News & Notes Archive - July 2008
Congress’s sweeping housing repair kit reforms FHA’s manufactured housing program. providing good news for MH buyers
As part of an effort to support underserved markets, the federal government, under the housing bill about to be signed by President Bush, will foster a secondary mortgage market for manufactured housing loans. This means that MH loans made under the Federal Housing Administration (FHA) guidelines will not only be backed by FHA (in the event of default), but the loans may be sold by the lenders to the Government National Mortgage Association (Ginnie Mae) to replenish their money supply to make more loans.
Ginnie Mae in turn will sell these government-guaranteed loans to the broader financial community in the form of securities. Unlike the sub-prime mortgage-backed securities that proved worthless, causing the current meltdown in the housing industry, these securities will be backed by the federal government, making them desirable, safe investments.
This is good news for manufactured home buyers, because lenders will be able to offer loans at lower rates and have a ready buyer (Ginnie Mae) for the loans, thus ensuring a new and steady supply of money to loan.
Elsewhere, the law specifically charges Fannie Mae and Freddie Mac with “a duty to serve” the affordable housing sector, which means they must enlarge their loan portfolios to include a significant percentage of manufactured home loans (both chattel and home-land). This means these two government sponsored enterprises (GSE’s) must begin buying MH loans from qualifying lenders. Still to be determined are the loan guidelines that must be followed to ensure the loans conform to the GSEs’ standards, but you can expect these to be in place by early 2009 at the latest (the law itself goes into effect October 1, 2008).
Tip: If you’re shopping for a home loan before you begin your search in earnest for a manufactured home, talk to your lender about the latest developments relating to the housing bill. You may be surprised to learn things are starting to roll in your favor.
American Association of Retired Persons (AARP) releases survey of MH households with residents 50 years and older.
According to a just-completed survey by AARP, there are an estimated 3.3 million manufactured home households in the U.S. with occupants 50 years and older. Interestingly, the median annual income for those households in 2005 was about $22,000, compared to twice that amount for households of the same age group living in site-built homes.
The great majority of senior MH households were located in manufactured home communities (a.k.a. mobile home parks) where the land is leased and homeowners rent their sites. These MH land-lease communities (the correct term) can be excellent values for seniors living on fixed incomes, but care must be taken when considering this option, to avoid disruptions down the road. The longest chapter of The Grissim Buyer’s Guide to Manufactured Homes & Land deals with finding and leasing land for your home. There, you will find step-by-step advice on how to proceed, how to protect yourself and ensure you get a fair deal. Please read it carefully before you move forward with your home purchase.
Interview: 15 minutes with...Nichole Farris
Note: In my role as an industry observer and consumer advocate I speak with people at all levels of the manufactured home industry (MH) to gain insights I share with my readers to help them be better informed. Some I have interviewed for a one-page column that runs in an industry trade publication. In return the magazine runs an ad for the Grissim Guides. No money changes hands. I insist on this. Aside from book sales, I neither solicit nor accept a dime from the industry, and my readers have my assurance I intend to keep it that way. Here’s this month’s interview:
Nichole Farris, the Green Queen of the West
Who: Principal home designer and owner of American Homes Sales of Auburn, California; Green home design consultant for MH clients in western region and Hawaii. Member, US Green Building Council, and Build it Green. Partner, Energy Star New Homes Program. Green Building column writer for ABC “Living Green,” and “Fixing the Planet.” Owner of “Lime Designs – Green with a Twist,” a green consulting firm.
Background: Age 37. Born and primarily raised in Wheatland, CA a small agricultural community north of Sacramento. “We were a large close family of very modest means. My grandfather drove a milk delivery truck. We carried on the frugal traditions of our Depression era grandparents: never waste anything; pies and quilts were made for gifts; food scraps were composted; kids walked to school; and my uncle made the saddles and tack.” She excelled in high school, graduated in 1989, and moved south to San Louis Obispo to attend California Polytechnic State University, majoring in ornamental horticulture. Interrupting her degree studies, she returned to Wheatland to raise her son Trey (“I became a working mom, doing all kinds of jobs.”)
