Why Potential New MH Lenders Hesitate Entering the MH Market – What MHCs can do to boost lending

Tony,
Shine your spotlight on this topic, please. 

Our firm made loans in a nice manufactured home community.  One of those home loans defaulted. 

We contacted the property manager when we repossessed it in November of 2014 and told her that we would like to leave the home there and we would pay them a 10% commission to sell it. She said, great we can move it quickly, especially since it’s in such good condition. (Older lady lived in it and died – see photos).

Our field rep made periodic calls and even explained our special rate that we would offer applicants on any of our firms repossessed homes. 

Anyway longer story short, that manager is gone. 

The field rep called on the new manager. This one now says the home will never sell, however “we will give you $10,000 for it.” NADA current value is $48,900. So we didn’t want to do sell for that 10k price, of course.

Now we are getting threats for $5,700 in past due lot rent, though our agreement prohibited that. 

When will the community owners in your MH industry realize that there are reasons why so few lenders are left in MH? Sure, CFPB

regulations are a negative factor. But another negative is the poor  professional behavior that flows from some, not all, manufactured home community owners and managers.

Please publish this, but withhold the names involved for now. Maybe, just maybe, that kind of community manager or owner will think about how embarrassing it would be if their names were published in connection with such short sighted behavior.

Thanks for all you do to advance MH. It’s a great industry, but some behave like it’s still the “trailer house” days. ##

(Editor’s Note: on occasion, MHProNews will publish letters-to-the-editor or OpEds sans the name and/or company who supplied it. That is done entirely at our discretion. But part of the rule of thumb we follow is this: is the person someone we know, and the item under discussion important and sensitive enough, to warrant publishing it anonymously? This letter fits all of those check boxes for us. The photos of the home shown were only part of the documentation provided to us by the sender of this lender.

As a consultant to the industry, and as an editor, I would agree with the writer on the following points: it is short sighted and costly to the firm involved and to the industry-at-large when a community operator or retailer tries to ‘steal’ a home from a lender.

The successful exit of lenders (as well as home owners) from a home they own is a key component to protecting existing lenders, and encouraging new ones to enter into the MH lending space. The cost in terms of lost opportunities far outweighs the short term profit gained from ‘stealing’ a house.

We hope the upper management for the community in question will realize the error made, and will make good with this lender – treating them as a “partner,” rather than a “mark.” Should the lender opt to litigate this matter, we can foresee reporting that as news in the Daily Business News.

Final thought for now. For those considering lending on manufactured homes, there is documentation and processes that have successfully been put into place by MH lenders. “Park agreements” that cover such matters are part of that documentation. Most communities will honor the park agreements they enter into, and the current lenders all report being profitable. Even when U.S. Bank exited MH lending, they reported they were profitable – they pulled out of MH lending for other reasons, not due to a lack of profitability. We know a number of firms interested in entering the MH lending space, and a story like this should be a reason for dotting i’s and crossing t’s, as opposed to not making a move that can be a mutual victory to prospective lenders and their customers.

Other comments on this topic or related are welcome.)