Although the economic times are indeed tough, they bring solutions. In the case of MHP’s, the Residents have a need, but, so do the City and the Park owners. All are centered on Financing. Interestingly, the Cities benefit from the Residents buying, thus, a win-win-win. Here is how it works – along with some supporting law[Financing = Cornerstone of Happiness]
(1) Until 2003, Freddie Mac/Fannie Mae would buy loans on homes on leased ground [Ex. # 1]. Since then, VA, FHA, HUD, and banks are looking at a lease situation as a – No Deal.
(2) #1 above means that without land, Resident Homeowners are forced to deal in the ‘Predatory Loan Market’, i.e., own the land = 4 ½% interest+ vs. leased = up to 15% interest+.
(3) For comparison:
(a) own the land - loan payments on a $60,000 loan, 4 ½% - 30 yrs. = $305.00/mo.
(b) leased land – loan payments on a $60,000 loan, 15% - 12 yrs. = $923.00/mo.
[Ground rent/Rent control/Housing Cost]
(1) There is a built-in cost conflict with Home ownership divided between Home and Land.
(2) U.S. Supreme Court decisions support “Preserving Affordable Housing”.
(3) #2 above is well covered by a Legislative Counsel Opinion. [Ex. #2]
(4) Using #1-3 above, the waste and uselessness of voters’ money for any legal action is clear --- Buy the Land. Please note the many examples where millions have been spent on attorney fees in a ‘battle’, when the battle and the war have already been won – see0 #2 & 3 above.
[How to Buy the Land under your Home – History]
(1) [Note]: Before we go any further, it is understood that there are several ways for Resident Homeowners to acquire ownership of the land under their homes. For lending purposes, control is not the same as ownership, i.e., co-op, condo, etc.
(2) The age, size, layout, location, condition of utilities, and amenities all have a substantial influence on what is the best path to take to ownership.
(3) An extreme example of one end of #2 above would be a 1960 20-unit trailer park owned collectively as a co-op. The other end would be a 1976 350-unit 5 star park – see (D) following.
(4) Even though a true trailer park had small, pull-behind units with wheels still attached and the tow hitch still in place, and might have been considered “Affordable Housing”, it is certainly not what today's manufactured homes are...definitely NOT mobile!
(5) There is no question that in the beginning of this industry it was understood by landowner and trailer owner – the give and take of the marketplace. In fact, it was a useful, co-beneficial situation.
(6) When things slowly morphed into a problem situation was when enhancement of the pull-behind trailer to the ‘single-wide’, which in turn went on up to the double and triple wide units. By the nature of this improvement, the installation became permanent and the die was cast – Rent Control was a substitute for mobility.
(7) The above bit of history is helpful in keeping a ‘Big Picture’ aspect in lining up the ‘Intent of the Legislature” that will show a consistency from bill to bill as the State gets more and more involved. Also Opinion of AG. [Ex. #3].
(8) The ‘Intent of the Legislature’ and State Agencies was, and is, to comply with Federal Law, the betterment, support, and protection of ‘Affordable Housing’. This is further represented by HCD and State construction guidelines that came out in 1971. Interestingly, the HUD construction guidelines that came out in 1976 were a copy-cat of the 1971 California Law.
(9) One last observation regarding Home and Land. Regardless of its beauty to the eye of one and not to another; regardless of the fact it long ago lost the ‘Mobile Home’ aspect, it is still considered “Affordable Housing”. The law of the land, starting at the U.S. Supreme Court level (“Preserve Affordable Housing”) is recognized in statement, or, implied in all the California bills dealing with this area. A few examples:
(a) B&P Code 11010.8 (b) Revenue &Tax Code 62.2 (c) Health & Safety Codes 18555, 50780, 33449 regarding holding. [Ex. #4 to #8]
(D Soooo – [How to buy the Land to “Preserve Affordable Housing”]
[Note]: Based upon the History above, the following will outline a Park Purchase:
(1) Using the code sections in C (9) above, the Resident Homeowners can subdivide, finance, and close escrow in 90-120 days.
Note: These code sections all have common purposes:
(a) To Preserve Affordable Housing.
(b) To be fast, proficient, and less costly.
(c) To qualify for the best financing.
(2) One of the largest parks in the State, “The Groves” with 535 spaces in Irvine – closed escrow in 90 days, all cash, in the manner described above.
The practice of a City floating a Bond issue to cover:
(1) Overpaying the value of the park,
(2) Funding substantial accounts not necessary in normal ownership,
(3) Imposing annual increases in the ground rent.
(4) Withholding ownership of the lot under their home, forcing a Predatory Lending situation on the Residents.
(5) Increasing the monthly housing cost immediately to cover the 150% to 190% Loan to Value of the Bond.
(6) Add insult to injury – the Residents are solely responsible for the Bond payments and operation funds for the park.
Every item in 1-6 Summation above is an established fact.
Any one of those items would be totally out of step with helping Resident Homeowners. But there are 6, strongly impacted by # 3 & 4. Being held captive in a City or 501-c-3 situation is not the American Way, not the “intent of the Legislature”, and, as well-stated by an Appellate Judge (Craig vs. City of Poway, “33334.2 Legislative history – ‘improve’ means to make available less expensive or make already inexpensive less expensive.” [Ex. #9]
There are thousands of MHP Resident Homeowners in this situation (City or 501-c3). This is so easy. There are no “Investors/Landowners, i.e., WMA. The City must support, and thus earn Resident Voter approval. The City will be in compliance with the State mandated plan.
The City or 501-c-3 entity will be carrying out their duties in compliance with IRS and State rules, confirmed with IRS.
The Residents will enjoy for the first time an elimination of the ever-increasing housing cost of ground rent. The Residents will now be able to sell and buy their homes in the normal finance market.
The State will enjoy Cities and Counties complying with the rules --- no cost to anyone!!!
This is a joyous win-win-win-win situation for all…comments on (C) (9) a, b, c are welcome.