MH NewsWire – August 21, 2012

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US Treasury Hastens Demise of GSEs

The Treasury has revamped its bailout terms for Fannie Mae and Freddie Mac, accelerating the pace at which taxpayers will see their money returned. The firms will have to shrink their investment portfolios faster, and the Treasury will claim all profits that they earn each quarter. Mortgage Bankers Association President and CEO David Stevens called the move a “clear and appropriate effort” to reduce taxpayer risk but added that MBA wants “to emphasize the importance of ensuring continued liquidity that will provide the affordable mortgage financing necessary to support the housing market.”

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From “US Treasury Hastens Demise of GSEs” (08/19/12) Morphy, Erika

Builder Confidence in Older Homeowners More Than Doubles

Builder optimism toward the single-family housing market for buyers 55 and up rose in the second quarter from a year earlier, reports the National Association of Home Builders. The index rose from 13 to 20, the second-highest score since NAHB began tracking confidence in this segment of the market in 2008. “We are seeing buyers slowly return to the 55-plus housing market as home prices begin to improve,” said NAHB chief economist David Crowe. “This helps unlock some of the pent-up demand from 55-plus consumers who have been sitting on the sidelines until they are able to sell their current home at a reasonable price.” Despite the improved reading, any number below 50 signals that more builders see conditions as unfavorable than favorable.

From “Builder Confidence in Older Homeowners More Than Doubles”
Housing Wire (08/09/12) Hilley, Justin T.

Industry News

Cavco Industries Reports Fiscal First Quarter

Cavco Industries, a maker of modular homes and park model homes, reported a 20 percent gain in net sales for the first quarter of fiscal year 2013. Net sales exceeded $118 million compared to $98.9 million during the same period the previous fiscal year. Cavco Chief Financial Officer Dan Urness said the increase is largely due to results from Palm Harbor — which Cavco acquired in April 2011 — included for the full quarter instead of a portion of the quarter last year. According to Cavco Chairman, President, and CEO Joseph Stegmayer, manufactured home industry unit shipments were up nearly 25 percent from January to May 2012 compared to a year earlier, although they are still low by historical norms. “In order to succeed in this difficult market environment, our homebuilding activities remain focused on producing high quality homes that incorporate flexible housing designs to fit homebuyer interests, establishing and maintaining strengths in niche market areas, and striving to provide excellent service after the sale of each home,” he said.

From “Cavco Industries Reports Fiscal First Quarter”
MarketWatch (08/02/12)

Sun Communities Inc. Announces Acquisition of Michigan Manufactured Home Community

Sun Communities Inc., based in Southfield, Mich., has paid $32.3 million for a manufactured housing community (MHC) located near Northville, Mich. As part of the cash deal, the real estate investment trust takes ownership of the 756 sites that make up Northville Crossing in addition to associated personal property, inventory, and chattel loans. Sun Communities owns and operates 164 MHCs including about 56,930 undeveloped sites.

From “Sun Communities Inc. Announces Acquisition of Michigan Manufactured Home Community”
MarketWatch (08/01/12)

Champion Home Builders Partners With Craftsman, Ty Pennington, Rebuilding Together, Heroes at Home, NextGen Home, and Bank of America to Build a Home

Champion Home Builders — a specialist in manufactured and modular construction — has been selected to participate in the House United project, which will bring together several partner organizations to build a residence for a deserving military veteran. Also involved in the project are NextGen Home, Craftsman, Bank of America, and the nonprofit groups Rebuilding Together and Heroes at Home. Television personality Ty Pennington will oversee the effort to construct a NextGen edition of a Champion home as the two major political parties hold their conventions. Candidates and convention attendees, as well as members of the community and media, are all invited to paint and hammer alongside Pennington during the events. One half of the home will go up at the Republican National Convention in Tampa, Fla., on Aug. 28; and the other will be erected on Sept. 3, as the Democratic National Convention takes place in Charlotte, N.C. The two halves will then be “united” in October, when they will be trucked to a lot in Charlotte and installed. The finished product will be donated to a military veteran.

From “Champion Home Builders Partners With Craftsman, Ty Pennington, Rebuilding Together, Heroes at Home, NextGen Home, and Bank of America to Build a Home”
MarketWatch (08/07/12)

UMH Properties Inc. Reports Second Quarter Earnings

UMH Properties Inc., owner and operator of 53 manufactured home communities in six states, posted improved financial results for the 2012 second quarter. Funds from operations (FFO) at the real estate investment trust topped $2.8 million for the period, up from $1.3 million during the same quarter last year. Over the same time frame, total income increased to more than $11 million from about $9.6 million. Results for the first six months of 2012 showed similar gains in FFO and total income.

