MHWeekly » Manufactured Home Loan

WELLS FARGO RELEASES FOURTH EDITION OF ITS MANUFACTURED HOME COMMUNITY FINANCING HANDBOOK

Frank Rolfe — Fri, 26 Mar 2010 16:16:15 +0000

CARLSBAD, CA March 24, 2010 -Wells Fargo (NYSE:WFC) has released the Fourth Edition of its Manufactured Home Community Financing Handbook (attached hereto) created by Tony Petosa (tpetosa@wellsfargo.com) and Nick Bertino (nick.bertino@wellsfargo.com) of Wells Fargo’s Multifamily Capital office in Carlsbad, California.

The latest edition of the financing handbook features a preface by the authors discussing the current state of the commercial real estate financing market and future prospects. Also included is an expanded section on Fannie Mae financing for manufactured home communities.

Wells Fargo provides Fannie Mae and portfolio loan programs for manufactured home communities (”MHC”) nationwide. Since 2000, Wells Fargo Bank has originated in excess of $4.3 billion in financing within the MHC sector. Wells Fargo was named Community Lender of the Year, three years in a row, by the Manufactured Housing Institute; and since 2000, has been #1 in total loan volume origination according to George Allen’s annual National Registry of Land-Lease Community Lenders.

Click Here to Download the Report

For more information, contact:
Tony Petosa
(760) 438-2153
Senior Vice President
tpetosa@wellsfargo.com

Nick Bertino
Vice President
(760) 438-2692
nick.bertino@wellsfargo.com

Fema To Sell 160,000 Trailers By April 3

Frank Rolfe — Sun, 14 Mar 2010 16:01:52 +0000

The Federal Government is auctioning around 160,000 trailers on or around April 3. And they are being sold for any use other than a dwelling. These are the RVs and mobile homes that the government acknowledges contain not only formaldehyde, but also mold, mildew and propane gas leaks. All units sold will have large stickers on them warning that they are not suitable for any type of housing.

Despite criticism by many groups claiming that the government is creating a nightmare by allowing these trailers to be sold without any oversight as to what they are actually used for, the government has decided to move ahead with the sale, since it has spent $220,000,000 in storage fees on these units over just the last three years.

Building inspectors in Fenton, Missouri recently found Katrina units, sold to be scrapped, being used for housing at a mobile home park. “What if Toyota ordered a recall, then simply put a sticker on its vehicles saying that they were “unfit to drive” before re-selling them?” said Becky Gillette of the Sierra Club.

The sale is under review by the Justice Department.

Frank & Dave’s Analysis of This Story:

You have to hand it to the U.S. government. Where else can you find people dumb enough to spend $220,000,000 just to store trailers. That works out to $40 per month per trailer, which is what a normal retail self-storage facility would charge. Do you think they might have asked for a volume discount? That’s $40 per month for a vacant field with no infrastructure. too. We remember when Katrina hit and the government was renting every available lot in Louisiana for about $600 per month when the market rent was $150 – and then never used most of the lots but kept paying anyway. Now you know where the federal deficit came from.

You will need to be especially observant, after the auction is completed, to make sure any park-owned home you buy does not have the “sticker” and is O.K. to be used as a dwelling. We imagine some special designation will be made on the title. But it’s one more thing to worry about when you are looking at trailers to buy.

An Insider’s Guide To The Safe Act

Frank Rolfe — Fri, 05 Mar 2010 20:52:00 +0000

There are probably few pieces of legislation in history that are more flawed and harder to understand than the Safe Act. And what was designed to safeguard average Americans from the abuse of the mortgage industry has actually turned into a costly, inefficient mess that will no doubt result in nothing more than removing a vast amount of available credit from the market at the worst possible time.

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!

Wachovia Bank Wins Foreclosure On Homestead Mobile Home Park

Frank Rolfe — Fri, 05 Mar 2010 20:46:29 +0000

Wachovia Bank has foreclosed on Homestead Mobile Home Park, in which it had a $9.8 million mortgage. Homestead Mobile Home Park is located in south Florida.
Wachovia had made a $9.8 million loan on Homestead in 2006, when it was purchased by Washington, D.C.-based developer Yale-Stead Associates for $13.5 million. Yale-Stead had planned on tearing down the mobile home park and building a 204 unit apartment complex on the site, and had arranged a $50 million line of credit to build the facility. However, due to problems in the credit market, the complex was never built.

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.

The new SAFE Act: Are You Compliant?

