Perhaps 75 to 80 percent of manufactured home communities are owned by local owners who are often in a good working relationship with their residents. But the other 20 percent or so may fall into a different category, and that segment will be part of the subject of this report with expert analysis. “My name is Tim Sheahan and I live in a manufactured home community in San Marcos, CA, near San Diego.  I have been a volunteer homeowner advocate for over 20 years serving at the local, state and national level…” Those words and what follows in this preface are from remarks prepared by Sheahan to the Federal Housing Finance Agency (FHFA) from a document available at this link here. Sheahan continued: “I have also served as a consumer representative to the HUD Manufactured Housing Consensus Committee for six years and was a delegate to the White House Conference on Aging in 2005.  I have visited manufactured home communities from California to New Hampshire and Washington state to Florida.  I’ve volunteered over 50,000 hours in serving resident homeowners of manufactured housing communities…” While Sheahan stressed that his remarks are “my personal views,” they are also apparently the views of an expert in several respects who has decades of lived experiences.

 

Part I

According to Sheahan, “FHFA’s “Duty to Serve” rule and make other suggestions to the GSEs for serving underserved markets.  First, I hope you recognize that manufactured housing can constitute an opportunity to meet a “trifecta” of all three underserved markets goals and; therefore, warrants special consideration and “extra credit points” when considering the most cost-effective solutions for meeting the needs of our very low, low and moderate income citizens.  I hope you will also formally recognize that since adoption of the Housing and Economic Recovery Act of 2008, roughly 30 million people have reached retirement age at a pace that continues at 10,000 per day.  The special and dramatic impact of the “senior tsunami” must be carefully considered when evaluating housing programs and meeting the “Duty to Serve” mandate of Congress.” The millions who have reached retirement age have only increased since Sheahan delivered those remarks.

“Through my experiences in California alone, I have witnessed “the best of manufactured housing done right” and “manufactured housing done extremely wrong,” he said. All the quotes that follow are from Sheahan.

“In 1970, my city of San Marcos had a population of less than 4,000 and was part of the dramatic manufactured housing community development boom of the 1970s, adding over 3,000 pads among 18 manufactured home communities, which led to more than a doubling of the population by the mid 1970s.”

“Like many areas of CA, manufactured home purchasers in San Marcos were lured away from metropolitan areas by the promise of a quiet semi-rural retirement lifestyle with low lot rents and nice amenities, which often included clubhouses/community centers, swimming pools and spas, saunas, shuffleboard courts, pool tables and card rooms, community kitchens; and, in some cases, tennis courts, golf courses and fishing ponds.  Downsizing to a MH also enabled them to enhance their financial nest eggs for the retirement years.  Initially, stiff competition among various developers during the only time a true “free market” situation existed in these communities commonly led to very reasonable starting rents.  In fact, I’ve been told that in my community, which happened to be developed by actor Ray Bolger, from The Wizard of Oz movie, and his partners, lot rents were $50/per month, as was often the case in other MH communities in the area.  As the communities filled with “im-mobile” homes, free market forces such as competition were lost and lot rents for captive homeowners skyrocketed in many areas of California.”

“We know many nice resident-owned communities in California are operated and maintained by homeowner fees of less than $175/month, which provides a stark contrast to rents in some areas that now surpass $2,000/month in some land lease MH communities.”

Without proper consumer protections, homeowners have little home/land security of tenure and as “Mom & Pop” operators have sold to Wall Street Real Estate Investment Trusts and other corporate conglomerates, we’ve seen an “Enronization” of the industry, where profiteering corporate operators have pillaged and plundered our manufactured home villages, threatening the future viability of manufactured housing as the largest form of unsubsidized housing in the United States.  Rents have gone way up and/or maintenance has been deferred as a way to maximize profits.”

Let’s pause and consider what Sheahan has said, and then compare and contrast his observations with recent remarks reported in mainstream media by manufactured home industry expert and homeowner, L. A. “Tony” Kovach.

