Few if any topics are of greater concern to manufactured home professionals than manufactured home single family “home only” financing. So, on one level the emails involving former MHI chairman Joseph “Joe” Stegmayer, who served for years as the Chairman and CEO of Cavco Industries (CVCO) makes sense. Additionally, it is worth mention that few subjects have a greater impact on the value of literally millions current and potential pre-HUD Code mobile home and post HUD Code manufactured home owners than financing. For more insights on that resident-homeowner financing and resale value topic, click the link here.
What follows below, as the headline suggests, are new insights on a historic set of emails involving Cavco’s longtime leader, Joe Stegmayer and MHProNews publisher L. A. “Tony” Kovach.
As early and enduring readers of MHProNews may know, years of efforts have been talked about and promised by MHI leaders on the financing issue. This Stegmayer email arguably sheds a bright light on various nuances and claims made then, previously, or more recently.
To additionally set the context, some links in the reply email explains which MHProNews articles Stegmayer was calling into question. He appears to doubt claims of additional home only, chattel, personal property, and other little known but existing and relevant manufactured home lending options. The reply speaks for itself.
The email exchange from Stegmayer is clearly in his official capacity from his business email address. This writer’s reply was similarly in my own official role. There were follow up messages, which may be revealed in the day’s ahead. But these two messages are shown as in the original. As noted, properly understood, they shed new light on developments past and present, as expressed at the time by Stegmayer to Kovach and back.
Note that Stegmayer says “Respectfully,” but then pointedly questions the veracity of the published statement. “Respectfully I don’t think the above statement is true.” While there are several possibilities, one is that Stegmayer may not have realized – or wanted to admit – that home only mortgage lending had occurred in land-lease communities on single family manufactured homes. More on that in the reply email.
Typos and spacing errors are in the original in both messages. Titles and other items after the name are omitted as irrelevant to the points in question and for the sake of focus and brevity. The blue quotation marks are not in the original, but merely reflect that the body of each messages are being quoted verbatim.
Note that Stegmayer’s subject line read: “lets do real business.”
In reading your piece this morning I am confused. What lending opportunities are there that we are missing. Your story does not identify any. Our company has been looking far and wide for chattel lending possibilities and to develop secondary markets for such loans. All of our work has been on our own not through MHI but never the less with little success.
What are these missed opportunities? Why would such lenders not come forth with them. They do not need a trade association to market to private companies, retailers, community operators and even manufacturers.
Who is eagle One and what are their capabilities? When searching for them on the web, they don’t come up easily, their name is mixed with other Eagle financials. Is it the credit union, the truck and trailer financing Eagle or the one in San Jose? If Mr., Dare has sources of chattel financing have him contact us, we will be glad to offer them at our retail stores.
From your Article:
“regime, there was progress made with the GSEs, and that some $150 million in lending in land lease manufactured home communities was successfully done.”
Respectfully I don’t think the above statement is true. When did the GSE’s buy chattel paper? They have certainly financed community property but not consumers to my knowledge. Have they? Where, when and through whom?
What is going on here? We need specifics on lending not unnamed sources and silly statements such as (sic) “we would do chattel lending but MHI interferes”. MHI cannot stop people from doing business in our industry, business is generated business to business, rarely through any trade associations.
We stand ready to talk with any of these mostly unnamed people to develop sound and mutually beneficial programs.
It is fair to note that our own understanding at MHProNews of the meaning or implications of these words have evolved and sharpened with time. For instance, his statement that: “All of our [Cavco’s] work has been on our own not through MHI but never the less with little success.” One must keep in mind that time has passed and new insights on both sides exist.
That noted, this exchange is relevant right now, in the light of ongoing foot-dragging and posturing by leaders routinely associated with MHI, but also in fairness due to revelations from the FHFA and GSEs too. More on that in the links and analysis further below.
Here is the reply email from Kovach to Stegmayer that was transmitted on the same date. Note that the MHProNews website has since been rebuilt. The links are shown as in the original, but have been redirected to the current location of the article in question. Note too that the process of our own ‘awakening’ as to what was occurring with MHI was underway. But this reply from Kovach to Stegmayer message focuses on MHI staff, not on corporations involved in the background. Once more, the quotation mark was not in the original, but is shown to reflect that the statement sent is a direct quote from the email from Kovach to Stegmayer.
