie Mae and Freddie Mac, for their continuing failure to fully and faithfully implement the remedial DTS directive within the mainstream manufactured housing market, to the profound detriment of both consumers and the industry.”

This is what we expect from the ‘Washington watchdog for the manufactured housing industry’! MHARR goes on to say…

“…some 12 years after enactment of DTS, as a remedy for Fannie Mae and Freddie Mac’s long-term failure to serve the mainstream manufactured housing market, and the lower and moderate-income American consumers who rely on inherently affordable manufactured homes, only 5-6 percent of the total market for new manufactured homes is being ‘served’ under DTS, while the industry’s single largest and most affordable segment – comprised of homes financed as personal property – has been left totally unserved. Worse yet, FHFA, in various reports to Congress, has falsely certified that both Enterprises are in compliance with the DTS mandate, when they clearly are not. Thus…94-95 percent of the current-day manufactured housing market remains completely unserved under DTS.” (Lightly edited. GFA)

Therefore, “…more than 90 percent of manufactured housing personal property borrowers (have been forced into) ‘higher-rate’ loans, according to federal data, with less-than-fully-competitive lending market dominated by a relative handful of ‘portfolio’ lenders, most of which are directly affiliated with the industry’s largest corporate conglomerates. This discrimination in the implementation of DTS not only subjects millions of lower and moderate-income Americans to needlessly high borrowing rates for mainstream, personal property manufactured home loans, but also needlessly excludes many more families from the American Dream of homeownership altogether.”

MHARR’s recommended remedies:

• “…FHA must conduct a thorough internal investigation into its failure to faithfully implement DTS within the manufactured housing market for 12 years…”

• (Ensure) the two Enterprises terminate their diversionary tactics under DTS and scrap their current non-complying ‘plans’ and programs.

• (Ensure) Fannie and Freddie immediately implement effective, market-significant and fully comp0liant DTS programs within all segments of the mainstream HUD-Code manufactured housing industry….”

MHARR is a Washington, D.C.-based national trade association representing the views and interests of independent producers of federally-regulated manufactured housing. (202) 783-4087

III.

The following remarks have are quoted directly, in part, from Dr. Lesli Gooch’s presentation, in behalf of MHI at the subject Listening Session on 16 October.

“In light of the impact of COVID-19 on the economy, MHI believes the importance of the Enterprises carrying out their charter access-to-credit and statutory Duty to Serve (‘DTS’) manufactured housing responsibilities should be a priority. In the longer term, as Fannie Mae and Freddie Mac move toward eventual exit from conservatorship, adherence to DTS responsibilities become increasingly critical to ensure these underserved areas are not ignored.

In assessing progress in meeting their statutory DTS responsibilities so far, let’s first look at the GSE’s performance on manufactured homes backed by real estate. Both Fannie and Freddie’s plans promised to develop more flexible, innovative loan products for real property loans – and we believe they have done so.

MHI is also pleased both GSE’s have introduced new programs that provide conventional financing for manufactured homes with site-built features. Qualifying home features for the MHAdvantage and CHOICE Home programs align closely with the industry’s new CrossMod™ homes with higher roof pitches, permanent and lower profile foundations, garages or carports, and porches. CrossMod™ homes are a point of entry for home buyers who are currently priced out of homeownership because traditional site-built housing is not produced at below $200,000. homes, with higher roof pitches, permanent and lower profile foundations, garages or carports, and porches.

A secondary market for chattel manufactured home loans, also called personal property loans, is an area that continues to elude the manufactured housing industry. Chattel loans are mortgage loans which are only backed by the manufactured home, and not by underlying land. Both Fannie Mae and Freddie Mac had included the acquisition of existing chattel loans as a pilot project within their three-year plans. We assume this (COVID-19) has been a factor in Fannie and Freddie not making any visible progress to develop a secondary market for chattel financing in the first three years of their plans.

We would also appreciate candor about how long this delay in re-entering the chattel loan market will continue – and more specifically, what Fannie and Freddie hope to accomplish next year.

There has been much discussion about the GSE’s support for the purchase of land lease communities, both within and outside of DTS. Land lease communities offer more than affordable housing. Communities offer a sense of neighborhood and often feature a range of amenities. MHI recently conducted a national survey of people living in manufactured housing, which showed 87 percent of residents in all-age communities are satisfied with their homes.

MHI understands some parties have raised concerns about some bad actors raising rents excessively and otherwise acting in bad faith. Raising rents and evicting tenants is counter to the prevailing business model of every professional land lease community owner-operator who relies upon stable rent and high occupancy. Going forward, MHI remains committed to responsible, professional ownership of (land lease communities) – and to the homeowners in those communities.” (Lightly edited. GFA)

In closing, MHI appreciates FHFA and the GSE’s for setting up these Listening Sessions.

MHI is an Arlington, VA. – based national advocate for all segments of the manufactured housing industry, including the land lease community real estate asset class. (703)558-0400

IV

Who else was scheduled to address the
Enterprises’ ‘Underserved Markets Plans for the Manufactured Housing Market: Proposed 2020 Modifications and 2021 Additions’?

Todd Kopstein, Cascade Financial
Doug Ryan, Prosperity Now
Bruce Thelen, Sun Communities, Inc.
Paul Barretto, MH Initiatives
Stacey Epperson, Next Step Network
Paul Bradley, ROC USA, LLC
Garth Rieman, National Council of State Housing Agencies
Keith Wiley, Housing Assistance Council
Thomas Heinemann, Heinemann Consulting

George Allen, CPMEmeritus, MHM Master @ EducateMHC

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