Top National News
Commercial Lenders More Aggressive as Economy Heals
The economy is slowly improving and so are commercial real estate fundamentals, according to the general consensus at the Mortgage Bankers Association’s recent Commercial Real Estate Finance/Multifamily Conference in San Diego. Peter Gineris, senior vice president of debt and equity at CBRE/Capital Markets in Albuquerque, says the mortgage markets have more liquidity now than in 2007, different types of financing are available, and competition among lenders will pick up this year. Although credit spreads have narrowed over the last two quarters, he says they cannot move much lower, so borrowers will see any increases in Treasury yields passed on to them. The third quarter of 2012 saw a shift toward more aggressive lending, and an increase in payoffs and a decrease in problem loans mean lenders have room on their balance sheets for CRE loans. Non-recourse lending has returned in some markets, and some banks are granting loans with seven-year terms or longer. Gineris expects larger lenders to invest in “first tier” cities, with small and medium-size lenders beefing up activity in smaller markets.
From “Commercial Lenders More Aggressive as Economy Heals”
Albuquerque Journal (04/22/13) Gineris, Peter J.
Americans’ Optimism About Home Prices Surges This Year
Gallup’s annual Economy and Personal Finance Survey of more than 2,000 Americans and 1,400 homeowners reveals that more than half believe average home prices in their areas will rise over the next year, marking the first time that figure has topped 50 percent in six years. Regionally, 62 percent of those from the West expect home prices to rise, compared to slightly less than 50 percent in other parts of the country. Sixty-three percent of homeowners polled say their houses are worth more than the purchase price, up from 53 percent in 2012. By age, 52 percent of homeowners under age 50 and 71 percent of those aged 50 and up say their homes are worth more than when they bought them. The finding signals that younger homeowners made more recent purchases and were more affected by the housing downturn. An estimated 73 percent of respondents believe now is a good time to buy, marking a 10-year high; that figure was 87 percent among those earning $75,000 or more, 76 percent among middle-income Americans, and 55 percent among those earning less than $30,000. The survey indicates that the housing market has stabilized, residential prices are on the rise, and upper-income Americans are the most optimistic about home purchases.
From “Americans’ Optimism About Home Prices Surges This Year”
Gallup Economy (04/18/13) Jones, Jeffrey M.
Smith Earns Promotion
Nathan Smith, a member of the Manufactured Housing Institute’s PAC Board of Trustees, now is also the organization’s chairman. Smith previously held leadership positions not only within MHI at the national level but also at the state level through the Indiana Manufactured Housing Association and the Kentucky Manufactured Housing Institute. He is a partner in SSK Communities — which sells, finances, and insures manufactured homes as well as manages manufactured home communities in Kentucky, Ohio, and Indiana.
From “Smith Earns Promotion”
Cincinnati.com (OH) (03/29/13)
Champion Home Builders Wins Modular Building Institute’s ‘Best of Show’
Champion Home Builders’ off-campus student housing project in New York has won it the Modular Building Institute’s Best of Show award for 2013. The four-story modular structure, including one- to three-bedroom apartments, houses student and faculty of Cornell University in Ithaca. “Champion works hard to manufacture the best buildings in the industry and we are incredibly pleased to be recognized by the modular building industry and our peers with this honor,” Champion Home Builders CEO Jack Lawless remarked. “The modules for the Cornell project were placed on the podium in just five working days, a premier example of a major benefit of the modular building process.”
From “Champion Home Builders Wins Modular Building Institute’s ‘Best of Show'”
PR Web (03/26/13)
YES! Communities Acquires 64 Manufactured Housing Communities
Denver-based YES! Communities has closed on its purchase of 64 manufactured home communities from American Residential Communities (ARC), also based in Denver. Under the terms of the deal, YES! Communities gains more than 14,000 home sites in Atlanta, Ga.; Dallas, El Paso, and Corpus Christi, Texas; and Los Alamos and Las Cruces, N.M. It also agrees to take on 180 former ARC employees. Including the new properties, YES! Communities owns and operates 181 manufactured housing communities, including 46,000 individual lots, in 17 states.
From “YES! Communities Acquires 64 Manufactured Housing Communities”
International Business Times (04/05/13)
Manufactured Home Community Operator Buys on Dickerson Road
UMH Properties, based in New Jersey, is the new owner of Holiday Mobile Village — its fifth property in the mid-state region of Tennessee. The purchase price for the manufactured home community, which is 82 percent occupied, was $7.25 million. With its latest acquisition, UMH now owns a total of 1,263 developed home sites in middle Tennessee and an estimated 12,800 in all.