In 2001 Nichole acquired ownership of a manufactured home dealership in nearby Auburn, CA to start a small design-build firm, American Home Sales. A passionate believer in the future potential of building green, she started working closely with Golden West’s Perris, CA plant to create a “green” home. In 2007, Farris designed and had constructed her first “environmentally conscious manufactured home” (web site: ecomanufacturedhomes.com). In May, at a regional home show, American Home Sales exhibited to rave reviews the Sonoma House, a modern barn-style zero-energy home. Farris also attends U.C. Davis in an accelerated program to obtain a degree in sustainable building and green architecture. Her son Trey, 17, will soon begin his own college track, having achieved a near perfect score on his SATs (1790).
- Q: Your expertise in green building, and your innovative designs of green models, have put you at the forefront nationally within the HUD universe. Can green become an industry trend?
- A: Absolutely. Just last week I made a presentation on affordable green building at a HUD co-sponsored workshop in Sacramento. I spoke about green building requirements, and I handed out green building samples: insulation made from blue jeans, countertops from smashed porcelain toilets, tiles from airplane windshields, and permeable concrete pavers that allows water to leach at 200 inches an hour. Everyone was really intrigued, especially hearing the products are cost-effective and within the affordable home price range
- Q: How has it been working with Golden West’s plant in Perris (CA)?
- A: They’ve been fantastic. Rob Loomis, the sales manager, started collaborating with me in 2007. It was a new concept for him, but he really got it. He worked with the EPA to get the plant Energy Star Certified, and after that, we reviewed the products and fixtures needed, such as low-flow toilets and faucets, materials with low/no VOC levels, non-toxic adhesives, recycled building materials, low emitting finishes, and formaldehyde-free products. Then we were off and running.
- Q: How did Golden West respond to your design requirements for what amounts to your own brand?
- A: They’ve been wonderful. Although I drive Rob half crazy with daily calls and emails (laughs). Utilizing green architectural design principles, the factory will pretty much build anything I design within the shipping dimensions. Most of our clients prefer a 1200 square foot home. I can design different elevation styles including an upscale country look, with board and batten exterior, higher side walls, grids on the windows, omitting or adding dormers, and 16-inch eaves all around. But our current best seller is our $46,000 Little Red School house, at 757 square feet, with reclaimed wood floor inside. Our homes have an option for a metal roof with a rain catchment system that filters the runoff for drinking water or irrigation storage. Annually, we get about 17 inches of rain in our region which amounts to 12,700-plus gallons of water saved on a 1200 square foot home. And saving water, especially in California, is crucial. All of our homes are solar ready and our roof pitch is designed for maximum efficacy for photovoltaic solar panels.
- Q: You had your $95,000 Sonoma House barn model displayed at the Auburn Home show in May. The response?
- A: Incredible. This was a small home show that sees maybe 30,000 through the gate. We had 300-400 people an hour tour the house from ten to six when we closed the doors, exhausted. We had great news press, TV coverage, and were even contacted by Sunset magazine. We ended up with pages of appointments. Many people are looking for classy, sustainable homes or small in-law cottages, and our models are ideal for them.
- Q: You’ve chosen the term “prefab” rather than manufactured home or factory-built. Why?
- A: Because everyone understands prefab. People come in and ask “Do you sell kit homes? Manufactured homes? Modular homes? We keep it simple: custom prefab green homes.
- Q: Can your business model be replicated as a national model?
- A: Certainly, but I see two things our industry lacks. One is confidence. Dealers don’t have the confidence to design and represent their products as a residential building option. Instead, they continue to offer MH only as a building alternative, like, “If you can’t afford site-built, we offer an alternative.” And second, our industry lacks green building guidelines. My biggest fear is someone will pop in a tankless water heater and say they’re “green.” That could severely undercut our future credibility in honestly promoting sustainable building. I tell anyone who will listen, “Green is the new black. It’s fashionable. It’s functional. It goes with everything. And it’s not only cost effective, it’s profitable.”
- Q: From what’s been happening, it sounds like you’re getting people’s attention.
- A: I’ve received great support including letters from the First Lady, Vice President Cheney, Senator Diane Feinstein, and phone calls from Bill Clinton’s office of and the Home & Garden Channel. But the biggest compliment I’ve got thus far is an email from Leonardo DiCaprio. For a 30-something married girl, that’s pretty big. And for 15 key strokes he knew who I was (laughs).