From “UMH Properties Inc. Reports Second Quarter Earnings”
Sacramento Bee (08/08/12)

Manufactured Housing Market Shows Signs of Life

The manufactured home industry appears to be perking up. Berkshire Hathaway, owner of Clayton Homes, revealed in its second-quarter financial report that Clayton’s pretax earnings had grown 45 percent since the previous year due to higher sales volume. “While Clayton Homes’ operating results continue to be negatively affected by the ongoing soft housing markets and the surplus of traditional single-family homes for sale, volumes of manufactured homes sold were higher in 2012 compared to 2011,” according to Berkshire Hathaway. Although manufactured home makers have had to compete with a market inundated with site-built homes thanks to foreclosures related to the housing industry collapse, there are more signs that people are choosing manufactured homes as an alternative. It is thought that higher lending standards have been pushing people into multifamily housing and that these standards could draw more buyers to manufactured homes as well, although there is concern that a rise in unemployment could hurt the growth of loan applications for manufactured homes.

From “Manufactured Housing Market Shows Signs of Life”
Knoxville News-Sentinel (TN) (08/12/12) Marcum, Ed

Walker & Dunlop Provides $67 Million in Financing to Manufactured Housing Projects in Four States, Including Illinois

Walker & Dunlop provided nearly $68 million in Fannie Mae refinancing to Hometown America LLC for a portfolio of manufactured housing communities (MHCs) in Florida, Illinois, New Jersey, and Massachusetts. The funding included acquisition financing for one property and refinancing of four others. The portfolio — encompassing more than 1,800 home sites — is one of the biggest Fannie Mae MHC deals so far this year, signaling that permanent financing for the U.S. manufactured housing sector remains active.

From “Walker & Dunlop Provides $67 Million in Financing to Manufactured Housing Projects in Four States, Including Illinois” (07/19/2012)

Real Deals: Colorado Firm Bets Big on NC Manufactured Home Communities

The collapse of the residential housing market five years ago created opportunities for investors able to take advantage of severely distressed real estate prices. Yes! Communities, created in 2007 to own and manage assets within the manufactured housing industry, is one such firm. Since then, it has been on a buying spree, purchasing 117 manufactured home communities with 30,000-plus home sites in 16 states, including North Carolina. With its majority equity partner Stockbridge Real Estate Funds, Yes! Communities bought 10 communities and nearly 2,500 home sites in North Carolina from American Residential Communities (ARC) for nearly $75 million and hired on all of ARC’s employees. North Carolina does not boast large manufactured housing communities like those found in Florida, California, and Arizona; and ARC had been among the largest players in the state before it exited the market with its sale to Yes! Communities. The communities are viewed as sources of new capital that can stabilize or improve the area to satisfy modern infrastructure standards.

From “Real Deals: Colorado Firm Bets Big on NC Manufactured Home Communities”
News & Observer (08/09/12) Bracken, David

Champion Home Builders Expands in Texas Market With the Acquisition of Athens Park Homes

In a deal that increases its footprint in Texas, Champion Home Builders Inc. has acquired Athens Park Homes. The transaction also makes Michigan-based Champion, which produces manufactured and modular homes, a stronger competitor in the market for HUD code and park model homes — which are small units categorized as recreational vehicles but designed for permanent placement. “From my past association with Champion, I know they share our commitment to our customers to provide affordable, high-quality homes,” said Athens Park Homes President Phil Surles, who expressed excitement about the takeover. Including the purchase of the Athens, Texas-assets, Champion’s portfolio now includes 29 manufacturing plants that it owns and operates in the United States, Western Canada, and the United Kingdom.

From “Champion Home Builders Expands in Texas Market With the Acquisition of Athens Park Homes”
MarketWatch (07/24/12)

RV Firms to Expand in Indiana, Create 260 Jobs

Lippert Components Inc. and Kinro Manufacturing Inc. — both manufacturing units of Drew Industries Inc. — are growing in Indiana’s Elkhart County. The local jobs market will benefit when Lippert, which makes manufactured housing and recreational vehicle components, expands its thermo forming operation and Kinro expands its glass-tempering and awning operation. The subsidiaries, which already have 4,000 full-time workers in the area, will add 260 more positions by 2015.