From “Manufactured Home Community Operator Buys on Dickerson Road”
Nashville Post (04/03/13) Lind, J.R.
Deer Valley Corporation Teams With CIS to Increase the Availability of Affordable Loans for Qualified Retail Buyers of Factory-Built Homes
Manufactured home builder Deer Valley Corp. confirms that, through its financing arm, it has entered into an arrangement that will increase the availability of retail financing for buyers of factory-built housing. The Tampa, FL-based company is providing a secured line of credit of up to $2.5 million to CIS Home Loans, which will use the money to fund “construction-to-permanent” mortgages for buyers of manufactured and modular homes. Such financing was largely shunned by banks following the financial meltdown of 2008, according to Deer Valley CEO Charles G. Masters. However, he adds, “This specific source of retail financing is very important to the entire housing industry, and because of the short construction time associated with manufactur[ed] housing and modular housing, the actual funding risk is exceptionally low.”
From “Deer Valley Corporation Teams With CIS to Increase the Availability of Affordable Loans for Qualified Retail Buyers of Factory-Built Homes”
Wall Street Journal (04/15/13)
Help Now Available for Debt-Plagued Manufactured Home Owners in Delaware
Officials in Delaware are using some of the state’s share of the National Mortgage Foreclosure Settlement to help distressed owners of manufactured homes. Previously, these homeowners had little recourse if they became delinquent on their mortgages or lot rents. Now, under the Manufactured Housing Assistance Program, they can receive up to $5,000 in assistance if they have suffered an income reduction of 15 percent or more due to illness, injury, or loss of employment through no fault of their own. The aid is delivered in the form of a zero-interest loan secured by a lien on the home; and it must be repaid if the property is refinanced or sold, if the title is transferred, or if the borrower relocates. The initiative was developed by the Delaware State Housing Authority (DSHA) and the office of Attorney General Beau Biden after talking with both manufactured home owners and landowners in the state. An estimated 11 percent of the housing supply in Delaware is made up of manufactured homes, but authorities have been challenged in finding an assistance solution for this segment of the population. “Now,” according to DSHA director Anas Ben Addi, “we have access to a funding source without any strings attached.”
From “Help Now Available for Debt-Plagued Manufactured Home Owners in Delaware”
Dover Post (04/17/13) Brown, Jeff
Manufactured Home Limits Challenged
Legislation proposed by North Carolina state Rep. Nathan Ramsey (R-Buncombe County) seeks equal zoning treatment of manufactured homes with other kinds of single-family housing. A number of counties have restrictions in place that block manufactured housing in some areas, which Ramsey says squeezes the availability of affordable homes. His measure, he explains, is “a response to so many people out there who own a piece of land, and the government says they can’t put a home they can afford on their land.” As written, the bill prohibits counties from adopting or enforcing regulations that exclude manufactured homes from being placed on individual lots in areas zoned for single-family residential use. An exception is provided for historic districts. Counties would still have the power to set design standards for manufactured homes.
From “Manufactured Home Limits Challenged”
Asheville Citizen-Times (04/13/13) Morrison, Clarke
NJ Sandy Victims Moving Into Modular Homes
A $1 million grant from the Robin Hood Foundation has made it possible for some victims of Superstorm Sandy to move into permanent, modular housing. The Affordable Housing Alliance used the funding to buy 17 modular homes in New Jersey, all of which will be inhabited by low-income residents whose previous homes or apartments were destroyed by the storm. After spending five months living in hotels, with friends, and in other temporary shelter, 65-year-old Mary Brooks has moved into in a two-bedroom modular home. She pays $850 per month for the house, which she heard about through a social service agency.
From “NJ Sandy Victims Moving Into Modular Homes”
Wall Street Journal (03/29/13)
Calendar Alert: 2013 NCC Fall Leadership Forum Announced
The National Communities Council is excited to announce the addition of a new leadership and networking event to be known as the NCC Fall Leadership Forum. The event will be held on October 16th-18th in downtown Chicago. This year’s theme for the annual event is “Building a Vision for the Future.” The NCC is pleased to report that Sam Zell, Chairman of Equity Group Investments, is a featured speaker at this year’s inaugural event.
While NCC staff and leadership are working through a variety of details, the plan is to host a networking event on the evening of Wednesday, October 16th, have a full day of programming plus a major networking event on Thursday, October 17th, and end the program by noon on Friday, October 18th. There will be significant networking opportunities throughout the event in the spirit of bringing industry leaders together, sharing knowledge, and building relationships.