• Sheahan noted his decades of experience with manufactured home living and his years of volunteer advocacy.
• Sheahan said: “stiff competition among various developers during the only time a true “free market” situation existed in these communities commonly led to very reasonable starting rents.”
• Because of the current lack of competition: “Without proper consumer protections, homeowners have little home/land security of tenure and as “Mom & Pop” operators have sold to Wall Street Real Estate Investment Trusts and other corporate conglomerates…”
• “…profiteering corporate operators have pillaged and plundered our manufactured home villages, threatening the future viability of manufactured housing as the largest form of unsubsidized housing in the United States.  Rents have gone way up and/or maintenance has been deferred as a way to maximize profits.”

Editorially, Mobile and Manufactured Home Living News (MHLivingNews) would broadly agree with such points, which have been previously highlighted in articles like the one linked below.

 

 

Sheahan elaborated by saying this.

It is outrageous there aren’t adequate restrictions on GSE backed loans to protect vulnerable homeowners (and lenders).  I have a printout from one lender who has gone so far as to “black list” several corporate owners, including Kort & Scott Financial (Sierra Management), Tatum and Kaplan Financial Group, Cal-Am Properties, Kingsley Properties and MHC/Equity Lifestyle Properties, because home loans in their communities carry such high risk (Exhibit 1).  If these and other operators create such high risk for home loans, they should be disqualified from receiving GSE backed loans!”

“Predatory capitalism is alive and well in the manufactured housing industry where the property management arm economically evicts homeowners, enabling the sales arm to seize the homes for little to nothing.” Sheahan used this example: “I also have a printout of Tatum and Kaplan Financial’s sales arm, Community Mobilehome Sales (CMS) listing of 113 homes for sale that they had seized in their communities at one point in time…” That is similar to what was purported about Nathan Smith of then SSK Communities, which has since rebranded and gone public as Flagship Communities. Cautionary tales have been published by MHLivingNews about that operation, and others. Smith went on to be the chairman of the Manufactured Housing Institute (MHI) and is still on the board of directors of MHI, per the information from MHI that is posted here.

 

 

Sheahan continued.

There are even “get rich quick schemes” on the Internet, such as www.mobilehomeuniversity.com, describing how to profit by purchasing MH communities and taking advantage of captive MH owners.”

Warnings about operations connected to Frank Rolfe and Dave Reynolds have been the subject of years of articles on MHLivingNews and/or MHProNews. Among them are those linked below.

 

 

 

 

 

 

 

 

 

 

Skipping ahead in Sheahan’s remarks: “Instead of providing loans to enable some of the most aggressive and opportunistic operators to expand their oppressive empires, it would be far better to support acquisition of MH communities by philanthropic nonprofit operators, support resident purchase of MH communities or support nonprofit developers in the construction of new MH communities.” In those comments to the FHFA, he went on to say the following.

I especially want to encourage you to consider how the GSEs could work with other Federal, State, and local agencies along with interest groups and high profile leaders and foundations to create public/private partnership opportunities that could develop a whole new model of manufactured home communities/villages.  The “tiny home” movement has gained attention and popularity for providing short-term housing needs and could be a springboard for broader societal acceptance and support of new manufactured home villages.  A first focus to consider could be a new type of “age 62 and over” MH villages that could provide broader services than exist in the many 55+ communities that are currently very common, especially in sunbelt states.

New Activity

Could there be a new era of widespread MH village construction, especially in rural and semi-rural areas that could once again lure seniors from stick homes in the cities, older conventional homes in small towns or from family farms, to live in new retirement communities with more amenities than MH villages have ever provided in the past?  By getting seniors to downsize to MH retirement communities, their previous homes would be made available to younger families/the workforce at a generally affordable price closer to where they work, reducing their daily commute time on highways.  Offering amenities/services such as basic medical care, transportation for those who no longer drive, shopping cooperatives to purchase goods at discounted rates, some form of meal service, entertainment/social activities, etc. would enable homeowners to “age in place” for the longest time possible before needing more intense and expensive specialized care.  The manufactured home product has never been better and with modern ADA and accessibility standards for common areas and homes, the ability to age in place has become even more extended.  I have known many MH owners who valued their MH lifestyle so much and had such pride in homeownership that they preferred to live-out their lives in their MHs rather than ever moving to assisted living facilities.

