First a quick history of how we got to this point. You probably remember all those ads a few years ago for 110% mortgages with no credit check? Or mortgage rates from 1%? Well, those didn’t exactly work out. In fact, as you probably already know, it resulted in the largest residential mortgage meltdown in U.S. history. Today, something like 25% of Americans are upside down in their mortgages. And around 10% of them are already in some form of default. Many of these borrowers are blaming the mortgage companies for leading them blindly into such a financial mess. Whether you buy onto that argument or not, it wasn’t hard for Washington to see this as a great political opportunity to show their extreme concern for the people (of course, not enough concern to actually do anything to fix those 25% of Americans who are upside down in their mortgages). So they came up with a terrific public relations concept: The Safe Act. This piece of legislation is supposed to protect all of us from the evil mortgage companies that seek only to enslave us into bad loans.

Here’s how it works. To enter into a mortgage, the individual doing the lending has to be licensed under the Safe Act. And they have to abide by certain covenants and restrictions on what they can and cannot lend on and how much they can charge. Somehow, this is going to stop mortgage abuse (kind of like how prohibition stopped drinking). The reality is that it causes all lenders to go through a pain-in-the-neck licensing process, pay about $1,000 in fees, and be subject to perpetual CPE classes.

Great, who cares? Well, if you sell mobile homes and carry the paper, then you better care, because you fall under the Act. While nobody knows for certain yet whether or not “rent-to-own” programs are included, the standard old sell and carry paper sure is. So you need to immediately contact your local Manufactured Housing Association and find out how the process works in your state. You do not, however, need to attend any expensive event to tell you about the Safe Act. Opportunists have popped up everywhere. You can get all the information you need for free from your state association.

Should you panic? No. First of all, the Act is so new, that many states have been able to buy time for it to actually take effect, so you may not already even be in default. Secondly, there will no doubt be a ton of lawsuits and case law to come, and the Act will probably morph into all kinds of things in the days ahead. But you need to know what’s going on, and if you need to begin the process to get licensed. Does everyone have to? No. If you sell no homes, or just rent homes, or sell homes for cash, then the Safe Act should have no effect on you. It only pertains to creating mortgages.

And there may be some help on the way. There is a huge push from the single-family housing industry to amend the Safe Act to not include any lender who is creating a mortgage on his own property. Apparently the geniuses in Washington forgot that there is a sizable market of individuals who buy stick-built housing and then sell and carry paper on them. And this credit market is among the few still making loans. So restricting the moms and pops of the world from creating home mortgages is a pretty stupid idea if the goal is to help keep home ownership within the grasp of many Americans. If the Safe Act was amended to exclude this group, and only focus on true mortgage companies who create loans on things they don’t own, then just about all mobile home park owners would be excluded from the law.

So don’t lose sleep over the Safe Act. Get the facts from your state manufactured housing association. Stay calm. Evaluate your position. Then act appropriately. If you only have a home or two to sell, maybe you should just sell them for cash and be done with it. You do have options.

And when it comes election time, you might remind your local candidate of how much you appreciate his hard work on the Safe Act – and kick him safely out of office!

Finally, at 8:30 pm, the caller called again and gave the lot number. Police responded and saw bullet holes in the exterior of the trailer. Inside was a man lying dead on the floor from multiple gunshot wounds.

Frank & Dave’s Analysis of This Story

While this is an extreme example, very often the tenants forget to give the lot number, or the lot number is not clearly marked, on 911 calls. The park owner will get in trouble with the police or fire department if they do not have clearly visible numbers on each mobile home. It can trigger much greater scrutiny by the city inspector or fire department if this happens, resulting in tighter enforcement of such issues as fire lanes. Numbers to put on homes are cheap at Walmart or Home Depot. Make sure that every home in your park is easily identified from the street. You can also turn in a map of your park to the police department, so that they can reference it in the event of a 911 call or emergency.

Frank & Dave’s Analysis of This Story:

There will be more stories like this in the months ahead, as troubles in the commercial real estate financing market are finally dealt with. Would this be a good mobile home park deal? It might be. Most banks have absolutely no desire to be in the mobile home park business. Could you get a loan on it? The first source might be Wachovia. They might be most interested in just putting this loan back into the “performing” category.

