Issue link: https://read.dmtmag.com/i/231807
On The On The A JOURNAL Q&A Horizon With Industry Professionals Horizon 1. After showing increases in production in 2013, do you think this trend will continue and why? 2. What, in your opinion, continues to be the greatest hurdle for the Manufactured & Modular Housing Industries? 3. What do you see on the horizon for our industry in the next 5 years? 1. From a financing perspective we expect an increase in lending volume on MHCs in 2014 and beyond due to an increase in maturing loans and also a pick-up in acquisition activities. While we do not have specific stats for MHCs, total loan maturities in 2014 are estimated to be $350 billion and this increases to $425 billion in 2015 and $500 billion in 2016.CMBS lenders and traditional banks are expected to pick up a big piece of this increase in maturing loans. MHCs conAnthony Petosa tinue to be a preferred asset class for most lenders Managing Director given the strong performance MHC loans have Wells Fargo demonstrated. Fannie Mae, for example, reports it has experienced no losses in their MHC loan portfolio of approximately $6 billion. 2. The elephant in the room is home financing for both new and used homes as well as park-owned rental homes. The lack of chattel financing is restraining occupancy everywhere in the country except the tightest housing markets in the northeast and California. MHC lenders are also assessing the implications to their MHC loans as a result of an increase in captive home financing and rental homes within communities.These lenders now must consider if a sponsor should offer chattel financing to their residents and if they have adequate capital to do this (not to mention the need to satisfy regulatory requirements such as the SAFE act). The growth in rental homes is also a challenge for MHC lenders as they have typically avoided lending on properties with a high percentage of rental homes due to a perception it results in a lower quality resident base.Other issues include the additional work involved taking the rental homes as collateral and factoring in additional reserves for maintenance of the rental homes. 3. We are cautiously optimistic that chattel lending will become more available over the next 5 years as the capital markets have stabilized in recent years We believe that a standardization of loan documents used with captive financing programs and improved performance data could facilitate the return of asset backed securitization of larger pools of these loans. This would facilitate the flow of less expensive capital becoming available for home chattel loans. The initial pools would likely include several large operators who have captive finance programs. There is also a renewed optimism that Mel Watt as the Director of the FHFA will be supportive of efforts to provide loans for affordable housing as originally dictated by the duty to serve underserved housing markets, including manufactured housing, contained in the 2008 housing and Economic Recovery Act. JANUARY 2014 12 THE JOURNAL 1. I am very encouraged by the upward trends. Despite the new governmental hurdles being created for the industry in DC, I expect 2014 to be another strong year for the manufactured and modular industries. I think the positive movement will continue for several reasons. First, and foremost, is the affordability and quality of our homes. On top of that, economic numbers look good. The unemployment rate is trending downward and, from everything I've read, is expected to continue improving in 2014. Nathan Smith If you break those numbers down a bit, you'll find Partner SSK Communities rising employment in key industry demographics like construction, service industry and warehousing and transportation. Everything seems to be pointing in our direction. The strengthening of these economic indicators make me encouraged about the coming year. Granted, we are not back to historical levels of past growth, but we're showing measured steady improvement. With those economic numbers on the rise we can go back to one of our core industry factors, that is, manufactured housing communities are far better managed than other options. We are implementing proven technologies to bring more value to our residents and a deliver a stronger return. 2. Our greatest hurdle remains access to credit for our customers. Consumer financing will continue to drive demand for our homes. We have to make sure that the new lending regulations being churned out in DC don't cut off a segment of our buyers. Looking to the future, as lawmakers figure out what comes next for the secondary markets; we need to insure there is a place for manufactured housing loans. I think if we address these crucial consumer credit issues, we can attract new capital to the industry overall. 3. For our industry to succeed, we must change the outdated adverse perception of manufactured housing and battle the negative stereotypes placed upon our customers. We must reinforce the idea that manufactured housing is a sustainable option not only for affordability, but for green technologies and lifestyle as well. Once we make progress on that front, people will come to recognize our product for what it is – well-built, high value homes for decent, hard-working Americans. Ross Kinsler Wisconsin Housing Alliance 1. No. There will be a level of confusion in early 2014 as Dodd-Frank rules impact the lending community and the year will get off to a slow start. 2. Access to capital 3. The downturn has lasted more than a decade and there is no evidence that markets will improve, in fact a pullback is more likely to 2010 levels.