I have witnessed how my own hometown of 600 people in WA state is withering away, forcing drastic steps such as school consolidation with other small towns in the area.  The rural lifestyle has been a bedrock asset for raising productive citizens for centuries and we need to find innovative strategies to continue to support that way of life.  Support of retirement MH villages could be a welcome economic and civic stimulus to many small towns, especially if they are not too far from large cities that would offer more extensive services, when needed.”

 

Candidly, among the points of respectful disagreement with Sheahan would be the following, but his thoughts will be balanced shortly thereafter. The projection of a halo type effect around some ‘philanthropists’ has been the subject of other reports that will be linked for those who want to better grasp those topics. Sufficient for now is to say, it is understandable why Sheahan – or anyone else – might think of Warren Buffett has a “philanthropist,” because that is the narrative carried by much of mainstream media that may not want to lose the advertising dollars of Berkshire Hathway owned brands.

 

Achieving support of renowned philanthropists and foundations could create public awareness of the true value of manufactured housing and help dispel negative stigmas and stereotypes.  A successful new manufactured housing model would also be great PR for FHFA and the GSEs and the Federal government in general.  Might Warren Buffet personally support nonprofit MH Village developers, starting with construction of MH villages in rural areas of Nebraska that could then expand nationwide?  After all, creating more demand for construction of Buffet’s/Berkshire Hathaway’s Clayton Homes brand would benefit BH shareholders.  Might President Jimmy Carter encourage Habitat for Humanity to expand its mission to include construction of retirement MH villages in Georgia and other rural areas of the South, which could include community centers that could also serve as storm shelters when tornados strike.  Might Vice President Mike Pence support programs that would greatly benefit the many MH manufacturers in his home state of Indiana?  Perhaps President Trump could even persuade large Foundations to adopt an “America First” philanthropic mission to support the Duty to Serve mandate to benefit Veterans, seniors and families in manufactured housing communities?  Could the government build more senior MH housing communities on military or other government land?  I encourage FHFA and the GSEs to use “innovative approaches” in meeting the Duty to Serve mandate and these examples could be just that type of innovative approach that can provide significant collateral benefits to many elements of society, while focusing on underserved markets.”

 

 

Again, the above reflect Sheahan’s thoughts, and perhaps in hindsight given more information, he might revisit some of them. Woes associated with Buffett’s brands in manufactured housing have been the subject of numerous reports on MHLivingNews and on our MHProNews sister site.

 

 

 

There is an evidence-based argument to be made that if Buffett wanted to see the Duty to Serve (DTS) properly and fully implemented, he would have already seen to it that his manufactured housing brands owned by Berkshire Hathaway (BRK) would have done so. That noted, again, in fairness to Sheahan, he may have been aiming to thread a political needle, or perhaps hoped to encourage true (vs faux) altruism that would also have a sound business component to it. His thinking was arguably correct in the respect that it does make good business sense. But the Buffett style of business is not the traditional ‘take good care of your customers, and your customers will take good care of you’ kind of mentality.  Buffett’s brands have understandably been accused of behavior that is just as predatory and harmful as the consolidation focused community operators Sheahan’s narrative quite understandably laments.

 

 

 

Skipping ahead, Sheahan said the following about chattel lending on manufactured homes.