From “RV Firms to Expand in Indiana, Create 260 Jobs”
Louisville Business First (08/09/12)

Manufactured Homes Popular

Manufactured homes have become more popular around Bismarck, N.D., with some local companies adding to their payrolls. The industry is growing in an attempt to meet demand that has been increasing as more people choose not to wait on standard contractors who have been exceptionally busy since a flood affected part the area. Flooded homeowners are discovering that manufactured homes are a good alternative to renting or rebuilding, and some say manufactured housing is a better deal than standard construction. Competition restrains the prices, while the customization options for manufactured homes offer a variety of options in floor plans, finishes, appliances, and flooring. The companies in the industry are able to offer lower prices than traditional contractors, in part because they can buy supplies and appliances in bulk and have a shorter time frame for construction — which also has contributed greatly to the rising popularity of the homes.

From “Manufactured Homes Popular”
KFYR-TV (North Dakota) (08/02/12) Castro, Jenny

‘True’ Homeownership in Rural America

Homeownership rates have grown over the last century; and the number of residences occupied by owners had climbed to 66.2 percent by 2000, with rates having held consistently above 60 percent since the 1960s. By 2010, the level had dropped to 65.1 percent nationally, but homeownership rates in rural and small town communities are higher than the U.S. level. The level of rural home ownership varies across demographic groups and regions, with the Midwest holding the highest regional level of 74 percent and the West holding the lowest — although Delaware has the highest homeownership level of all the individual states. Rates also vary across racial and ethnic groups in rural and small-town communities, with minorities at a substantially lower rate than white non-Hispanics. Ownership levels in rural and small-town communities are higher than urban and suburban levels for several reasons, primarily because of the high number of manufactured homes — which have driven up the number of individuals who own their homes without a mortgage, as these homes have shorter loan terms and relatively low purchase prices. Many rural and small-town households own the manufactured house but not the lot on which it is located, which also contributes to the high homeownership level.

From “‘True’ Homeownership in Rural America”
Daily Yonder (07/25/2012) George, Lance

MHI News
CFPB Rules Propose Exempting Home-Only Transactions from Appraisal Requirements

On August 15th, the CFPB issued a proposed rule to establish new appraisal requirements for higher-risk mortgages. The proposal implements sections of the Dodd-Frank Wall Street Reform and Consumer Protection Act directing the Bureau to prescribe regulations requiring an appraisal for a “higher-risk mortgage.”

The law defines a “higher-risk mortgage” as a residential mortgage loan that exceeds the average prime offer rate, for a comparable transaction, by 1.5 percent or more for first-lien loans. These rate thresholds are substantially similar to the triggers currently in Regulation Z for higher-priced mortgage loans. The definition of “higher-risk mortgage” expressly excludes “qualified mortgages” and reverse mortgage loans.

The proposed rule exempts “loans secured solely by residential structures, such as many types of manufactured homes” from these appraisal requirements. The agency is requesting comments on whether the proposed exclusion of loans secured solely by a residential structure is appropriate in its current form. Comments on the proposed rule are due by October 15, 2012.

For an analysis of the proposed rule, click here to view the MHI issue brief. Click here to view the proposed rule.

Encourage Your U.S. Senators and Members of Congress to Support the Preserving Access to Manufactured Housing Act (S. 3484 and H.R. 3849)

Your assistance is needed to encourage your U.S. Senators and Members of Congress to support the Preserving Access to Manufactured Housing Act (S. 3484 and H.R. 3849).

On August 2nd, 2012, Senator Sherrod Brown (D-OH), Chairman of the Senate Banking, Housing, and Urban Affairs’ Subcommittee on Financial Institutions and Consumer Protection, formally introduced legislation (S. 3484) to reduce regulatory burdens impeding access to affordable manufactured housing financing. The bill (titled the Preserving Access to Manufactured Housing Act) is a companion measure to the bipartisan bill (H.R. 3849) that was introduced in the House of Representatives in January 2012 by Reps. Stephen Fincher (R-TN), Joe Donnelly (D-IN) and Gary Miller (R-CA), all of whom serve on the House Financial Services Committee.

