This seems like a paradox, but it should make Manufactured Home loans a logical consideration among the possible lenders that are looking to appear into a lucrative new niche market. Which leaves everyone in the Manufactured Home community asking the question: Who will step up to the plate to be the leading Mobile Home Lender? It is possible that Warren Buffet will step up to the plate, but his big investments and movements lately have seemed incongruous. He may move to a low-stakes table, while the Manufactured Home financing market is overtaken by a new investment company willing to appear into a new industry starving for capital.
Loan standards in the Mobile Home finance market have typically tightened during times of economic crisis. This is not surprising, but nevertheless not well received. The tight standards that edges are now holding themselves to for Manufactured Home loans can be compared to a farmer who depletes all the nutrients from his soil as fast as possible. The farmer then points the finger at the grocery store for his loss in livelihood, instead of accepting that he is truly to blame for poisoning the well. The financial institutions have been reaping the benefits of the loose legislation for many years now, all the while profiting from allowing irresponsible lending to take place, then securitizing it and placing it in other places. Now the hens have come home to roost, and the edges are acting irresponsibly in the opposite direction, on the side of over caution. Manufactured Home lending institutions are finding phantom reasons to decline already the lowest risk loans.
Manufactured Home finance California agents are now left asking who the new dominant funding institution will be in the Mobile Home loan industry after the dust settles. Recently the government has confined Taylor, Bean and Whitaker from providing any more loans backed by by the federal government. HUD believes the institution failed to submit a necessary financial report, raising eyebrows at fraud concerns. The company was also ordered to desist from issuing mortgage backed securities for Ginnie Mae. Taylor was the No. 1 source of funds for mobile homes, they lent nearly 13 percent of all Mobile Home investments in 2007, which were insured by the FHA.
Wells Fargo, JP Morgan Chase Bank, and Countrywide are the remaining large manufactured home lenders, however these companies are not as active as they used to be in the Manufactured Home loan market. This small number of lenders will rule to reduced competition, yielding a high need and therein, increased interest rates. Because of this situation, the lenders have the advantage and will probably only issue a limited number of loan programs obtainable to refinance or finance a Mobile Home in America.
Manufactured Homes have been the first step towards home ownership for low income and retired Americans for a long time. Mobile Home loan agents are finding it more and more challenging to find new supplies of mobile home funding from a group of lenders that has shrunk during the past several years. Manufactured houses, which are factory-built in parts and then put together at a land site, are considerably less expensive than traditional homes. According to the Commerce Department, the average price for a Mobile Home in 2008 was $65K, much lower than the average price of $292K for a site-built home.
Strangely, Warren Buffet’s Berkshire Hathaway revealed recently that in this current housing/banking crisis, their Mobile Home customers are foreclosing less and making their loan payments more. Berkshire subsidiary Clayton Homes’ delinquency rates for mobile home loans have also been stable during these times of turmoil: the delinquency rate was 3.26% in 2004; it was at 3.5% in 2008; and now it’s 3.82% here in 2009. However, the delinquency rate in the traditional housing industry is higher, around 6.4%. Annual credit losses are running steady at a reasonable 1.5% of the loan portfolio. It is worth mentioning, however, that Clayton does not securitize their loans. This method the loans keep on their books, so they are much more conservative in their loan approval course of action.