“Dallas is a great place to hold the Boot Camp since Frank and I have owned so many parks here” said Dave Reynolds, founder of Mobilehomeparkstore.com, the nation’s #1 website for the mobile home park industry. “We will be walking around a ton of parks – from 1 star to 5 star in quality – some of which we own or have owned. The whole point is to show you how to figure out if a park is a good buy or bad buy, using every shortcut, insider secret and trick we know.”

Many of the attendees go on to buy successful mobile home parks within a few months of the course. “I think we have, by far, the best track-record of people who can act on the information we present. We try to always show the reality of the business, and walk you through the process from indentifying properties to making offers, doing due diligence, finding funding, closing and operating them. Maybe that’s because we’ve personally bought about 100 of them.”

For more information, call (800) 950-1364 or go to www.mobilehomeparkstore.com. These events always sell out, and all tickets are sold on a first come – first served basis.

The trailer on lot #29 is listed at $495,000.

Frank & Dave’s Analysis of This Story:
Can you imagine reading this article if you were they guy who let this thing go back to the bank in 1976? Assuming the average lot, without ocean frontage, sells for $200,000, then this park would be worth $40,000,000! In 1976, it probably had a note of $400,000 or so. It’s still not the most valuable mobile home park in the U.S., which honor arguably goes to Paradise Cove Mobile Home Park in Malibu, California.

All of the mobile homes in the park were destroyed, including the park office. Following the flood, the park had to replace all of its infrastructure at a cost of nearly $200,000.  The park now has 11 occupied lots, after the rebuilding.  “I think it was a freak thing” Amrozowicz said. “It hadn’t happened in a hundred years. I don’t think it’s ever going to happen again”.

Frank & Dave’s Analysis of This Story:
Can you handle this? Complete loss of income, $200,000 out of pocket, and then only 11 units occupied, down from 35? If not, don’t buy a park in the floodplain. Maybe it won’t happen again. But would you invest your life savings on that gamble?

Kurt D. Kelley
President
Mobile Insurance
25775 Oak Ridge Drive, Suite 110
The Woodlands, TX 77380
(281) 367-9266, ext. 17
(281) 292-7429 fax
email Kurt@mobileagency.com
www.MobileAgency.com
Member of the American Insurance Alliance

The dog has been euthanized and is being tested for rabies.  Police said that charges against the dog’s owners will come shortly. 

Frank & Dave’s Analysis of This Story:

Do you think the lawsuit will end with just the tenant, who probably has no insurance or assets? No, the park owner is in trouble here.  We cannot emphasize enough that you cannot allow pit bulls and other dangerous breeds in your park, and certainly never in any circumstance that can allow them to roam free or attack through a fence.

If you have a small dog roaming the park, you call animal control. If you have a pit bull or similar breed roaming the park, you call 911. These animals are on par with a 5 year old roaming the park with a loaded shotgun.

Charles Podany, a resident of the mobile home park, approached a vehicle that contained Casey Landes, and asked the vehicle to slow down while driving through the park due to children at play. Landes became enraged and knocked Podany off this bike and started beating him. Podany, who has a license to carry a concealed handgun, pulled out a .40 caliber automatic and shot Landes twice, killing him. Toxicology tests showed that Landes had a .28 blood alcohol reading, while a reading of 08 is considered intoxicated

A judge ruled that the shooting was justifiable self-defense. The lawsuit has left almost everyone involved baffled.

Frank & Dave’s analysis of this story:

Mobile home park tenants never fail to amaze us. But what’s even more amazing is a legal system that allows this kind of blatantly frivolous suit to be filed without being immediately struck down by a judge. The park will have to spend thousands in legal fees to defend against a suit so pathetic that not one person interviewed for the article could even come up with a rational argument that could be used in court.

The moral is to carry plenty of insurance on your park, plus have solid asset formation strategies for liability protection. And it wouldn’t hurt to mention lawsuit reform if you are ever asked at a town forum as to what’s wrong with America.