With Congress in recess until mid-September, now is the ideal time to approach Members of Congress while they are back in their districts/states and discuss the challenges facing the manufactured housing industry. MHI members are urged to specifically request that their U.S. Senators sponsor S. 3484 and their U.S. Representatives sponsor H.R. 3849. While the bills do contain some differences (Click here to view background information and a chart comparing the two measures), both are focused on providing relief to the industry while preserving consumer protection.

Currently, the House bill (H.R. 3849) has over 40 co-sponsors, with interest continuing to build. If your House member has not yet co-sponsored, recess is the ideal time to contact them and request that they co-sponsor. A list of current co-sponsors is below. At the same time, we ask that you contact your U.S. Senators and urge them to co-sponsor S. 3484. We are working to build support for the Senate bill here in Washington, D.C., but need the message to be delivered at home as well. Your participation at the local level is needed to communicate the important, yet modest, relief both bills will provide to all connected to the manufactured housing market, industry and consumers alike.

Click here for background material and click here for SAMPLE LETTERS that you can edit and customize. Click here to view both versions of the legislation.

Thank you for your grassroots assistance with this issue of critical importance to the industry.

U.S. Representatives Co-sponsoring H.R. 3849
Rep. Aderholt, Robert B. [AL-4] – 5/16/2012
Rep. Black, Diane [TN-6] – 4/19/2012
Rep. Blackburn, Marsha [TN-7] – 3/26/2012
Rep. Boren, Dan [OK-2] – 3/19/2012
Rep. Boswell, Leonard L. [IA-3] – 3/26/2012
Rep. Calvert, Ken [CA-44] – 3/22/2012
Rep. Carson, Andre [IN-7] – 8/1/2012
Rep. Chandler, Ben [KY-6] – 3/19/2012
Rep. Cole, Tom [OK-4] – 2/29/2012
Rep. Dent, Charles W. [PA-15] – 4/19/2012
Rep. Dold, Robert J. [IL-10] – 3/5/2012
Rep. Donnelly, Joe [IN-2] – 1/31/2012
Rep. Duncan, John J., Jr. [TN-2] – 2/28/2012
Rep. Fincher, Stephen [TN-8] – 1/31/2012
Rep. Fitzpatrick, Michael G. [PA-8] – 2/28/2012
Rep. Fleischmann, Charles J. “Chuck” [TN-3] – 6/18/2012
Rep. Graves, Tom [GA-9] – 7/24/2012
Rep. Harper, Gregg [MS-3] – 3/21/2012
Rep. Jones, Walter B., Jr. [NC-3] – 2/29/2012
Rep. Kissell, Larry [NC-8] – 6/18/2012
Rep. Kline, John [MN-2] – 5/8/2012
Rep. Lankford, James [OK-5] – 3/6/2012
Rep. Latham, Tom [IA-4] – 6/6/2012
Rep. Loebsack, David [IA-2] – 4/19/2012
Rep. Lucas, Frank D. [OK-3] – 4/16/2012
Rep. Manzullo, Donald A. [IL-16] – 3/26/2012
Rep. Marino, Tom [PA-10] – 6/18/2012
Rep. McIntyre, Mike [NC-7] – 4/27/2012
Rep. Miller, Gary G. [CA-42] – 1/31/2012
Rep. Nunnelee, Alan [MS-1] – 3/26/2012
Rep. Palazzo, Steven M. [MS-4] – 3/26/2012
Rep. Quayle, Benjamin [AZ-3] – 5/31/2012
Rep. Rahall, Nick J., II [WV-3] – 3/26/2012
Rep. Renacci, James B. [OH-16] – 3/21/2012
Rep. Roe, David P. [TN-1] – 4/16/2012
Rep. Rogers, Mike D. [AL-3] – 4/16/2012
Rep. Schweikert, David [AZ-5] – 3/29/2012
Rep. Scott, Tim [SC-1] – 7/19/2012
Rep. Sewell, Terri A. [AL-7] – 5/16/2012
Rep. Sullivan, John [OK-1] – 2/29/2012
Rep. Thompson, Bennie G. [MS-2] – 3/21/2012
Rep. Wilson, Joe [SC-2] – 6/18/2012

Modular Production Up in 2nd Quarter of 2012

According to the recent data from Hallahan Associates, modular home production for the second quarter of 2012 is up 5.6 percent over the same time last year. The first half of 2012 shows an increase of 9.3 percent from the first six months of 2011. For the entire U.S. 6,325 homes were produced in the first half of 2012. This includes both single and multifamily housing units. Excluded from this total are transient commercial units such as man camps and other temporary housing. Modular activity in twenty three states show increases for the first six months in 2012. Based on current information available relative to economic conditions, 2012 twelve month modular activity is projected to be about 13,300 homes, a 9.4 percent increase over 2011.

