The future of CONSECO FINANCE continues to make headlines on Wall Street and in the various financial publications and websites. Conseco Finance is losing at least $15 Million a month due to delinquencies and defaults on manufactured home loans, so its easy to see why Conseco Inc. is moving quickly to divest itself of this cash-hemorrhaging finance subsidiary.

Sources report that in addition to bidders including GE Capitol, Bear Stearns Cos. and the joint venture group CFN Financial, a group lead by Warren Buffett's Berkshire Hathaway Inc. has made a bid for Conseco Finance. This is a fascinating move, since Berkshire Hathaway Inc. is well under way to becoming the primary owner of Oakwood Homes and Oakwood Acceptance Corp. In another astonishing move related to Conseco Finance, Fannie Mae, the government sponsored secondary mortgage purchaser has bid $70 Million for the servicing rights and technology platform of Conseco's $23 Billion manufactured home loan business. Fannie Mae has less than 1/2 of 1% of its credit portfolio invested in manufactured home loans, yet those loans amount to 10.3% of Fannie Mae's foreclosed properties. Fannie Mae has a $7 Billion investment Conseco Finance so they clearly are making at the very least a token "backstop" bid to protect their interests. Experts predict that a more typical consumer finance company or bank will be the likely high bidder for Conseco Finance. We should know who that is by the end of this week, since the bankruptcy court is scheduled to announce the winner of this high-stakes bidding contest on Wednesday, March 5, 2003.

The Salem Manufactured Home Show concluded yesterday with manufactured home builders, community owners, subdivision developers and retailers reporting brisk sales activity to a large group of qualified homebuyers. The Oregon Manufactured Housing Association (OMHA) reports a 9% decrease in total paid attendance as compared to 2002, but said that the decline was softened by the large preponderance of qualified home buyers attending versus a large number of casual attendees with little interest in actually purchasing a home. Given the depth of Oregon's recession and the glut of repossessed manufactured homes on the market in Oregon and Washington, this news comes as a welcome sign that manufactured housing is still an attractive housing choice for much of the home buying public.

Looking for new homes to fill smaller, existing park spaces? Contact Wayne Houghtailing at SKYLINE HOMES in McMinnville. In response to requests from community owners, SKYLINE has just announced that they are building 20' wide new homes, in lengths up to 60' long. You can get more information about these new homes by contacting Wayne toll free at 1-800-235-2003.

Activity in the legislature is heating up. In Washington we continue to battle bills that attempt to saddle us with unfair impact fees and restrictive zoning. Other issues include the ability of a utility to charge the community owner for unpaid balances from former residents, and unpaid back taxes on abandoned homes. Add this to Washington's budget problems and rising unemployment and you've got yourself one heck of a busy session.

Oregon's budget crisis and the restructuring of the Public Employees Retirement System in Oregon is foremost on everyone's minds. In our industry, OMHA has several important bills in progress, including SB 690 which moves manufactured housing from DMV to Building Codes Division (BCD), a huge step in improving and streamlining our industry, and HB 2439, a bill that will allow for attached units (duplexes) in manufactured home parks & land-lease communities.

HB 328, commonly known as the Freddie Mac bill, had it's hearing last week and I testified before the Senate committee hearing arguments on this bill. There was no opposition to SB328, and industry experts agree that the Freddie Mac conforming loan program is a program that will give community owners struggling to fill their communities a very affordable financing choice for their residents, should they decide to offer the required Freddie Mac-approved long term lease. The Freddie Mac program is working well in a few Washington communities and many more are considering offering the program in Washington. This bill allows for manufactured homes on leased land to be treated as real estate (real property) instead of personal property, and we are pushing for the shortest possible lease term. It was initially thought that title companies would insist on a 30 or 35 year lease before supporting the bill, but we've since learned that they do not oppose shorter term leases, provided they are long enough to satisfy their requirements necessary to issue the ALTA 7 endorsement title policy. It is exciting to see several pieces of legislation being introduced that are designed to generate additional home sales, fill vacant home sites, and create new types of financing for residents of manufactured home communities.

Manufactured Home shipments were reported to be 163,000 nationally in 2002, the lowest since 1963. Repossessions are expected to be a record high 115,000 in 2003. These numbers clearly present a challenge to manufactured home community owners, but they can also create an occasional opportunity and cause us to stop and take a look at the way we do business. Are we affordable housing as compared to other housing choices in our area? Are we adequately addressing the needs of our residents? Are we working cooperatively together with our business partners to bring health and prosperity back to our communities? I can't speak for the entire manufactured home community business, but at Commonwealth we have seen a dramatic reduction in repossessions and homes being removed from our communities in Washington and Oregon, largely because we have taken a pro-active approach to business and have worked together with the lenders and brokers to make sure that most repossessions are sold onsite.

When our business rebounds, AND IT WILL, some of these lenders will re-enter the personal property/chattel loan business and remember how Commonwealth worked cooperatively with them during these tough times. Our #1 goal is always to protect our community owners and their investments. When making decisions based on long-term thinking and planning, coupled with prudent business practices, you can accomplish your goals while being sensitive to the needs of your residents and working with your business partners, resulting in a solid financial future for owners of manufactured home communities.

Greg Harmon - President
Commonwealth Real Estate Services
E-mail: greg@cwres.com
Telephone 503.244.2300 Ext. 101