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  • Comment Detail

  • Date: 02/07/17
    First Name: Jim
    Last Name: Picard
    Email: Jim.Picard@denalifcu.com
    Organization Type: organization
    Organization: Denali Home Loans

  • Comment

    Comment on Chattel Lending for manufactured homes:

    I do not have data to support my comments but can point you in the right direction.

    I have been in consumer or chattel lending since 1975 and mortgage lending starting in 1981.

    I recall, as a consumer loan officer in 1975 – 1980, a brand new 14 foot wide mobile home would sell for between $18,000 and $19,000.

    The manufactured home industry, known at that time as the mobile home industry in Alaska, lobbied the State of Alaska and Alaska Housing Finance Corporation to offer similar terms and interest rate subsidies to those purchasing mobile homes that were placed in mobile home parks, without permanent foundations, in urban centers in Alaska, but mainly in Anchorage, Fairbanks and the Mat-Valley.

    Due to political pressure, AHFC created a mobile home financing program similar to traditional stick built homes on permanent foundation. The prices of a used mobile home that originally sold as new for $18,000 a few years later appreciated in value to $20,000, $30,000 or $40,000, depending on the amenities, deferred maintenance etc.

    And then a housing recession, oil industry related, struck Alaska (along with several other oil dependent states) and the value of the mobile homes crashed and most frequently ended up with a resale value of a fraction of the loan balance, resulting in significant losses to the Alaska Housing Finance Corporation.

    I was working at Alaska USA FCU at the time, first in consumer lending financing mobile homes as chattels, and then in mortgage lending using the AHFC mobile home program.

    The cost of servicing delinquent mobile homes was extremely high and I believe certain accounting issues caused AHFC to force the largest mobile home servicer City Mortgage into involuntary bankruptcy.

    Mobile home park owners were charging $200 per month space rent per mobile home, whether occupied or not. The burden/obligation fell to the Servicers to negotiate with mobile home park owners regarding costly space rent, but with little success. What Alaska USA did then was move all the vacant mobile homes out of the mobile home parks into an empty lot to eliminate the cost of monthly space rent, where there was little demand and the depreciating asset continued to deteriorate.

    That is my memory. Huge losses to the investor AHFC and the mobile home servicers. And it was due in part to the heavy lobbying from the industries that support manufactured homes.