Thanks for your message.
First, Titus articles are linked below.
They will answer some questions. There are MHI members who know Titus.
Respectfully, let me clarify an issue you may be misreading.
First, I’ve personally spoken with community operators who did these long term loans in their MHCs. My sense is Titus is correct; we don’t knowingly publish inaccurate info, and correct it if an error is identified. You know that, because you had me make a correction a few years back.
Second, to clarify – there is a distinction between chattel and home only in a land lease. Maybe this is why some don’t make the progress on this that they should?
I think you should question Dick Jennison and Jenny Hodge, face to face if you are in Indy. I doubt they will deny what they know to be true, but just watch their body language.
You are quiet right, MHI can’t keep a lender out of the market, but I didn’t say that was the case. The points made contradict Lesli Gooch’s claim (an error) that they promote lending options and encourage more lenders into the industry. I know first hand that’s not accurate, and waited until now to dot those i’s in one column.
IMHO – What’s happening in Arlington is beyond sad. There will likely be more wake up calls, until matters there are corrected.
Please watch and read this carefully.
As to lending options your operation seeks, we do consulting, but I don’t pretend to be Dick or Ken or anyone else.
Lending is important. But the real need is to learn to attract and sell the site built buyer.
Attract the site built buyer – that’s the MH ticket. One of our clients was bought out by your prime rival last year; they were already successful, using some (not all) of our systems, they grew even more rapidly. What we do when applied, works.
All of the above is matter of fact, I hope it’s helpful. Thx,
L. A. “Tony” Kovach …
Unpacking the Stegmayer Email and Reply – Additional Information, Analysis, Commentary
In brief, Stegmayer asserted that Cavco, apart from MHI, was looking for more lending options. That may have been true. But either way, it raises questions.
Second, after asserting “Respectfully,” Stegmayer gets rather sharp and pointed. For example:
“MHI cannot stop people from doing business in our industry, business is generated business to business, rarely through any trade associations.”
“We stand ready to talk with any of these mostly unnamed people to develop sound and mutually beneficial programs.” Those statements merit scrutiny.
- Was Stegmayer unaware of, perhaps had forgotten, or was otherwise feigning ignorance about the lending opportunities meetings held by MHProNews at a Louisville Show and other manufactured housing industry trade events? They are a matter of record, not speculation. Those on stage and their companies where named, not anonymous. So part of what Stegmayer asserted is factually inaccurate.
- The reference to Dick Jennison and Jenny Hodge – among others involved with MHI – mentioned in the Kovach reply was because they were at one or more of those presentations. Lenders and experts were on stage. They spoke about their respective firm’s or agency’s lending programs. They explained how more loans could be done, and how a given lender could do it.
- While it may be technically true that “MHI cannot stop people from doing business in our industry,” that does not mean that MHI – and the corporate players behind that trade group – do not have ways of undermining or thwarting such efforts.
- Despite Stegmayer’s claim that “We [i.e. Cavco Industries] stand ready to talk with any of these mostly unnamed people to develop sound and mutually beneficial programs.” – there is no evidence that we are aware of that they followed up on this discussion about lending and attracting more business for their firm or any others involved at MHI.
- One should keep in mind that our firm was still an MHI member when this exchanged occurred. That relationship between MHI and MHProNews was severed about a year later. Further, as several writers and tipsters know, MHProNews has declined publishing items that seemed to be contradicted by known facts. As the reply above made clear, Stegmayer previously asked for and obtained a correction on an incorrect piece of information that was errantly published. There is no medium- to long-term upside to MHProNews knowingly publishing misinformation. Pivots in reporting were caused by new insights and new revelations, as should happen with any authentic news media. Even short-term, an intentional misstatement could hurt a publisher’s credibility. While style or other issues are a factor in reader perception, accuracy in conveying information plus cogent analysis based on known facts are arguably what has kept our trade publication the runaway number 1 in our industry.
- While it is certainly possible that some of those firms and individuals named and involved in various efforts to bring more lending into manufactured housing might have been providing MHProNews misleading information, there is no obvious reason for them to do so. As noted, MHProNews confirmed the broad brush outlines of their respective statements. Far more likely is that they meant what they said both publicly in meetings and presentations as well as more privately to MHProNews. There is no evidence that they were deceptive. When the various finance-connected parties said that they had no follow ups from MHI leaders, that presumably included Joe Stegmayer. As a former MHI Chairman, MHI board member, as well as Cavco’s once top corporate official, Stegmayer’s firm fell into that category.