 

Not only does the classification of “chattel” fuel the negative stigmas and stereotypes of manufactured housing, such loans seem to justify higher rates because there is a perceived risk that homes could easily be moved during the night under the cover of darkness to escape loan payments.  These homes are not motorized; these homes have typically had the “tow-hitch” removed with a cutting torch and wheels/axles removed; virtually none, even “pre-HUD” homes have been moved from MH communities during the life of any home loans.  The risk of default is tied to unreasonable and/or unanticipated rent increases or hardship circumstances which place the homeowner in peril, rather the possibility the home might be moved because it is neither on a foundation nor in a resident-owned community. The term “chattel” should NOT be applied to im-mobile manufactured homes.  In 1992, economist and urban planner, Dr. Kenneth Baar wrote an article in The Urban Lawyer (Volume 24/Number 1) entitled “The Right to Sell the “im” mobile Manufactured Home…”  In that article, Baar described the inverse relationship between lot rents and home values, along with other precarious aspects of owning a home “permanently” affixed to someone else’s land.  In fact, Baar is also known for citing that for every $100 increase in lot rent, MH values can drop by $10,000.  The Baar article also cited that some courts had recognized that an “absence of meaningful choice” without adequate homeowner protections in the monopolistic MH community environment creates a form of “economic servitude” to the land owner.

Unlike an apartment landlord who is motivated to keep rents reasonable to keep all units rented and generating revenue, MH community operators seize the opportunity to capture homes for little to nothing by either economically evicting homeowners through unaffordable rent increases or by unfairly denying prospective purchasers of homes.  Since the selling homeowner is obligated to pay lot rent until the home is sold, even if unoccupied, many homeowners trying to get a fair price for their homes eventually give up and transfer ownership to the community owner, who then offers rent discounts or perks to the purchasers of “park owned” MHs.  That is how the landlord opportunities for abuse are far greater in MH communities than in apartments.

Since the goal of Duty to Serve is to serve the most underserved markets, I encourage consideration of loan products for “pre-HUD” homes, which are the homes the lowest income buyers are likely to purchase.  My experience has been that a properly maintained pre-HUD home can be just as sound as some newer, HUD code homes not properly maintained.  In Calfornia, so long as a MH meets the Health and Safety Code requirements it can be sold “in-place” and perhaps some inspection requirement could enable qualification of pre-HUD home loans.  Pre-HUD homes in MH communities are generally more highly maintained and have greater “curb appeal” than on private land because they have been subject to “community standards” addressed in rules and regulations.  Thousands of pre-HUD MHs in California have been remodeled, re-wired, re-plumbed, etc. and continue in fully functional service.  There are many good, upstanding MH community operators and perhaps with proper homeowner protections, such operators could be authorized to write limited numbers of home loans.”

 

Part of that last sentence above merits restatement for emphasis. “There are many good, upstanding MH community operators…” That is similar to remarks made by Paul Bradley, with ROC USA. Bradley has also said that there are good, manufactured home community operators and more predatory ones.

 

 

So, both Bradley and Sheahan are clearly not saying that every manufactured home community operator is predatory. There may be a reasonable and evidence-based argument to be made that it is the minority of such property owners who are ‘predatory.’ But unfortunately, it is those predatory community operators who are consolidating properties once owned by mom and pops who get the most headlines. It is those predatory style operations that ought to be considered for legal action, including prosecution for what legal researcher Samuel Strommen called “felony” violations of antitrust laws when the evidence supports it.

Regulatory Activity

…Monopolistic opportunism, depending upon the predatory whims of particular community operators, determines whether life in a given MH community will be comfortable and secure or contentious and frightening.  And no matter how good things are today, it can all change overnight if the community is purchased by one of the industry predators or if an abusive manager is hired.”

 

Perhaps the key word is “monopolistic.” It used to be the case that to be called a “monopolist” was a tremendous insult. Perhaps that era is returning?  What appears to be certain is that a growing percentage of the population realizes that the trends toward oligopoly style monopolization has infected the manufactured home profession.

 

 

Buffett is in several ways arguably an oligopoly style monopolist.

The late Sam Zell cheered, during an “earnings call,” the oligopoly nature of the manufactured home industry.

 

 

It is harder to spot that style of monopolization. But once that style of monopoly behavior is understood, it should be combatted, as Sheahan, Strommen, James A. “Jim” Schmitz Jr. and others have argued.

