What follows dramatically changed the manufactured home industry.
It started with the SAFE Act. Two years later, it was Dodd-Frank. While Dodd-Frank was being passed into law, came first one, then another letter from 21st Mortgage Corp that was sent to the independents of manufactured housing.
In the wake of that trifecta came
• a steady wave of independent retail closures.
• Thousands of manufactured home communities had been losing occupancy for approaching a decade. Losing occupancy in communities resulted in relatively few outright failures, but far more that sold out to larger portfolio operations.
• All of the above resulted in a number of independent producers of HUD Code manufactured homes.
• U.S. Bank essentially shuttered a profitable manufactured home lending operation, citing low volume and regulatory risk.
• Communities that made loans on manufactured homes to buyers – like UMH Properties – likewise stopped making those deals, due to regularly risk.
All of the above created dramatic change for the industry. They are points few who understand the facts would deny. So, what are the insider insights?
Many.
This column will focus on one aspect today that has literally impacted the entire industry, without exception. Other reports from inside MHI, and later from inside Clayton Homes, and other organizations impacting MHVille will follow in the days ahead.
The View of Insiders at MHI
Recent reports on MHProNews have spurred a surge in news tips from manufactured home industry readers and insiders. These aren’t the fluff-talk that others may publish, but rather core issues that make or cost companies opportunities and money.
Among those numerous tips and comments?
Those that focused on inside information from and about the Manufactured Housing Institute (MHI), and how they’ve handled the industry’s post-production and production agendas.
It should be noted, prior to proceeding to this manufactured home regulatory and financing focused report, that there have been some ‘fake news’ tips coming in too. MHProNews seeks evidence and corroboration on claims, not just a mere allegation.
Evidence and corroboration are important for our work. Why? Because some hate an operation, agency, and/or person so badly that they will make up something that sounds salacious, plausible or ‘juicy.’ But if it turns out to be untrue, has no corroboration, etc., then we at MHProNews don’t run it.
It should also be noted that those who provide news tips may hold different policy, political, or other views than MHProNews’ publishers.
For example, among the tips are voices that are pro-MHI, or pro-Clayton, etc. So why do pro-Clayton, 21st, MHI, etc. voices pick up a phone, or send messages, documents, and other forms of news tips, and insights?
Among the reasons we have been told by such sources is that they may like some person or industry organization, but nevertheless they too have concerns with specific things said, or done. Others raise the flag on some failure to act in a timely or proper fashion about an important issue.
Nathan Smith is among those who has said that the industry must admit its past failures. Richard ‘Dick’ Jennison – MHI’s President and CEO, has also generically admitted past failures. Both of those were captured on videos by MHProNews.
It’s facts, evidence, reason, and related we pursue at MHProNews. Insights and information are then shared with manufactured housing readers and investors through the lens of how it impacts the industry.
With that tee-up, let’s examine how a financing related issue dramatically changed the manufactured home industry, as told to MHProNews from voices in or associated with the Arlington, VA based Manufactured Housing Institute (MHI).
Inside MHI and Financing, and MH Consumers
The industry’s retailers and communities didn’t have to hear from Harvard’s Eric Belsky to know that credit – access to capital and financing – are essential to manufactured housing.
The industry’s consumer groups have also protested what then CFED’s Doug Ryan – who today is Prosperity Now’s point-man for manufactured housing issues – called Clayton’s monopoly on manufactured home lending. Ryan said that in an article published by American Banker.
What MHI insiders have stressed to the Daily Business News on MHProNews is that the consumer groups offered during the Obama Administration to compromise with MHI.
‘They [MHI] are now trying to sell S 2155 as an accomplishment, as a win by MHI,’ said one source. “But MHI specifically rejected that same deal with consumer groups about 4 years ago.’
“Stomping” and MHI’s Dick Jennison
A caller told our publisher that when L.A. ‘Tony’ Kovach sends a message to MHI’s team members, asking for a comment, or sharing some information, those messages are supposed to be forwarded by staff to MHI’s President, Richard ‘Dick’ Jennison.
“He will come stomping out of his office” in anger said the caller. Another source at MHI said that “Dick [Jennison] gets red-faced when he gets upset” – including, but not limited to, those messages.
