In recent years regulatory impact has forced our industry into pretzel-like contortions. Consider the challenges faced by manufactured home communities. When options – such as "buy-here, pay-here" "captive finance" are tried, the ever growing cost of regulatory compliance threatens those methods. While a number of states have de minimus exemptions, not so with the Feds. With lease purchase options considered to be 'disguised credit transactions' by many experts, it is no wonder that numbers of communities have turned to doing straight home rentals in addition to HUD Code home sales. FYI, for those involved in or considering any of those captive finance programs, please see our hot, exclusive report, linked here. That aside, what are manufactured home retailers, communities and those who supply them to do in the face of not only market but regulatory challenges?

Before giving the two word answer, let's consider what a savvy MH leader told me two years ago.

"Tony, our Industry is built on the backs of buyers who are fundamentally not financeable." Ouch!

That's a bit of hyperbole to make the point, as finance sources such as CU Factory Built Lending, Triad, US Bank and regional lenders are making routine loans to people with 700+ FICO scores.

So that MH leader's point was we need to reach out to the more credit qualified buyers, and not be dependent on "get me done" buyers who are challenging to finance.

Without abandoning the lower end credit buyers who 'deserve a shot' at home ownership, why not embrace marketing to the better credit customers? Why not think of this two word solution:

Escape up

Nothing works with everyone, every time. But with clients and companies we've worked with in a variety of markets, competing creatively with realtors and conventional builders with manufactured homes routinely works. When you properly approach those conventional housing market shoppers with our modern factory built homes' value proposition, more than enough have the light bulb go off and pull the trigger to make it worth the effort.

As I'm writing this, low and behold, a guest article has come in from a respected, successful retail and community operator that underscores these points. The guest article is by a retailer who has listened to what we've preached here on MHProNews and at association and other events. They've put it to work. You can read for yourself what they have to say on the Industry Voices blog, we plan to post that guest column this weekend.

Here is one of the cool fringe benefits of reaching out to the better qualified buyers.

With those credit qualified buyers, you now have a number of third party finance options. Those loans to 700+ credit score customers have terms that are Dodd-Frank compliant. This can work in any state. To a question posted on LinkedIn, here is one of the possible answers. Simple.

Too Hard or Too Obvious?

But some will protest, "Tony! That means we'd have to...(shudder), change how we do things!"

So what else is new?

Change happens! Isn't captive finance, lease options, renting and all the rest of the changes that have often been forced upon your or your peers? Why not escape up, and learn to serve those better qualified buyers?

Let me swap my trade publisher's hat for a few moments for the consultant/sales trainer/web marketing hat instead.

I can tell you first hand how amazingly easy it is to write up the weak credit customer. If your operation sells homes, you know what I'm saying.

Some corporate and industry leaders privately admit that's why so many are 'bottom feeding' (their term) when it comes to selling people with low credit scores. They have sales people who want to rent or sell to poor credit customers; of course, it is easy.

But as MHARR Chairman and Sunshine Home's owner, John Bostick, likes to say, "Easy doesn't pay well."

Easy also leaves us vulnerable to the strong, regulatory winds.

Phyllis Knight said it

As you learn in our exclusive interview with Champion's Phyllis Knight, failure to pass HR 1779 or get the CFPB to modify regulations will cause "a debilitating impact" on our industry's financing. Keep in mind her finance background, as you ponder her words, and the fact that 21st Mortgage's Tim Williams has said similarly.

Are owners, executives and pros listening? Why not wake up and smell the coffee?

Escape up. It is where the opportunities are and necessary if we want to protect our industry's future. For every new HUD Code home shipped this year, we are likely to see about 9 to 10 new, single family conventional houses built for double the price.

The opportunities and the security are in Escaping Up.

Image

We will do a post soon on those who are joining others in committing to support the Industry's image building effort, know as ManufacturedHomeLivingNews.com. I can tell you all the reasons why this is necessary and why the timing is right for your business and for the industry in general. But let's turn it around, don't you think a better image would help us sell more homes?

Don't you think that an improved image will help us sell more homes to credit worthy customers?

Experience says yes.

We will pick this topic up in the light of some more specific examples in the days ahead. In the mean time, please do what other companies and associations are doing or committing to do:

• anyone can provide a hot link to MHLivingNews.com or use an RSS feed (found at the bottom right on the home page. Others are doing it because they get it, why not you!
• Associations, learn the ways we can team up with you to drive more sales in your state for the benefit of you and your members.
• Corporations, please join the growing list of corporate sponsors who have already or are committing to support this long overdue cause.

Team up with us to help you improve the image in your area, it will sell more homes to better credit customers. Escape up.

We need to work together to build a better industry. That teaming up process works for everyone involved at MH Industry trade shows, it already is and will work online in enhancing our industry's image too.

We should never abandon the entry level product, because it serves a critical and growing need in America. Lenders and pros should look closely at what Howard Banker from the Fair Mortgage Collaborative says about serving the customer with challenged credit. My reading of his comments are that there are ways to position the challenged credit buyer for success.  

But a potentially huge future for our industry can and will be found primarily by escaping up. ##

PS: Check our many Exclusive and Red Hot Featured Articles for August and see the

L. A. 'Tony' Kovach
ManufacturedHomeLivingNews.com | MHProNews.com |
Business and Public Marketing & Ads: B2B | B2C
Websites, Contract Marketing & Sales Training, Consulting, Speaking:

MHC-MD.com | LATonyKovach.com | Office 815-270-0500 |

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