Josh Ducharme, San Antonio Credit Union (SACU) Mountainside Financial division’s Business Development Executive, tells MHProNews that hundreds of manufactured housing businesses have been or are providing lending to customers using variations of the captive finance concept.
This practice now requires increased licensure, explains Ducharme, for individuals and businesses under Dodd-Frank.
Businesses providing loans without being licensed are out-of-compliance with the new regulations enforced by the Consumer Financial Protection Bureau (CFPB). A robust sampling of views on the subject of ‘Can Captive Financing be done Successfully in Today’s Environment,’ are linked here.
Ducharme states: “There are common-sense, regulatory compliant options for business owners who want to address the non-compliant captive financing within their portfolio and do it in a way that will free up their cash.”
Ducharme points to ominous facts, such as the CFPB handing out huge fines. Bank of America recently settled a CFPB claim for $700 million. As the Daily Business News recently reported, Wells Fargo settled a steering complaint to the tune of $175 million. Banks that size spend millions each year on regulatory compliance, yet they still fell short of the government’s regulations for compliance.
“Why not let the bank be the bank?” was a key point made in the new Industry in Focus report.
The following list should be considered before choosing to start or continue to provide captive financing:
Training and Education of your staff
The establishment of legally compliant written policy and procedures
Ongoing changes in regulations, which can be so complex that even community banks are exiting the banking/lending business.
As a business owner or manager, it’s important to offer customers as many financing options as possible. Due to regulatory risk, some Manufactured Home Community operators have ended their captive finance originations. The complete, graphically rich with facts and examples filled report is linked here.##
(Top photo credit: Google Images/Shutterstock. Josh Duscharme photo, MHProNews.)