MHI will work with alternative bloggers and trade media competitors, in an effort to try to counter news coverage by MHProNews, or some report by the Manufactured Housing Association for Regulatory Reform, explained a person privy to such details.
Without specifically using those words, these sources were saying that MHI strives to ‘control the narrative’ as much as they can.
MHI team members have traditionally been a mix of both Democrats and Republicans, explained one. They don’t necessarily do that formally, but that has been the modus operandi (MO – method of operation) for years, explained that source, who believed it was a good association practice.
MHI felt the heat rising from the grass roots of the industry about financing and Dodd-Frank, explained one. They felt they had to “do something” to get what looked like a win on the heavy regulations coming out of the Consumer Financial Protection Bureau (CFPB).
But they could have had that same win with the MLO rule years ago, simply by making that agreement with the consumer groups. It would have required no legislation in Congress, because it would have been done via the CFPB. That would have “saved millions of lobbying [and overhead] dollars in the process.”
For anyone who’s business was negatively impacted by those years of regulatory overreach during the Obama era, they are potent admissions that imply what were avoidable burdens and costs for thousands of industry companies.
Attempted Choke Hold on Information, “Scandal…”
“Dick, wants to hold things very close to the vest.” There are circles within MHI staff, and circles within MHI members, per several insider sources.
The division boards and staff may make recommendations, but it’s the MHI Executive Committee that has the power.
“The Executive Committee tasked Dick with carefully managing the budget. He’s done that to their satisfaction,” said a known voice.
Meanwhile, an MHI VP has told MHProNews that Jennison “didn’t really understand, or much care about, the industry itself.” Additional details on that will be part of an upcoming related report.
“Dick’s job [at MHI] isn’t lobbying per se. It’s to manage the people, and [to] manage the budget.”
Reacting to those MHI insider comments, one industry professional and longtime association member said that it’s not “the millions wasted on lobbying Dodd-Frank” that bothers him “as much as the billions in lost business or [business] valuations caused by MHI’s failure to compromise with consumer groups on Dodd-Frank. That’s the scandal.”
“Some of the professionals they essentially put out of business were longtime industry friends of mine,” said a retailer. “I pray that Republicans hold the Congress, and that in the next two years the Feds expand their investigation into the market manipulation of manufactured housing that’s taken place. Buffett’s control of the industry through crony Democratic capitalism is an issue that could unite the left and the right. It’s cost taxpayers, homeowners, housing seekers, and small businesses like myself tremendously.”
An MHI member producer said that wiping out thousands of the independents in retail “hobbled every non-vertical producer” in the industry.
Manufactured Housing Industry, New HUD Code Home Retailing – More Exploring, Going Vertical
Another interesting observation was from one caller, who described them-self as not being crazy about MHARR because of style. But that person admitted that what they, MHProNews and others have often forced the much larger Manufactured Housing Institute (MHI) to pivot or change course.
The insights above confirmed prior sources, some of those are linked in the ‘related reports’ that are found further below.
The bottom line on this issue is that capital and restrictions on financing that dramatically changed the industry could have in many cases been avoided and/or mitigated. As one put it, had MHI settled the high-cost lending and MLO rule issues 4 years ago, they could have been focused on exclusionary zoning or other larger issues instead.
This is part one of a planned multiple part series that will include tips and insights from industry insiders.
Motivations?
One of those noted above said that they wanted to get some things off their chest, and another that said they wanted more transparency, so that the industry can deal with the real issues, heal, and advance to its true potential. A third said that no other resource is as read as MHProNews, and this gave them the anonymity they needed to keep their job, and still share useful insights. Other motivations were mentioned by professionals involved in the above, but stating them could reveal the source.
More from inside MHI, Berkshire owned brands, and other organizations connected to the manufactured housing industry in the days ahead. “We Provide, You Decide.” (C) ## (News, analysis, and commentary.)
(Related Reports are further below. Third-party images and content are provided under fair use guidelines.)
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Related Reports:
S 2155, Manufactured Housing,”Economic Growth, Regulatory Relief, and Consumer Protection Act” Back Story
S. 2155 is poised to pass the House today. It’s styled ” Economic Growth, Regulatory Relief, and Consumer Protection Act.” Should the bill pass – and Skopos Labs/GovTrack say there is a 56 percent chance of enactment – then the following is what you can expect from the Arlington, VA based national manufactured housing association and their surrogates.
