Mobile Home Lenders Hard to Come by

Lending standards in the Mobile Home finance market have typically tightened during times of economic hardship. This is not surprising, but nevertheless not well received. The clenched standards that lending institutions are now maintaining for Manufactured Home loans can be compared to a farmer who drains all the nutrients from his soil as fast as possible. The agriculturist then blames at the grocer for his losses, rather than realizing that he is actually to blame for poisoning the well. The financial institutions have been taking advantage of the loose laws for nearly half a decade, all the while capitalizing by approving irresponsible financing to take place, then securitizing the loan and placing it elsewhere. Now the banks are doing the opposite to recover their losses by becoming overly cautious. Manufactured Home banks are using any excuse to reject completely sound loans.

Mobile Home mortgage agents are now in the position of not knowing who the new primary lender will be in the Mobile Home loan industry after the dust settles. In recent news the government has banned Taylor, Bean and Whitaker from providing any future investments backed by by the federal government. HUD said the institution failed to submit a necessary financial report, raising eyebrows at fraud concerns. The company was also instructed to cease in issuing MBS for Ginnie Mae. This firm was the former premier source of financing for manufactured housing, they lent nearly 13 percent of all Mobile Home loans in 2007, which were insured by the Federal Housing Administration.

Countrywide, Wells Fargo and JP Morgan are the remaining large mobile home investors, but they aren't as active as they once were in the Mobile Home loan insdustry. The small amount of lenders will likely lead to downsized competition, yieldning a high demand and therein, increased interest rates passed on to the consumer. In this scenario, the lenders have the advantage and will likely issue a limited number of loan programs available to refinance or finance a Manufactured Home in America.

Mobile Homes have been) the primary first step towards homeownership for lowerincome and senior citizens for a long time. Manufactured Home loan agents are discovering it difficult 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 market 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 Mobile 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 market is overtaken by a new investment company willing to emerge into a new market starving for capital.

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