Much has transpired these last few weeks in the manufactured housing industry.  I thought you might find some of it interesting.  Here are the highlights.
 
MHI 2005 CONGRESS AND EXPO REPORT
 
I recently returned from the 2005 National Congress & Expo for Manufactured and Modular Housing.  The Congress & Expo was once again well attended by a cross section of industry participants from across the country.  This year’s theme was Winds of Change.  Seminars and speakers included:
 
How to find, Value and Buy a Land-Lease Community,
Renewing your Manufactured Home Community,
Government Regulation of Communities in 2005 and Beyond,
Legal Audits for retailers and developers,
Installing and Finishing Modular Homes,
Financing a Land-Lease Community,
Federal Regulatory Update,
Effective Water Conservation Methods for Communities,
Developing Modular Home Subdivisions,
Innovative Foundation Systems for HUD-Code Homes.
 
These are all useful topics but MHI could use some help in recruiting moderators that are more entertaining and outgoing.  Most were quite good but a few were awfully elementary and slow.  Not that they didn’t know their stuff, but they lacked those tools necessary to attract and keep your attention.  Missing from the Keynote Address or seminar line-up was any help regarding Chattel financing.  Solid, existing lenders such as 21st Mortgage, CU Factory Built Lending ( www.sacu.com ), Green Tree Servicing LLC ( www.gtservicing.com ) Origen Financial ( www.origenfinancial.com ), and USBank Manufactured Housing Finance ( www.usbank.com )were all there and appear to be in it for the long run.  But it doesn’t look like any new lenders are planning to enter the manufactured housing finance arena.  Our best bet for more aggressive Chattel loans will probably come from FHA, as MHI lobbies FHA for more flexibility and higher loan limits. 
 
GOODBYE ASSOCIATES HOUSING FINANCE

21st Mortgage Corporation ( www.21stmortgage.com ), an affiliate of Clayton Homes and a subsidiary of Berkshire Hathaway has announced its purchase of the remaining $1.4 Billion Associates Housing Finance manufactured home loan portfolio (nearly 40,000 accounts).  This is the final chapter in Associates withdrawal from the manufactured housing industry.  The remainder of their employees will likely be served termination notices this week and the Associates repossessions will be serviced by 21st Mortgage beginning in May.  21st Mortgage continues to expand their servicing portfolio, adding the Associates acquisition to last year’s purchase of the Chase Manufactured Housing portfolio.
   
MANUFACTURING

First, Champion Enterprises, Inc. (www.championhomes.com ) reported on February 15, 2005 their first profitable year since 1999, earning $17 Million on sales of $1.15 Billion.  This compares to a net loss of $103 Million on sales of $1.14 Billion in fiscal 2003.  These strong year-over-year results reflect continued progress in their core manufacturing business, growth in their modular home business, and the sale of several non-profitable retail locations.  Meanwhile,  Fleetwood Enterprises ( www.fleetwood.com ) continues to make headlines as they announced the departure of Roger L. Howsman, Executive Vice President of the Housing Group on March 31, 2005.  Look for more exciting changes at Fleetwood as they re-align their management team with experienced manufactured housing veterans, lead by new President Elden Smith.  Finally, Palm Harbor Homes ( www.palmharbor.com ) surprised us all with the announcement that President and Chief Executive Office Larry Keener can add the title of Chairman to his business card, succeeding founder Lee Posey.  Mr. Posey will stay active as a member of the Board of Directors but intends to focus his efforts more on his contributions to, and expansion of the Foundation for the Education of Young Women.
 
FOUNDATIONWORKS
 
This new company made the biggest impact at the 2005 Congress & Expo.  If you aren’t familiar with this revolutionary system, visit their website at www.foundationworksinc.com.  It is the quickest and best way for a home to meet the permanent foundation requirements of lenders offering the most attractive loan programs. With the FoundationWorks system a manufactured or modular home can qualify for the best interest rate without pouring concrete on site and/or experiencing costly weather delays.
 
NATIONAL TRENDS   
 
Regardless of who I spoke to at the Congress & Expo, no one predicts much of a rebound in 2005.  There are pockets of opportunity, such as Florida and California, but overall business has leveled out.  A modest 5-7% increase may materialize in 2005 but that will depend on interest rates, financing availability and whether or not stiff competition from site-builders continues. 
 

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