 

 

 

Part II

MHProNews recently featured two reports that deal with a specific aspect of part of Sheahan’s thesis above. That is the supply side of the equation. Sheahan is correct in saying that federal programs could be tailored to support the development of new manufactured home communities. He is also correct in saying that existing manufactured home communities could be converted into resident owned properties, perhaps in a similar model as what ROC USA offers.

 

 

This writer in public comment as the FHFA Listening Session in Washington, D.C. in 2019 and since has made an evidence-based case similar in several respects to what Sheahan and Strommen have said (before and since).

 

 

Last Sunday, 2.25.2024, the Gannett owned Ledger published an op-ed by this writer that explained how existing federal laws could be used to overcome zoning barriers for manufactured homes. By overcoming zoning barriers, the kind of manufactured home ‘village’ or other placements of manufactured homes could be accomplished. News aggregators Yahoo News and MSN picked up and republished the full article.

Planetizen on 2.28.2024 published the following brief about the Kovach op-ed on manufactured housing at this link here.

Opinion: Make Way for Manufactured Housing

Manufactured homes can be an affordable and accessible solution to the housing crisis, but they’re zoned out of many U.S. neighborhoods.

In an opinion piece in The Ledger, L.A. “Tony” Kovach calls on cities in Florida and elsewhere to loosen zoning restrictions that limit where manufactured housing, which can cost half as much as site-built homes, can be placed.

In many U.S. cities, zoning codes restrict where manufactured housing can be placed, often relegating it to the edges of towns and areas isolated from transportation and services. Yet manufactured homes can offer safe, affordable, secure housing and higher density than many single-family neighborhoods. “Unlike conventional housing, many could buy a manufactured home on privately owned land with FHA, VA, or USDA financing for about the same payment as a rental.”

According to Kovach, the 2000 Manufactured Housing Improvement Act allows the federal government to preempt local zoning rules that bar manufactured housing, though this “enhanced preemption” is rarely used. Kovach argues for more widespread enforcement of this rule, pointing to the success of accessory dwelling units (ADUs) in California after the state legalized their construction as a model for manufactured housing, which he argues could similarly help boost the housing supply and provide affordable units for individuals and families.

FULL STORY: Opinion/Commentary: Governments should lighten up on zoning for affordable manufactured homes  ##

 

“While MHARR and the author of this article are long-time advocates for implementation of the enhanced preemption of the Manufactured Housing Improvement Act of 2000 by HUD, in order to eliminate widespread zoning discrimination against affordable manufactured homes and the Americans who own and reside in them, others — including some within the industry itself — have either downplayed this major issue or have been missing in action for far too long.”

Mark Weiss

 

There is more on that op-ed and the various publications and platforms which have amplified that topic at the link below.

 

 

Those naturally flow into topics recently published at the links below.

 

 

 

There is a strong, evidence-based case to be made that HUD Code manufactured homes are the most proven solution to the affordable housing crisis.

There is a potentially robust case to be made that manufactured homes could be boosted by existing federal laws in several respects similar to what Sheahan, Strommen, Schmitz, MHARR, and Kovach have advocated. More competition will come from more home sites being developed. More competition can benefit current and potential manufactured home community residents. ###

 

 

 

 

That’s a wrap on this installment of “News through the lens of manufactured homes and factory-built housing” © where “We Provide, You Decide.” © ### (Affordable housing, manufactured homes, reports, fact-checks, analysis, and commentary. Third-party images or content are provided under fair use guidelines for media.) (See Related Reports, further below. Text/image boxes often are hot-linked to other reports that can be access by clicking on them.)

By L.A. “Tony” Kovach – for MHLivingNews.com.

Tony earned a journalism scholarship and earned numerous awards in history and in manufactured housing. For example, he earned the prestigious Lottinville Award in history from the University of Oklahoma, where he studied history and business management. He’s a managing member and co-founder of LifeStyle Factory Homes, LLC, the parent company to MHProNews, and MHLivingNews.com. This article reflects the LLC’s and/or the writer’s position, and may or may not reflect the views of sponsors or supporters.

http://latonykovach.com

Connect on LinkedIn: http://www.linkedin.com/in/latonykovach

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