Manufactured Housing Gains Momentum

CHICAGO—HAS Capital, LLC has just appointed Scott MacFarlane as president of originations, a newly-created position that company officials say will help them respond to the big changes occurring in the manufactured housing sector.

“We believe that the manufactured housing mortgage space is poised to make a comeback in the capital markets,” Stephan Wheeler, managing director and chairman, tells GlobeSt.com. The Little Rock, AR-based MacFarlane will manage the company's current manufactured housing funding programs as well as develop and expand their new national originations platform.

One factor that encouraged the Chicago-based HAS to take this step was US Bank's decision last fall to exit from indirect manufactured housing lending, which will open up some opportunities.

But perhaps more important is the overall outlook for the sector. Manufactured housing has played a key role in providing affordable housing for retired or older consumers, especially in warm-weather states such as CA, TX and FL, according to Wheeler, and the aging of the US population, coupled with an increase in the price spread between manufactured housing and other options, should “bring greater market share to this asset class.”

“We're already seeing record returns for companies that own manufactured housing communities,” he adds. Last week, for example, the Wall Street Journal reported that “in the 12-month period ended in March, the total return for the three public manufactured housing REITs was 44%, the best performance of any REIT category.”

Furthermore, under the provisions of the Dodd-Frank reforms, starting in early 2014 the sector was subjected to the same rules as other residential mortgages. Before this, these loans were looked upon as something between a regular mortgage and a personal obligation. But now, among other changes, before approval lenders have to verify that borrowers can repay the loans. As a result, manufactured housing “looks less and less like a unique product.”

Although some in the industry fear that these rules will make financing more difficult, Wheeler believes the combination of persistent demand and growing comfort with the new rules will bring lenders into the sector.

“Scott has a long track record in the industry,” Wheeler adds. MacFarlane specialized in banking and financial services for 30 years, and joins HAS Capital from US Bank where he was vice president of national sales for the firm's manufactured housing operations. He was responsible for all marketing and sales operations in the US. Prior to that, he was a region manager for GreenTree Servicing, LLC in Jackson, MS, overseeing an office that serviced a $255 million portfolio on 10,000 accounts in the state. MacFarlane began his career in the manufactured housing industry in 1984 as a collection manager at Benton State Bank in Benton, AR.

“We think we're in the right place at the right time and Scott is the right person to help get this asset class back to the capital markets.”