David Lentz, NCC Chairman and President and CEO of American Land Lease, Inc., commented, “With the housing market recovery well underway and our members getting more and more excited about the future, we felt the time was right to create a flagship event that will signal the next phase of success for the NCC and growth for our industry. Our goal is to make the NCC Fall Leadership Forum a total knockout and the ‘can’t miss’ industry event of the fall. The terrific team at MHI is poised to make this a winner.” The intent is to offer an unparalleled program including industry veterans and leaders as well as strategic perspective from outside the industry that would be of interest to our industry’s leaders, including not just community owners, but also manufacturers, lenders, consultants, and service providers.
The NCC will continue to communicate information about this event as it develops but be sure to mark the calendar for October 16th-18th in Chicago. “Exciting things are happening for the NCC on many fronts,” noted NCC Vice President Jenny Hodge, “and we look forward to seeing you in Chicago.” To receive updates on this dynamic new event, go to www.mhcommunities.org/cm/calendar/RegInfo.asp to enter your contact information.
2013 National Congress & Expo for Manufactured and Modular Housing Held on April 16th-18th in Las Vegas
This year’s Congress & Expo attendance was the largest in several years. Thanks to our sponsors, exhibitors, and attendees, all of whom helped to make this a great event!
A summary of the event will be provided in the April 26th MHI Week in Review and on MHI’s Web site at www.manufacturedhousing.org.
Save the date for next year’s Congress & Expo which will return to the Paris Hotel in Las Vegas on April 15th–17th.
Financial Services Policy Update
FDIC Holding Free Teleconferences on Mortgage Rules
Through May and June the Federal Deposit Insurance Corporation (FDIC) will hold three free teleconferences on mortgage rules recently released by the Consumer Financial Protection Bureau (CFPB), and will cover:
• The first teleconference will focus on the CFPB’s final rules on the ability to repay, qualified mortgage standards, escrow requirements, and the loan originator compensation requirements involving the prohibition on mandatory arbitration clauses and single premium credit insurance. The call will be held on Thursday, May 2, 2013, from 2:00 p.m. to 3:30 p.m. EDT.
• The second teleconference will focus on the CFPB’s final rules on mortgage servicing. The call will be held on Wednesday, May 15, 2013, from 2:00 p.m. to 3:30 p.m. EDT.
• The third teleconference will focus on the CFPB’s final rules on loan originator compensation and changes to the Home Ownership and Equity Protection Act (HOEPA). The call will be held on Thursday, June 6, 2013, from 2:00 p.m. to 3:30 p.m. EDT.
For more information or to register, click here to visit the FDIC web site.
CFPB Unveils Qualified Mortgage Compliance Guide for Small Entities
On April 10th, the CFPB published its Small Entity Compliance Guide for the Ability-to-Repay and Qualified Mortgage Rule. According to the agency, the aim of the guide is to provide “a comprehensive rule summary in a plain language and FAQ format, which makes the content more accessible and consumable for a broad array of industry constituents, especially smaller businesses with limited legal and compliance staff.” The guide is part of a series that will be published by the CFPB on each of the new mortgage rules. To view the guides, click here.
Housing Finance Groups Press CFPB for Extension on Mortgage Rule Implementation
In a letter to CFPB Director Richard Cordray, the American Bankers Association (ABA), Consumer Bankers Association (CBA), and Financial Services Roundtable and Housing Policy Council urged the agency to publish “much-needed” clarifications on its new mortgage-related rules and to extend the rules’ compliance deadlines.
The groups emphasized that they are repeating their request that the agency use its exemption authority to extend the mortgage rules’ compliance deadline from 12 months to 18 to 24 months. In the letter the groups state:
“Without more time to comply, we are concerned certain lenders may choose to mitigate the resulting operational risks by reducing, or even eliminating, their mortgage lending activities. This will be devastating to the industry and reduce mortgage loan options for consumers at a time when all agree there should be an increase in responsible mortgage lending.”
Click here to view the letter.
27 States Set to Adopt Uniform SAFE Act MLO Test
On April 1st, the Conference of State Bank Supervisors (CSBS) announced that more then 20 states were set to implement a new National SAFE MLO Test Component with uniform state content. In these states mortgage loan originators (MLOs) seeking licensure with their state regulatory agency will no longer be required to take a second state-specific test component.
According to CSBS, Delaware, Georgia, Idaho, Indiana, Iowa, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, New Hampshire, North Carolina, North Dakota, Pennsylvania, Rhode Island, South Dakota, Utah, Virginia, Washington, and Wisconsin will no longer require a state-specific test component beginning April 1st.
