Manufactured Home Investors Hard to Come by

Loan standards in the Manufactured Home finance insdustry have naturally tightened during periods of economic crisis. This is expected, but still unwelcome. The clenched standards that lending institutions are now maintaining for Mobile Home finance is similar to a farmer who drains all the resources from his dirt as fast as possible. The agriculturist then blames at the grocery store for his loss in livelihood, instead of realizing that he is truly responsible for poisoning his crop. The financial institutions have been reaping the benefits of the relaxed legislation for nearly half a decade, all the while capitalizing by allowing unwise lending to take place, then securitizing it and placing it elsewhere. Now the banks are doing the opposite to recover their losses by becoming overly cautious. Manufactured Home lending institutions are finding phantom reasons to decline even the lowest risk loans.

Mobile Home loan agents are now left asking who the new primary funding institution will be in the Mobile Home loan industry after this economic crisis. Recently the fed has blocked Taylor, Bean and Whitaker from making any future investments insured by the federal government. HUD said the institution failed to submit a necessary financial report, which amounted to fraud concerns. The company was also ordered to desist from issuing MBS for Ginnie Mae. Taylor was the No. 1 source of funds for mobile homes, they lent nearly 13 percent of all Mobile Home investments in 2007, which were insured by the FHA.

Countrywide, Wells Fargo and JP Morgan are the remaining large mobile home lenders, but they aren't as active as they once were in the Manufactured Home loan insdustry. The small amount of lenders will lead to downsized competition, likely resulting in a high demand and therein, increased interest rates. Because of this situation, the lenders have the upper hand and will probably only issue a limited number of loan programs available to refinance or finance a Mobile Home in America.

Manufactured Homes have been) the primary first step in the direction of homeownership for lowincome and senior citizens for a long time. Manufactured Home loan agents are discovering it more and more challenging to find new sources of mobile home funding from a group of lenders that has shrunk during the past several years. Manufactured houses, which are factory-built in parts and then put together at a land site, are significantly less expensive than traditional homes. According to the Commerce Department, the average price for a Manufactured Home in 2008 was $65K, much lower than the average price of $292K for a site-built home.

Strangely, Warren Buffet's Berkshire Hathaway revealed recently that in this current housing/banking crisis, their Manufactured Home customers are foreclosing less and making their loan payments more. Berkshire subsidiary Clayton Homes' delinquency rates for mobile home loans have also been stable during these times of turmoil: the delinquency rate was 3.26% in 2004; it was at 3.5% in 2008; and now it's 3.82% here in 2009. However, the delinquency rate in the traditional housing insdustry is higher, around 6.4%. Annual credit losses are running steady at a reasonable 1.5% of the loan portfolio. It is worth mentioning, however, that Clayton does not securitize their loans. This means the loans remain on their books, so they are much more conservative in their loan approval process.

This seems like a paradox, but it should make Mobile Home loans a logical consideration among the possible lenders that are looking to emerge into a lucrative new niche market. Which leaves everyone in the Manufactured Home community asking the question: Who will step up to the plate to be the leading Mobile Home Lender? It is possible that Warren Buffet will step up to the plate, but his big investments and movements lately have seemed incongruous. He may move to a low-stakes table, while the Manufactured Home financing insdustry is overtaken by a new investment company willing to emerge into a new insdustry starving for capital.

CAMHF is a licensed mobile home finance expert. They have helped hundreds of families in California get a manufactured home refinance.