Manufactured Housing News

Although the idea of having a diversified loan portfolio stirs up great debate among industry experts, poor portfolio diversification seems to be one of the most common investor mistakes. According to a recent study published by SigFig, more than 90 percent of investors fail to achieve the results they expect simply because they don’t have diversified, well-balanced portfolios. While investment diversification can’t guarantee superior return performance, it remains an important aspect in the lending context.

Is Diversification an Auspicious Decision for a Credit Union?

From a financial perspective, the main purpose of portfolio diversification is to reduce the risk of volatility and drive more solid returns. Now another important question is: should a credit union enhance its portfolio with manufactured home loans?

The first thing a credit union contemplating portfolio diversification alternatives should know is that an affordable housing option has always been needed in this country, but now more than ever. With approximately 10,000 baby boomers turning 65 each day, nearly 4 million people enter retirement every single year. Considering that most of these people have little to no retirement savings and that rental affordability continues to decline, manufactured homes have become one of the best housing options for retirees. If we add the fact that the average age of the people who live in and buy manufactured homes is 54, the nationwide demand for affordable housing will most likely increase over the next few years.

Additionally, even with the decrease in value of brick-and-mortar homes following the financial crisis of 2007-2008, buying a standard site-built home is more expensive than many low- and moderate-income home buyers can afford. What’s more, the old “trailer parks” giving way to growing neighborhoods with beautiful manufactured homes that can be customized to meet a wide variety of requirements have turned these homes into an even more attractive housing alternative.

According to Regina Lowrie, former Mortgage Banker Association chairman and a successful entrepreneur, “housing and mortgage industries can capitalize on [all] these shifts.” She also stated that the positive outcomes resulting from this sector will lead to “a strong, sustainable manufactured housing business.” Other mortgage industry experts regard manufactured home lending “as a primary means of gaining occupancy for manufactured home communities.”

Additionally, the increasing demand for these types of loans and the progress made in terms of manufactured home customization and quality of construction along with a rigorous applicant pre-screening process and restrictive eligibility criteria (e.g. FICO scores of 700+, and low loan-to-value and debt-to-income ratios) are some of the factors that have transformed these loans into one of the best financial products an investor can opt for to enhance his portfolio.

Another important aspect is that manufactured home loans can yield impressive return on investment, allowing your credit union to build long-term wealth. Based on a report issued by CFED, the performance of these loans is comparable to that of general mortgages.

If you’ve decided to add manufactured home loans to your portfolio in order to provide a full spectrum of lending solutions that cater to the needs of all of your members, including the people in the manufactured home communities, we can help. At Triad Financial Services Inc., our knowledgeable and experienced underwriters specialize in tailoring some of the best manufactured home lending programs with competitive rates for our partners.