Five additional states – Alaska, Kansas, Nebraska, Tennessee, and Vermont – will adopt the test on July 1, 2013. Two additional state agencies, the Texas Office of Consumer Credit Commission and the Texas Department of Savings and Mortgage Lending, will begin using the test on October 1, 2013. Remaining state agencies will continue to require state-specific test components, though additional states are eventually expected to adopt the new National SAFE MLO Test Component with uniform state content.
For more information, click here to visit the CSBS web site.
Ballard-Spahr to Conduct Free Webinar Examining Regulatory Challenges to Lender-Placed Insurance
Following recent interagency guidance on implementing revisions to the Flood Disaster Protection Act (FDPA) that increase penalties for FDPA violations, require new disclosures, and establish escrow accounts, the law firm of Ballard-Spahr will be hosting a free webinar on May 29th highlighting some of these revisions. Click here for more information.
The webinar will also highlight the new wave of litigation and regulatory action facing mortgage lenders and servicers arising from force-placed insurance, assess recent changes to the National Flood Insurance Program, and changes to agency regulation and guidance that will affect how mortgage servicers administer their hazard and flood insurance programs.
For more information, click here.
Financial Services Committee Top Democrat Open to Dodd-Frank Technical Changes
On April 10th in a speech before the U.S. Chamber of Commerce, House Financial Services Committee Ranking Member Maxine Waters (D-CA) indicated that she is willing to make changes to the Dodd-Frank Act, but only if they are “truly technical.”
Waters indicated she is not open “to wholesale revisions to the act, or receptive to packages of bills which, taken as a whole, essentially repeal its key provisions or dismantle it piece by piece.” However, “there may be some room for modification in some areas.”
For more information click here.
FHA Policies and Practices at Center of Financial Services Committee Hearing
On April 10th, the Financial Services Subcommittee on Housing and Insurance held a hearing examining the policies and practices of the Federal Housing Administration (FHA). The Financial Services Committee is holding an ongoing series of hearings on the need for FHA reform. Three prior hearings examined FHA insolvency, historical mission, and barriers created by FHA.
The agency has come under increasing scrutiny since last fall when an independent audit found that the FHA, which currently holds more than $1 trillion in loans in its portfolio, had expended the majority of its capital reserves due to bad mortgages. The FHA currently projects a shortfall in its Mutual Mortgage Insurance (MMI) Fund of $16.3 billion, which could necessitate a bailout from taxpayers. The MMI Fund is the government fund that insures FHA’s single-family housing portfolio.
President Obama’s FY 2014 budget request, which contains $943 million in funding to shore up FHA, was criticized by committee Republicans during the hearing, including the full Committee Chairman Jeb Hensarling (R-TX), who have called for FHA to shrink its “footprint” in the housing market to allow the private sector to take a larger role.
To view a webcast of the hearing, click here.
President Unveils FY 2014 Budget Plan
On April 10th, President Obama unveiled his $3.77 trillion FY 2014 budget request. Included in it is roughly $1.06 trillion in discretionary spending. The administration’s budget plan is expected to run into significant opposition from House Republicans, which recently adopted a $3.5 trillion budget with $966 billion in discretionary spending.
Included in the President’s request is $47.6 billion for Department of Housing and Urban Development (HUD) housing programs, an increase of $4.2 billion over FY 2013. The vast majority of the increase will be to sustain current program levels for rental and homeless assistance.
The budget contains $943 million to help shore up the Federal Housing Administration (FHA), which is pegged to run a deficit of $16.3 million in its single-family insurance fund (MMI Fund). Despite this deficit, FHA is expected to insure $178 billion in loans in FY 2014. See related article for information on manufactured housing programs.
The administration’s budget plan also assumes GSEs Fannie Mae and Freddie Mac will provide the federal government with roughly $51 billion in profit by 2023. To date, the GSEs have borrowed $187.5 billion from the federal Treasury and have paid $55.2 billion in dividends for net cost to tax payers of $132.3 billion. The White House budget anticipates Fannie Mae and Freddie Mac paying an additional $183.3 billion in dividends over the next ten years, for a net surplus of $51 billion.
The historic levels of return recently experienced by Fannie Mae and Freddie Mac have brought into question the viability and policy makers’ commitment to reform the GSEs. Earlier this month, Fannie Mae reported profits of $17.2 billion in 2012 and Freddie Mac report a profit of $11 billion, which were the largest profits ever recorded by the GSEs.
