Broker: Non-banks should jump on the mobile-home wagon

Broker: Non-banks should jump on the mobile-home wagon

Broker: Non-banks should jump on the mobile-home wagon

Non-bank lenders refusing to write mortgages on mobile homes are handing the growing niche market to the big banks, but also limiting market share for brokers, said one Halifax professional.

“Currently only about five per cent of our mortgages are in mini-homes,” James Shinners, president of Mortgage Managers, an independent brokerage focused on the burgeoning Halifax Regional Municipality, told MortgageBrokerNews.ca. “With really only the banks offering mortgages, that five per cent is found business instead of business that we can market to.”

 Broker efforts to grow that business have been hamstrung by the dearth of non-bank lenders willing to provide mortgages for mobile homes. Almost all underwriting is now performed by the Big Five, with prospective borrowers bypassing the broker channel and dealing directly with bank reps.

 The direct route means mortgage professionals like Shinners are increasingly cut out of a good and growing thing. There are more than 14 trailer parks in his Halifax market, alone.

According to Statistics Canada, no fewer than 380,000 people in this country call a mini-home – aka mobile or modular home, trailer or double-wide – their primary residence. There are no fewer than 250,000 units in Canada.

With a starting price of $80,000 for a 680 sq. ft. trailer, those moveable residences are billed as a cost-effective alternative for families seeking homeownership, but without the income required for bricks-and-mortar construction.

Most of the homes sit on rented land in one of 500-plus trailer parks across the country, with a growing number of them freehold – i.e., sitting on land the trailer’s owner also owns. That makes it possible for a borrower to win discounted mortgage rates, said Shinners.

But the overwhelming majority of mobile homes sit on rented land, with owners only able to access a bank’s posted rates, regardless of their beacon score. Non-bank lenders have the power to lower those rates and grow the broker pipeline in the process, argues Shinners.

While MCAP Service Corporation provides mortgages on mobile homes, they must be freehold, have permanent foundations and are subject to “a satisfactory full appraisal,” said company president Ron Swift. The lender is largely the exception, with other non-banks pointing to greater flight risks, inadequate security and depreciation concerns as reasons for steering clear of the business.

“I’m not sure why the non-banks aren’t in there,” said Shinners, pointing the number of upscale trailer parts in the greater Halifax area. “If we had more lenders, more brokers might take up mobile homes as a niche, and with the cost of traditional homes outstripping income growth, demand for mini-homes is likely to grow.”

MCAP, at least, appears open to having a discussion.

“We have not been asked by our customers to relook at our current mobile home policies and therefore have no current plans to review,” Swift told MortgageBrokerNews.ca.

 

 

3 Comments
  • Stephanie Scott, AMP 2011-04-07 2:29:25 AM
    I really think everyone needs to look at mobile and modular homes. They are built inside with dry wood and constructed, in most cases, to a higher standard than many new brick & mortar homes which are constructed outside, subjected to the weather. Mobiles and modulars are also constructed by fully trained and qualified staff as opposed to many construction crews, at least in my area, who are filled with untrained people whose only care is a paycheque.
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  • David O'Gorman, CPMB 2011-04-07 3:40:17 AM
    I worry that the banks are even lending on these things, at least they have a branch network to chase them across the country when they are moved. In the dark ages, when all phones were connected to a wire, there was a large credit union, based in Halifax, that does not exist anymore, in part to mobile home lending, that had mortgages on more than 600 mobile homes, & my first job out of university was chasing these things down & collecting the mortgage payments. Guys in the military when they were transfered, would put wheels on them & have them hauled to Alberta & BC, without telling the lender. "Well its mobile home, isn't it?" Others would buy a unit on a rental site & then move it to a permanent foundation on freehold property that had a mortgage, held by another lender, on the land. Once the mobile home was fixed to a foundation, the mortgage on the land took precedence over the chattel mortgage on the mobile home unit. Have fun getting your money from the borrower or even repoing that unit. When the econonomy starts looking good people buy real, real estate & bail out of these things. Park owners have the lender at their mercy, forcing them to pay the back rent owing on the park lot,restricting what haulage companies they would allow on their property to move units, & on & on. I could write you a book about the "joys" of mobile home lending. Yes they are housing & in booming areas like the territories, they provide decent, quick housing & double-wides on a permanent foundation in a retirement park are not likely to be moved...but to any non-bank lender even considering getting into lending on mobile homes, think again.
    Its been a long time since I was that young loans officer/collector, but I still cringe everytime I see a mobile home.
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  • Doreen 2014-06-05 12:54:23 PM
    I am trying to secure a mortgage on a mobile home in a secure park. The home itself is beautiful and I am offering to put in 1/2 the value of the home. My credit is good and I am employed full time. This is to be my full time residence. The monthly budget is only 1/2 of what I pay now.
    I looked at this as a pleasing alternative to being closed in a far more expensive condo box with a mini balcony and large condo fees.This is a lifestyle choice. the maintenance is less costly, I have a yard, patio and much more space overall. I am in a community of people my age and the overall cost including the mortgage is much less. I can even grow my own food!
    The unit is energy efficient and I have control over that. I can replace my windows and doors if they are drafty.
    I feel more secure as I can walk from my car to my door easily and install security systems and lights. No dark hallways or creepy parking lots.
    I can also have my things and live a more fruitful lifestyle as I do garden and take on home projects.
    Just because I am going into senior years I do not feel that I must follow the norm and put myself into an expensive box where I will truely wither much faster.
    This is an affordable lifestyle for those who still want to have a life. Lenders should take a closer look at this.
    I have been offered 90,000 to get a condo but I am being put through many silly hoops to take on 40,000 less.
    I have dealt with my bank for many years and always held my part of the bargain.
    They forget that 2008 was caused by them in the first place. All of the warning signs were there.
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