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Maine's Manufactured Home Industry on the Upswing
01/31/2014   Reported By: A.J. Higgins

After struggling through the recession, Maine's manufactured housing industry is showing signs of resurgence. As dealers gather this weekend in Augusta for their annual model homes show, there's a sense of optimism. But some sellers say federal revisions in lending practices instituted four years ago continue to discourage would-be home buyers. As A.J. Higgins reports, bankers claim the changes were needed to correct practices that led to the Wall Street meltdown of 2008.

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Maine's Manufactured Home Industry Surging
Originally Aired: 1/31/2014 5:30 PM
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 Duration:
3:57

Tinamarie Smith wandered through the depths of the Augusta Civic Center that had been transformed into a mini-neighborhood of manufactured houses for this weekend's home show.

Smith operates her family's State Manufactured Homes business in Scarborough, a company that - like many others in Maine - is struggling to recover from the 2008 recession. Last year's sales were good, she says, and this year's will be better.

But she would be happier if banks would consider easing up on some of their restrictive lending policies. "The Dodd-Frank laws that came into effect a few years ago really hurt a lot of our retailers," Smith says.

Smith says the revisions under the Wall Street Reform and Consumer Protection Act of of 2010, also known as "Dodd-Frank, " continue to cast a shadow over the state's housing market in general, and manufactured homes in particular - especially for businesses like hers, which sells homes to buyers, and also leases to those same buyers the lots on which homes are sited.

Since Dodd-Frank became law, she says there are more potential buyers than there are banks that are willing to provide financing.

"That made it so that we couldn't get financing anymore," Smith says. "We went from having five banks that would finance chattel property, which is manufactured homes on leased land, down to two. It's difficult for people to find financing for manufactured homes on leased land from time to time, if, say, their credit is not perfect."

"It's not a conventional mortgage," says Chris Pinkham is president of the Maine Banker's Association. "In a conventional mortgage the lender is able to take the land as part of the security. On the leased land, they don't have that option."

Pinkham says loans on chattel property present more uncertainty for lenders, and he says that could explain why many banks are not eager to take on what could be perceived as an un-securitized risk. After all, Pinkham says, a house that can be moved in can also be moved out.

And Pinkham says Dodd-Frank was needed to temper the heyday of the the late 1990s and early 2000s, when unqualified buyers were able to acquire what those in the business referred to as NINJA loans: No income, no job or assets.

"In the go-go days of growth, a lot of players in the marketplace who would work the fringes didn't require the same type of down payment - if any at all - didn't require documentation, and those alternatives are gone," Pinkham says. "And under the new Dodd-Frank rules for mortgage applications, as well as their new servicing rules, those players have disappeared, and those practices - which got a lot of people into trouble - are generally gone."

Still, manufactured home dealers claim that more and more qualified buyers in Maine are choosing their pre-fab over stick-built models. Bob LeClair, executive director of the Maine Manufactured Housing Board, says continued improvements in design and construction attract many first-time homebuyers, who are expected to purchase several hundred houses in Maine this year.

And LeClair says that will be a huge improvement. "Back in 2006, before we had the big drop in the market, modular homes and manufactured homes were 41 percent of all single family housing starts in the state of Maine," LeClair says. "So they've got their spot - it's just to get back there now."

Dick Bradstreet, a longtime Vassalboro dealer, says Maine's 2013 manufactured housing sales were up 13 percent over the prior year and that this year's sales should exceed that amount.



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