The budget calls for a change in the carried interest rate paid by general partners in equity firms or other alternative investments. The budget would seek to tax carried interest as regular income, and not at the lower capital gains rates. In addition, the budget would seek to raise $59 billion over ten years by imposing a “financial crisis responsibility fee.” It would be a tax of 17 basis points on institutions with at least $50 billion in assets to recoup the costs of the TARP program. Enactment of these changes would depend on passage of comprehensive tax reform legislation in both the House and Senate.
Both House and Senate Budget Committees are expected to hold hearings on the administration’s plan over the coming weeks.
HUD’s FY 2014 Budget Outlines Priorities for Manufactured Housing Program – Requests Label Fee Increase
President Obama’s Fiscal Year 2014 budget, presented to Congress earlier this week, proposes to fund $7.5 million for the HUD Manufactured Housing Standards program, including $1 million in direct appropriations and up to $6.5 million in offsetting label fee collections. To fund this expenditure, HUD plans to propose a label fee increase of up to $100 per floor and expects to have a new fee in place by mid 2014.
HUD needs $10 million in FY 2014 to administer the program, which until a few years ago, was funded almost a 100% through label fees. The $2.5 million difference between the cost to administer the program and the proposed budget will be funded through unspent funds from prior years.
HUD’s $10 million FY 2014 budget for the Manufactured Housing Program will be allocated as follows:
• $3.3 million (the same as FY 2013) to fund 37 State Administrative Agencies (SAAs),
• $4 million (down from $6 million in FY 2013) to fund the monitoring contract to primary inspection agencies and the states,
• $1.5 million to regulate and enforce model installation standards in 17 states that do not have such programs,
• $500,000 to regulate and enforce Dispute Resolution Programs in 23 states that do not have programs,
• $100,000 for a one year contract to NFPA to administer the Manufactured Housing Consensus Committee, and
• $60,000 for meeting planner services to fund regional SAA meetings.
The HUD FY 2014 proposed expenditures reflects the opportunity for the appointment of an Administrator for the Manufactured Housing Program and a staff of 54 to administer programs to carry out the activities of the Office of Risk Management and Regulatory Affairs.
In addition to the $10 million needed to administer the program, HUD requested eight full time employees to administer the Manufactured Home Inspection and Monitoring Program. HUD staff from the Office of Housing will carry out the additional workload activities of the manufactured housing program. The salaries and expenses for the manufactured housing program are paid out of the general HUD Salaries and Expenses account funded with congressional appropriations.
For more information regarding the budget click here.
GAO Reports to Congress on the Benefits of State Based Manufactured Home Replacement Programs
Last Month, the Government Accountability (GAO), in response to a Congressional request, issued a report on various state programs that utilize federal energy assistance funding and other state and federal resources to provide replacement homes for low income families living in pre 1976 manufactured homes. The GAO surveyed industry representatives and took an in-depth look at three state-based programs; Montana, Maine, and Washington. The GAO report concluded that energy savings from purchasing a new home did not fully offset the costs of replacing older manufactured homes over a typical loan term. According to the report, homebuyers were able to save almost $500 per year in energy costs on a new home costing an average of $56,000.
Not surprisingly, the GAO found that the energy savings did not fully offset the costs of replacing the older homes. However other benefits were achieved such as moving families into safer, more weather-tight manufactured homes built to a residential code which was considered just as important as increased energy savings. The report identified some challenges to utilizing the replacement programs such as the borrower’s inability to meet large down payment requirements and low credit scores.
This report will be used by Congress to decide whether and how to most effectively spend limited federal tax dollars to provide grants to states and local jurisdictions to assist low income families pay their utility bills.
Update on GAO Request by Congress to Review the HUD Manufactured Housing Program
With two recent reports on manufactured housing recently completed, the GAO has now turned its attention to a comprehensive review of the HUD Manufactured Housing Program requested by Representative Spencer Baucus (R-AL) in late 2011. Last month, MHI members hosted a team of policy analysts from GAOs Office of Financial Markets and Community Investments, who visited six manufacturing facilities, several retail locations, and a community as well as a private third party testing facility. Many thanks to Mary Gaiski and Mark Bowersox, Executive Directors of the Pennsylvania and Indiana Manufactured Housing Associations respectively, who helped host the tours and assisted members in answering questions and providing information.
MHI understands that GAO plans to visit and talk with other third party design and inspection agencies, manufacturers, lenders, and State Administrative Agencies as it continues its thorough examination of the manufactured housing program. It plans to complete its report by the end of the year.