Issue link: https://read.dmtmag.com/i/303813
MAY 2014 18 THE JOURNAL I recently overheard one of my sales staff encountering a young couple. Having re- cently hired a consultant to make clear the recent rules for handling financing issues under the provisions of the Dodd-Frank and Safe Act legislation, and had specific dos and don'ts handed out to everyone, I couldn't be- lieve my ears. If I can accurately repeat the conversation with you, can you please com- ment? Teri S., Ocala, FL. Salesperson: "Well, that was nice trip through our model homes; I was right the "Acapulco" model has been recently discounted, and it's available for a good price. Its a fine home, built to the highest standards in one of our leading home builders. Let me verify the price, yes, it's $49,325 plus sales tax and licensing/registration fees. Will this be a cash trans- action, or are you interested in hearing about various financing programs" Man: "We would like to hear about our financ- ing options". Woman: "We have barely enough for a down pay- ment, I think, but the monthly payments may be a problem for us, if we can't get pretty low payments. We don't want to spend more than we are right now for our small apartment. And, it would nice to have the extra space, and a new home". Salesperson: "Excellent. Before we proceed would you mind filling out this credit application for me. It will make it much easier for me to see which of the lending institutions may have the best terms for you." Woman: Of course. Please do. We appreciate you help in getting the right lender and the best terms. Here honey, you fill it out, since you have the pri- mary income. Man: Looking puzzled at the form. "I am not sure what they mean here about gross income. Do they mean my take home pay or the amount I am paid be- fore deductions? What do they mean here when they are asking about our current loan payments?" Salesperson: "Here, let me fill it out for you, as I have a lot of experience with these forms, and I have some experience (wink wink) with the range of an- swers which will give you the best terms. All you have to do is provide me with your social security numbers, sign and date it at the bottom" Woman "Sure thing. We appreciate your expe- rience and knowledge in this area, as we have no pre- vious dealings with financing a home purchase. We have always been renters, and have generally just as- sumed the rental agreements were ok as they were given to us" Salesperson: "I am more than happy to help. Since many of our lenders only offer chattel mort- gages sometimes called security agreements, these forms are quite different from an apartment lease. This kind of financing is more like a car loan. And, the lenders I deal with pretty much take your infor- mation directly from the credit application, so it helps if I can fill it out for you. Interest rates may be higher on manufactured homes than for site-built, however, sometimes we can get them lowered if we fill the forms out just right. Man: "Thanks. All signed. Are you sure it's ok to fax it into the lender so soon. Shouldn't we take it home and make sure all the information on it is cor- rect. We can check it against our pay check stubs to be sure?" Salesperson: "Don't worry about it. I'll take care of it for you, and we will have you in your new Aca- pulco before the week is over. When I am done, I will FAX it to my recommended lender. Their re- view of your credit situation can have a major posi- tive or negative effect on the terms they are willing to offer you. And, after all, it is in my best interests to help you all I can with the transaction. In fact I may fax a copy off to several of my lenders to get a little "competition" for your business, if that's Okay with you?" Man and Woman: Nodding their heads in unison "Sounds like a good idea to us" Salesperson. You know, some of our lenders are able to finance up to 100% of the purchase price. And, you know what that means: no down payment, which will allow you to save your money for moving, other expenses, and furniture or miscellaneous items you will need for you new home. I may be able to save your down payment for you to use for some new furniture. You would like that wouldn't you?" Man: "That's really nice of you. None of the other salespersons we have been talking to seem to have the inside track like you. Please go ahead." I guess some salespersons have to learn the hard way. To be a viable industry, we have to "clean up our act", and get rid of many of our bad habits. I presume he isn't licensed as a Loan Officer by your State, so it is clearly what he is doing is out of line, and may be considered ille- gal in a court of law. I suggest you get him a copy of Andy Gal- lagher's synopsis of what you can and can't do under the new laws. He is the Executive Direc- tor of the West Virginia Housing Institute. He makes it very clear using some examples of what you can and can't say or do with a prospective buyer when discussing financing options. FMHA has included a copy of it in their new publication "The Impact Of Dodd-Frank on Manufactured Housing Retailers". Some would say the Feds are encroaching on our business model to our detriment. I say, as we clean up our act, we will get more respect from the public, and begin to turn our industry around to what it can and will be. Mr. Hicks has a 45-year history with the m/h industry as a Southern California mobile/modular retailer, and later as manufacturer and developer. He is a licensed RE Broker, and Mortgage broker, and actively works with investors and de- velopers. He may be reached at (813) 300-6150. easted- die@aol.com, www.factorybuilthome.com, www.fha207m. com, and www.mobilehomepark.com Ask Eddie BY ED HICKS DEVELOPMENT MARKETING T J