Finance & Investment Articles - Its Hard to Find a Good Mobile Home Lender


by JOHN CAIN - Date: 2009-12-18 - Word Count: 683 Share This!

Lending standards in the Mobile Home finance insdustry have naturally become restricted during times of economic crisis. This is not surprising, but still unwelcome. The tight standards that banks are now maintaining for Manufactured Home loans is similar to a agriculturist who depletes all the nutrients from his dirt as fast as possible. The agriculturist then points the finger at the grocery store for his losses, rather than accepting that he himself is actually responsible for poisoning his crop. The banks have been reaping the benefits of the loose legislation for nearly half a decade, while profiting from approving unwise financing to occur, 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 lending institutions are using any excuse to decline even the lowest risk loans.

Manufactured Home loan agents are now left asking who the new primary lender will be in the Manufactured Home loan community after the dust settles. In recent news the government has blocked Taylor, Bean and Whitaker from providing any future investments insured by the federal government. HUD believes Taylor did not submit a necessary financial report, raising eyebrows at fraud concerns. The company was also ordered to cease in issuing mortgage backed securities for Ginnie Mae. Taylor was the No. 1 source of funds for mobile housing, they provided financing for nearly 13 percent of all Manufactured Home loans in 2007, which were insured by the Federal Housing Administration.

Countrywide, Wells Fargo and JP Morgan are the remaining large manufactured home lenders, however they aren't as active as they once were in the Manufactured Home loan market. The small number of lenders will lead to reduced competition, yieldning a high demand and therefore, higher 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 Mobile Home in America.

Mobile Homes have been) the first step in the direction of property ownership for lowincome and senior citizens for a long time. Mobile Home loan brokers are finding 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 Mobile 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 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.


Related Tags: finance, loan, loans, refinancing, financing, refinance, lender, refi, manufactured home, mobile home

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