[ECON] MOBILE-HOME FINANCING BUBBLE IS COLLAPSING

[Ed]

Source: Bloomberg, 1/3; and NYT from 11/25]

THE MOBILE-HOME FINANCING BUBBLE IS COLLAPSING
UNDER THE WEIGHT OF DEFAULTS.

The largest mobile-home financier, Conseco,
was reported in a New York Times piece,
to be facing bankruptcy in November,
due to its policy of securitizing its $26 billion in loans
for mobile homes, counting about $2 billion
in non-existent anticipated profits.

The bubble broke as thousands of defaults
began rolling in last year,
leaving the banks with highly
devaluated junk homes as collatoral.

Now, the second biggest financial firm in the business,
GreenPoint, which bought its share of the business
from BankAmerica in 1998 for $703 million,
is bailing out, taking a $663-million loss.

GreenPoint called it the
"most severe downturn in the manufactured-housing business
that has ever occurred."

 

[Gods1sheep]

ohmygosh! JUST when I called today to inquire about the purchase of a great-looking great-priced doublewide I saw in a SW VA newspaper ad, and they are mailing me their literature!!! Can't believe this is happening NOW. Just as I hope to get away from DC area and into the country!!! Wonder what this will mean to me. Any idea, Ed?

Thanks for the catch!

 

[Tweakette]

G1S, I wouldn't worry too much - the worst that could happen would be that you may have to look harder to find someone to finance it. The credit rules are being tightened up, but the interest rates should be good for you as long as your credit is solid.

My company (to rename nameless) also does MH financing and is also getting out of the biz. They bought a bunch of bad paper trying to accumulate market share in the late '90s and are now taking a bath on it.

Tweak

 

[Onebyone]

There are a great many in default in our area. The newspaper shows them every week.

G1S You might get a really good deal if you could take a used one a year or two old. I would think that would be still a good home for many years before repairs need to start being done. Since there are so many on the market from defaults you could get a good price.

 

[Gods1sheep]

Glad I came back here for a last look before heading out of office for weekend, and can't get on TB from home pc til gets fixed. (Or I learn how to correct whatever needs it.)

These are helpful ideas. Yes, a used one would be fine if it's in good shape...good idea, OBO. Thanks, folks. Will check back in on Monday to see if further ideas.

Have good credit, and am paying mortgage on condo that's risen in value due to location, so figure it will sell easily, as the neighbors' all are doing.

Have never owned as a single woman before, so don't know all the ins and outs of selling one property to acquire another, and need to learn that fast too.

 

[Reliance]

G1S, you can pm me for questions.

If the lender for your loan goes under, you can be sure that another one will step up to receive your payments. Your loan is an asset to the bankrupt company and would be sold.

 

[MISSOURIAN]

I've been in the manufactured housing transportaion industry for about 16 yrs. now. One thing I've never understood is how the finance companies do what they do. I've repo'ed many a home for Conseco, GreenPoint, Oakwood and Clayton Homes . What gets me, is, that there have been people who have wanted to take over payments on homes, right where they are, but the finance co. won't even consider it. Instead, They will pay me to move it to a dealers lot, pay the dealer an ungodly amount to do minor repairs and then sell it for pennies on the dollar.

With a system like that, no wonder they are going down. Also, about 2 yrs. ago, many dealers were offering $99 down and $99 a month for the first year. The result? hundreds of repo's.

The most insane thing I've seen, about 3 yrs. ago, I was setting up a single-wide for a dealer. We were installing the skirting, and the "new home owners" informed me they were going to town, then proceeded to put 4 large dogs, 5-6 goats and several chickens in the home and left. We all just looked at each other and said, "REPO". And, of course about 6 mo. later it was.

As far as Conseco goes, well, they have left several Transporters in this area holding the bag to the tune of $10,000 to $20,000.


Gods1sheep,
I'm not sure how things work in that area, but here in MO, if you put a double-wide on a basement or a block foundation around it, they consider it just like a regular stick-built home.
Last year we bought a dw and stuck it on a basement and got regular financing on it. The difference? If we had borrowed as a mobile it would have been around 14% int. The way we did it, we got 7 1/4%.

A word of caution: Don't go after the flash when you buy. Spend your money on things like 2x6 exterior walls, upgrade the insulation, high efficincy furnace and water heater. If you want the "regular house" apperance, opt for the un-finished sheet rock interior.
I don't have a clue on how the pm thing works, but if you have any questions, or would like the name of the finance co. we went thru, go ahead and pm me. (I'll read on how that works tomorrow)

Onebyone, good point. If i'm not mistaken, the repo market is going to be flooded with homes within the next 6 mo. Back about 9-10 yrs ago I would go around the Tulsa-OK. City area after the big oil boom. There were lots with 5-600 hundred homes, most within 2 to 5 yrs. old. ya could pick them up for between $1000- $5000.

 

[hillbilly]

we bout a new one, while we was looking at them
we started see warning sings in the trailors
says the dam thing will make ya sick or kill ya
so i pointed that that paper out to the seller
he said that that it didn't mean nothing it was the law to put that in all of them,so we bought one, move in it, then about 1 mounth my kids
started getting headaches then us to, we got red of it,built a log home 4 ,1third of the price
of that killer.
and another thing about them they loose their value big time once ya pull them off the lot
a $50,000 one will about $10,000 if ya lucky

 

[Satanta]

used to go on the back lots in Florida and buy older mobiles for like $200. They were the smaller songlewides that the parks were replacing. Put a couple of days muscle and maybe another $500 in materials and ship up North and sell for a couple grand or so.

 

[Shock Wave Rider]

Another problem with financing. We paid off the three boys mobile homes this year. It was a real hassle. The finance companies don't like that. One took 4 months to get the release after we had registered and over-nighted the certified check. So just for the record, these babies are not easy to pay off fast.