MHARR, as part of in its continuing effort to expand the currently limited availability of manufactured home consumer financing (public, private and particularly chattel), recently released information concerning a sole-source contract between Vanderbilt Mortgage and Finance, Inc. (Vanderbilt) and the Government National Mortgage Association (GNMA) (see, September 23, 2013 MHARR Washington Update, “Vanderbilt Sole Source Contract Raises Questions”). Since that time, an industry publication has stated that the initial report: “seems to included (sic) an error in fact… For the record, there are two manufactured housing lenders who can originate Title I loans, Vanderbilt and 21st Mortgage.” This statement now warrants the disclosure of further and additional information concerning this matter.
First the federal government document required by law to authorize a sole-source contract – the “Justification for Other Than Full and Fair Competition” – specifically states that Vanderbilt is the only GNMA Federal Housing Administration (FHA) Title I program issuer that reapplied (under the new 10-10 rule) and the only GNMA issuer “currently active in the manufactured housing program.” The relevant portions of the sole source justification document thus state:
“The Government National Mortgage Association (Ginnie Mae) hereby requests a sole source contract with Vanderbilt Mortgage and Finance, Inc. The current contract expires on April 30, 2013. This requirement requires a contractor to be a Ginnie Mae issuer and an approved [FHA] Title I mortgagee in good standing.”
“This action is taken under authority of 41 U.S.C. 253(c)(2), FAR 6.302-1 – only one responsible source and no other supplies or services will satisfy [the] agency requirement. Issuers had to meet and maintain a minimum adjusted net worth valuation of $10 million plus ten percent of each of the following: a) 10 percent of the dollar amount of all manufactured housing MBS outstanding; b) 10 percent of the outstanding balance of the issuer’s commitment line balance; and c) ten percent of the outstanding balance of all pools funded by the issuer.
The old Title I program was retired as of April 2009 by FHA and a new program was announced at that time. Ginnie Mae announce its support for the new program as of October 2010 with an updated set of requirements for issuers. All the previous Title I manufactured housing issuers needed to re-apply to operate under the new program. *** Vanderbilt is the only GNMA issuer who reapplied and is currently active in the manufactured housing program.” (Emphasis added).
(For complete details of the Vanderbilt-GNMA sole source contract, readers should go to www.fbo.gov/index, locate the Manufactured Housing Master Subservicer Solicitation, Solicitation Number: DU100G-13-R-0002 (May 1, 2013) and click on Manufactured Housing Master Subservicer.pdf.)
Consequently, either this official government document is correct, and Vanderbilt is the “only GNMA issuer who reapplied and is currently active in the [FHA Title I] manufactured housing program,” or the basis and justification for “other than full and fair competition,” signed by two high-ranking program officials, was false. In either case, this entire matter, as MHARR has stated, warrants further inquiry – which MHARR will pursue.
Second, even if the “Justification for Other Than Full and Fair Competition” is not accurate and both Vanderbilt and 21stMortgage are approved FHA Title I issuers, the distinction has little if any real meaning in the financing marketplace, as both Vanderbilt and 21st Mortgage are ultimately owned by the same parent corporation — Berkshire-Hathaway — together with Clayton Homes, Inc. and other industry businesses.
21st Mortgage’s internet web-page thus states: “[W]ith the financial backing of Berkshire Hathaway, 21st Mortgage now ranks as the largest provider of financing for manufactured home buyers. Since its acquisition by Berkshire Hathaway, 21st Mortgage has been offering inventory financing to retailers.” Similarly, Vanderbilt’s internet web-page states: “Vanderbilt Mortgage and Finance, Inc. is aBerkshire Hathaway Company that specializes in financing for manufactured homes.” (Emphasis added). The common corporate ownership of these companies makes their existence as separate entities a legal technicality that does not change the facts in the marketplace, for the industry or for consumers.
Beyond these two facts, the same industry publication points to other finance companies that either: (1) confirmed they could not meet the GNMA 10-10 criteria; or (2) do not offer FHA Title I financing “for a variety of reasons” — without offering further explanation. However, far from refuting MHARR’s central premise, this simply confirms that discriminatory federal policies are undermining the availability of manufactured home financing by making qualification so difficult that it effectively limits financing sources, thereby placing an artificial cap on industry growth.
Quite simply, with the manufactured housing industry building its best homes ever, with installation standards and consumer satisfaction programs now in place as a result of the 2000 reform law, and with the housing market steadily improving, the industry’s stagnation, at or near 55,000 homes annually, can be directly attributed to the unavailability of consumer financing and most particularly the unavailability of high-volume securitization for the chattel financing that comprises 76% of manufactured home placements. This should be unacceptable to every member of the industry.
To inform and educate industry members on these critical matters that are rooted in the nation’s capital, and with only one print media source left in the industry, MHARR will continue to share its findings with the rest of the industry, as warranted.
(Editor’s Note: MHProNews.com has reverified with an informed source at 21st Mortgage that they can originate FHA Title I loans. MHProNews thus stands by its commentary and analysis, found at this link here: http://MHProNews.com/blogs/tonykovach/can-we-all-get-focused-please/) ##