- Restated, while claiming to be ready to do business, Stegmayer effectively declined opportunities to do just that. That opens a range of questions which won’t be the focus of this analysis, but nevertheless are relevant and significant for shareholders, board members, regulators, and others.
- Last but not least. Stegmayer was a former Clayton Homes division president. There are cross-currents that may be revealed by the still evolving SEC drama.
- With that backdrop, some Cavco illustrations and related pull quotes are now relevant.
Note that about 2.5 years after this email, Stegmayer publicly landed in the Securities and Exchanges Commission (SEC) crosshairs. That was made plain by an announcement of a SEC subpoena to Stegmayer and Cavco. Years of investigations and millions spent later, Cavco recently admitted that they are not able to project the possible impact of that SEC probe.
Relative to financing issues, for whatever reasons – authentically seeking more insights or possible head fake(s)? – that sparked Stegmayer’s initial message, he claimed that his firm had been searching for new lending options themselves. That might be taken at face value. But it should also be considered in the light of the fact that Stegmayer certainly knew about the Duty to Serve (DTS) mandate, FHA Title I and it’s thorny 10/10 rule – that by accident or design – created a pan additional competitive advantage for Clayton Homes and their affiliated lending.
Additionally, as noted above, MHProNews provided speakers and other evidence that a GSE provided long-term loans in a land-lease. In at least some cases, Cavco-connected personnel were in attendance.
It is important to note that MHProNews for some time have structured our reports and analysis in a manner where much, and often all, of our research could be confirmed by others who follow the evidence provided. For example, if Cavco (CVCO) wanted to scan their emails, they would find the message from Stegmayer to Kovach as shown above. Accuracy and authenticity and hammering away at the facts can pay off.
There is no bottom line conclusion being offered on this exchange at this time, beyond those bullets noted. But these emails shed new light on several issues. They are a fresh piece of the puzzle that is an industry that is underperforming during one of the worst affordable housing crisis periods in decades.
Programming Planning Notice:
There are several emails from top manufactured housing leaders as well as public officials, GSEs and others that may become part of future reports. A follow up on this specific topic is planned.
Furthermore, a follow up inquiry will be sent to Cavco Industries for their comment and reaction to the emails above is also planned. Because years of research and evidence from inside and beyond manufactured housing reflect the notion that options for more lending at competitive rates in our industry were subverted by industry insiders. That in turn sheds light on why manufactured housing is operating at only about 1/4th the production and sales levels achieved in 1998. Other periods of far higher production also existed that were not solely dependent on phony or problematic credit-created bubbles. Last for now, even those ‘credit bubble’ timeframes revealed authentic demand. All of this matters to publicly traded firms, such as Cavco Industries, but also to the industry at large.
Not to be overlooked is the point that Stegmayer and others involved at MHI would enter into such email exchanges. These examples shed light on the vexing issues that have caused thousands of industry professionals to lose their businesses, or to sell them out for discounted valuations relative to what their true market potential would have been absent such machinations. Stay tuned for more.
Stay tuned for more of what is ‘behind the curtains’ as well as what is obvious and in-your-face reports. It is all here, at the runaway largest and most-read source for authentic manufactured home “News through the lens of manufactured homes and factory-built housing” © where “We Provide, You Decide.” © ## (Affordable housing, manufactured homes, reports, fact-checks, analysis, and commentary. Third-party images or content are provided under fair use guidelines for media.) (See Related Reports, further below. Text/image boxes often are hot-linked to other reports that can be access by clicking on them.)
By L.A. “Tony” Kovach – for MHProNews.com.
Tony earned a journalism scholarship and earned numerous awards in history and in manufactured housing.
For example, he earned the prestigious Lottinville Award in history from the University of Oklahoma, where he studied history and business management. He’s a managing member and co-founder of LifeStyle Factory Homes, LLC, the parent company to MHProNews, and MHLivingNews.com.
This article reflects the LLC’s and/or the writer’s position, and may or may not reflect the views of sponsors or supporters.
Connect on LinkedIn: http://www.linkedin.com/in/latonykovach
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