Dave Reynolds — Fri, 26 Feb 2010 17:25:30 +0000

The SAFE act is new federal law designed to assist with the recovery of America’s residential housing market. It is intended to modernize the Federal Housing Administration, reduce foreclosures, enhance consumer protections, and reduce mortgage fraud by establishing minimum standards for the licensing and registration of state-licensed mortgage loan originators. If you sell manufactured homes, provisions in this law likely apply to you. All states must have a licensing and regulation system in place by July 31, 2010 (for states that meet biennially) or July 31, 2009 (for states that meet annually). For a more complete overview of the SAFE act, visit the HUD website http://www.hud.gov/offices/hsg/ramh/safe/smlicact.cfm
Community owners and retailers that finance home sales, and those that are compensated financially by finance companies for sending them loan customers, will need to acquire a “Mortgage Loan Originator (MLO)” license. Acquiring this license will require attending a 20 hour class, passing a test, passing a criminal background check, paying a fee, and carrying a MLO $25,000 bond. Check with your state government for the details on getting the MLO license. Mobile Insurance at 800-458-4320, can write your MLO bond.
It’s unclear at this time in many states whether communities and retailers who simply help an applicant complete a home loan application and forward it on to a finance company, without being compensated for doing so, will have to carry a MLO license. You should check with your state’s Manufactured Home Association and or legal counsel for detailed direction. The penalties for not being compliant can be severe.

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

MISCONCEPTIONS OF MOBILE HOME PARK FINANCING

Dave Reynolds — Thu, 18 Feb 2010 22:56:05 +0000

The greatest misconception about financing Mobile Home Parks is that the lender who finances the park will also finance the homes. The fact is that nothing could further from the truth since the value of the homes are of no value to the lending institutions. The reason is that the homes depreciate in value, people tend to trash them when they leave, and even if the tongues are cut off, they can always be welded back on and the home

can be towed off. Rent from the homes is not applied to the income of the park, but depending on the financials of the borrower and the park, in some instances the income from the homes may be considered as personal income.

The ideal scenario for an investor is to seek a park that has no park owned homes because there are no problems getting it financed and there is no maintenance to contend with for the homes. However, there is still hope for parks with park owned homes since there are ways to get the job done providing a little creativity is shown by the seller, buyer and mortgage broker. Some lenders will allow seller seconds, with restrictions, and some will allow for the seller to finance the homes on a separate deal from the real estate since there are lenders who will finance the homes only
- which offers an option. Many lenders have a 25% limit on park owned homes, and there are lenders who are more liberal and have no limit.

The following is a guideline for buyers to keep in mind when looking for a Mobile Home Park. Very basically the types of loans available can be divided in to 2 groups – Small Balance Loans and Conventional Loans.

Small Balance Loans – $250,000 to $2.5 million range, no limit on park owned homes, allow gravel streets and driveways, must be permanently attached, 85% max loan to value depending on credit scores and the debt service ratio which the required minimum is 1.2, 650 minimum mid score, minimal paper work, seller seconds negotiable, only partial environmental’s required, Interest rates are a little higher than with conventional loans but up front costs are much lower. These are the easiest loans to get and usually close in 30-45 days.

Conventional Loans – $500,000 to $10 million range, 20% max park owned homes, hard top streets and possible gravel driveways, must be permanently attached, 80% max loan to value, 1.2 debt service ratio, 650 minimum mid score, full documentation, seller seconds negotiable, partial to full environmentals required, and generally close in 4-6 weeks.

When buying any commercial property with a business, the type deal a borrower will get depends on the credit scores and financials plus the profitability of the park. Lets face it, the better the financials of the borrower and the park the better the deal. Another point worth mentioning is that owner occupied properties get about a half point interest rate break versus remote investor. I recommend getting as much park data as you can in writing plus digital pictures and lining up your finances before making an offer – I can assure you that you will save a lot of time, money, aggravation and will eliminate any surprises.

Buddy Dufau
Residential and Commercial Mortgage Company
Sevierville, Tn
865-428-6995
buddydufau1@msn.com

In case you need background information, I am a petroleum engineer with a successful 32 years experience in industrial engineered pump sales and have been doing commercial mortgages with my wife Kathy, who is an accountant and previous business broker, for the past 7 years.

Mobile Home and Mobile Home Park Lender Contest

Dave Reynolds — Thu, 11 Feb 2010 08:19:46 +0000

We all know how hard it is to find a lender in today’s economy for mobile homes and mobile home parks. This month’s contest will entail a search for all local, regional, and national lenders that will loan on mobile homes and/or mobile home parks. We will put together a list of all the submissions that we get and send a copy of this list to all those who send in at least one suggestion. Please send the lender’s company name, contact name, phone, and email to dave@mhps.com and I will put together the list.

Also, as part of the contest, we will draw one name at the end of February for a free copy of our Mobile Home Park Home Study Course.