Manufactured Win In Wyoming, Warren Buffet Claims “Best In Class” For Clayton
While Jason Halverson of Wheatland, Wyoming motivated State lawmakers to pass important legislation for the benefit of all manufactured homeowners in the Equality State, Warren Buffett informed Berkshire Hathaway shareholders that Clayton Homes possesses a “best in class” management culture.
It’s Wednesday, March 8, 2017, and those are some of the more interesting manufactured housing headlines for the past seven days.
Wyoming Manufactured Homeowner Wins Access to Economic Mobility –
Across the United States, mobile and manufactured home owners are without the same access to financing as their neighbors with site built homes. That’s because manufactured homes are usually classified as personal property and financed as chattel, like an automobile – and converting them to real property – like a house, can be not only complicated but also nearly impossible in some jurisdictions.
But in Wyoming, one feisty and determined manufactured home owner decided to take action, according to Wyoming Public Radio.
Several years ago, Jason Halverson sold his site-built home in Gillette and purchased a manufactured home on property owned by a private party in Wheatland. After remodeling the dual section home he visited a local bank to secure a low-interest short-term mortgage on the home. But the banker, Georgann Martinez, couldn’t help Halverson because he didn’t have the Manufacturer’s Statement of Origin for the manufactured home.
Martinez describes the Manufacturer’s Statement of Origin (MSO) as “kind of like a flimsy piece of paper. So people don’t realize it’s important and that it needs to be taken down to the courthouse.” Which the previous owner never did. Halverson reached out to him but the man had since passed away. He went to the county clerk to get a duplicate, and the clerk told him it was not possible.
To give you some context for the frustration, imagine you’ve just won a free vacation to the beach in Mexico. When you go to apply for a passport you discover that your mom lost your birth certificate. And then the government says “sorry” we don’t have a law that allows us to replace yours.
Martinez says Halverson is not her first customer to hit this obstacle. “I would say in the customers I help I see it 50 percent of the time,” she estimated.
Martinez can still get mobile homeowners financing without all the paperwork, but the options have higher unfixed rates. She said at that point a lot of people walk away. But Jason Halverson doesn’t just give up and walk away.
So after an emphatic “NO” at the bank, and another “NO” at the County Clerk’s office, Halverson next stop was Tyler Lindholm. A Representative in the Wyoming State Legislature. Lindholm explained how Halverson, “brought me this situation and said hey this is happening. Can we fix this? And this is what started” a journey into the underbelly of titling laws.
Perplexed and ready to help, Rep. Lindholm agreed to look into it and found that there were some counties that would reissue titles. While others, like Platte County, where Halverson lives, would not. After further digging, representative Lindholm quickly realized this was a much bigger issue of legal inequality.
“I mean you’ve stranded an entire class of people from being able to obtain a loan. That’s not fair. That’s not right.”
On Thursday, Jason Halverson drove down from Wheatland to the Wyoming State Legislature. He was there when Governor Matt Mead signed House Bill 56 into law.
Governor Mead thanked Representative Lindholm and Halverson. The signing marked the end of a long fight to be able to refinance his home. As Jason Halverson walked out of the room he said he felt relieved.
According to the U.S. Census Bureau, there are 18 million Americans living in manufactured homes – it represents 15 percent of the housing stock for rural Americans, and there’s no consistency in the ways states handle titling laws. According to Doug Ryan, Director of Affordable Homeownership at the Corporation for Enterprise Development, “In many markets across the country manufactured homes and mobile homes are an inexpensive alternative to affordable housing without subsidy. That’s why states need to be more creative and more aggressive in making sure these homes are part of the housing system.”
New Hampshire, Vermont, and Oregon have the most favorable titling laws, but most states are somewhere in between like Wyoming. Halverson knows the impact of that legal ambiguity, first-hand, and he’s proud he took his fight all the way to the Governor’s desk.
But he’s not convinced that Wyoming’s new law is a total cure. He said it will help manufactured homeowners if “they are willing to dig into the law to find that they can do this.
Warren Buffett Calls Clayton Homes “Best in Class”–
Despite Critics, Warren Buffett on Saturday Feb.25 used part of his annual letter to Berkshire Hathaway, Inc shareholders to defend the business practices of one of the conglomerate’s lesser-known but more controversial operating units – Clayton Homes.
According to a report by Reuters, the manufactured home unit, which Buffett’s Berkshire bought for $1.7 billion in 2003, came under fire in reports two years ago in the Seattle Times accusing Clayton of driving black, Latino and Native American borrowers into unaffordable subprime loans, and promoting a racist corporate culture.
Clayton has forcefully denied such allegations, and Buffett’s annual letter came to its defense for the second straight year: “Clayton and Berkshire have been a wonderful partnership,” Buffett wrote. “Kevin Clayton came to us with a best-in-class management group and culture. Berkshire, in turn, provided unmatched staying power when the manufactured home industry fell apart during the Great Recession.”
Manufactured homes are often bought by people with low credit scores and incomes, with financial profiles that Buffett said can be easily damaged by divorce or death.
Buffett called such demographics a factor in Clayton’s decision to foreclose on 8,304 manufactured housing mortgages last year, or 2.5 percent of its portfolio. At a cost of $150 million in 2015. But he said the Maryville, Tennessee-based unit also gave loan extensions last year to 11,000 borrowers and canceled $3.4 million of payments from 3,800 borrowers. About 94 percent of loan balances were current on payments, down from 95 percent a year earlier, Buffett said. For all of 2016, Clayton’s pretax profit rose 5 percent to $744 million, mainly from its $13.3 billion mortgage portfolio.Revenue rose 18 percent to $4.23 billion, mainly from the sale of 42,075 homes, equal to 5 percent of all new American homes, Buffett said.
MFH note: The U.S. manufactured home industry produced and sold a total of 81,000 new homes in 2016. Clayton Homes, the dominant entity in the manufactured housing industry, sold over one-half of all manufactured homes produced, shipped, sold and financed in the nation.