MHI Certified Representative Doug Gorman Inducted into RV/MH Hall of Fame

Surrounded by more than 300 family, friends, and colleagues from across the country, the Class of 2012 was inducted into the RV/MH Hall of Fame (Hall) at a gala ceremony on August 6th in Elkhart, Indiana. Doug Gorman was inducted into the RV/MH Hall of Fame during its 40th Anniversary induction dinner. Doug Gorman is the certified representative to MHI from the Oklahoma Manufactured Housing Association and President of Home-Mart, Inc. located in Tulsa, Oklahoma. Gorman established Home-Mart, Inc. in 1988 with the goals of having satisfied customers, offering homes that provide more value than its competition, and providing a non-threatening shopping atmosphere for its customers. Gorman is an active supporter of local community initiatives, is heavily involved the Oklahoma Manufactured Housing Association and MHI, is co-chairman of the Great Southwest Home Show in Tulsa, and served many years on the Manufactured Housing Consensus Committee which has the responsibility of drafting, reviewing and making recommendations for changes to the HUD construction standards and regulatory programs for the industry.

Other inductees and family members accepting on behalf of deceased inductees included Stan Sunshine, Gerald “Jiggs” Meuret, Kaki Williamson, Jeanne Mize, Rachel Gandy, Mary Irene Younkin, Michael Evans, Bob Olson, Kent Titcomb, Allan Yoder, Gail Yoder and Holly Yoder.

Barry Cole (Manufactured Housing Insurance Services), chairman of the board of directors for the Hall, said, “What a joyous occasion with all past legends and present leaders of our great industries to honor the ten new inductees. There is no industry function that can equal the emotional feeling and happiness when mingling and networking with so many greatest of the great.”

Registration is Now Open for MHI’s Annual Meeting to be Held October 7-9, 2012 in San Antonio, TX

MHI’s 2012 Annual Meeting will be held at the Hotel Contessa in San Antonio, TX on October 7-9, 2012. Click here to register now and save $100. The early-bird hotel and registration fee deadline is September 7th.

MHI has been working hard to amend the Dodd-Frank and SAFE Acts. These laws threaten to limit the ability of consumers to obtain mortgage financing for manufactured homes and the ability of manufactured home retailers and sellers to provide home-buyers with adequate information to make an informed purchase decision or provide basic information about available lending options. Significant progress on this MHI priority has been made with the introduction of the Preserving Access to Manufactured Housing Act, (S. 3484 and H.R. 3849), in both the U.S. Senate and the U.S. House of Representatives.

Many MHI members have been working diligently with the MHI staff to achieve this significant step towards resolving the negative results of the Dodd-Frank and SAFE Acts. In addition, MHI has increased its efforts in working with the Consumer Financial Protection Bureau (CFPB) as they draft regulations to implement the Dodd-Frank and SAFE Acts. Multiple visits to Washington, D.C. have been made by several MHI members to visit with the House, Senate and CFPB on these issues.

At the Annual Meeting we will continue to work on MHI’s priorities that include strategy to pass S. 3484 and H.R. 3849, CFPB regulatory implementation of Dodd-Frank and SAFE Acts; GSE reform and the government’s role in housing; and energy issues. It will take the collective experience and ideas from all of MHI’s members to achieve the success needed on these very important issues. Your involvement in the association and active participation in working to achieve its goals are essential to the industry’s future.

The MHI Annual meeting is the largest member meeting of the year for all sectors of the industry and provides excellent opportunities for networking and idea sharing. This year’s highlights will include discussions of the initiatives and issues above, as well as feature speakers on Monday and Tuesday mornings who will provide information on the upcoming elections in November and health care reform issues that will impact businesses in our industry.

At the Annual Meeting, special awards will be presented to those individuals that have gone above and beyond for the industry during the last year. The prestigious MHI Chairman’s award, State Association Executive of the Year Award, Frank Walter Standards Award, and Jim Moore Excellence in Communications Award will be presented during Monday evening’s Annual Awards Dinner.

Don’t miss this chance to reconnect, network and build lasting relationships with fellow attendees. The industry needs your participation and input. Together we can succeed in increasing manufactured housing’s share of the housing marketplace.

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