Consumer Lending for Manufactured Housing

1. Consumer Lending for Manufactured Housing Industry Perspective and Opportunities Elkhart, Indiana June 2, 2010

2. Why We Are Here • Manufactured housing offers homebuyers quality, affordable, energy efficient single family housing and consumers risk the loss of this housing choice! • Consumer lending is nearly non-existent for manufactured housing with most funding coming from a handful of companies relying on their own capital sources • Since 1989- Manufactured housing has accounted for 21% of all new single family homes sold • Without significant improvements- an entire segment of the affordable housing market could disappear Source: MHI, U.S. Census

3. How We Got Here • Manufactured housing suffered its own lending crisis in the 1990’s • 2000-2002 MH lending began improving while site-built lending practices eased 1) Increased scrutiny of MH Lending policies while site built lending practices loosened, created an extremely unlevel playing field for MH customers 2) As a result, MH lost significant market share due to subprime lending practices in site-built market • Finally, the collapse of the ABS Market, an important source of liquidity for our loans

4. Due to Lack of Liquidity, Construction of New MH Has Crashed Over The Past Ten Years (000s) 2000-2002- Improved Lending Taking Hold 2002- Onset of Site-Built Subprime Boom 2007- Collapse of Credit Markets Source: MHI, IBTS

5. MH Serves a Vital Market • 2009: Manufactured housing accounted for: • 43% of all new homes sold under $150,000 • 23% of all new homes sold under $200,000 • 9 million households with 18 million people live in manufactured homes • 73% of manufactured home households earn less than $50,000 Source: MHI, U.S. Census

6. MH Serves a Vital Market • 45% of manufactured housing borrowers earn 80% or Less of Area Median Income (AMI) • Hallmarks of manufactured housing are quality and affordability • MH predominant source of housing for rural America- and affordable lifestyles provided by MH communities

7. MH Serves a Vital Market Median Household Income Source: U.S. Census, American Housing Survey

8. Plus: Continued Demand for Affordable Housing • Traffic in sales centers • Stable occupancy rates in communities (88.7% in 2009 versus 90.0% in 2008) High Cost of Capital Suppressing Demand But Need for Affordable Housing Constant! Source: 21st Annual Allen Report, 2009

9. Critical Actions and Solutions Necessary • Immediate Action by FHA and Ginnie Mae to Provide Liquidity for MH Lenders • Immediate Action by FHFA and the GSEs to Implement Industry Specific Loan Programs

10. Consumer Finance:Personal Property Non-Real Estate

11. Personal Property Issues • Over 60% of MH lending occurs in this space MH Communities Privately leased property • Failure of FHFA and GSEs to implement “duty to serve” despite: • Congressionally mandated deadline of January 2010 for Final Rule • Dozens of meetings with industry associations, lenders, community owners, and manufacturers (including site visits) since 2008

12. Critical Actions and Solutions : Personal Property • FHA Must Finalize Title I Program • Ginnie Mae Must Activate Issuers Already Approved • Ginnie Mae Must publish the new issuer requirements and lift the Moratorium on approval of New Issuers

13. Critical Actions and Solutions: Personal Property • GSEs Have a congressionally mandated “Duty” to serve this important source of affordable housing • Implementation must include personal property lending products • Purchase Title I Loans • Develop Securitizations for Home-Only and non conforming Land-Home Transactions • Implement Programs Already Developed

14. Critical Actions and Solutions: Personal Property • FHFA Should Direct GSEs to Create Personal Property Loan Program in Order to: • Provide much needed liquidity to manufactured home lenders to continue their support of affordable housing • Help the GSEs meet the affordable housing, rural housing goals and fulfill their “duty to serve” • Create attractive (non-TBA) securities for investors FHFA Has Duty to Ensure Manufactured Home Buyers Can Secure Loans and Owners Can Sell or Refinance Their Homes

15. Features of Personal Property Program • Single-family, owner occupied, primary residence • Fully documented income • Fully amortizing loans • Fixed rates • Fixed payment • Low prepaid finance charges and fees • Longer term leases in communities • Minimum FICO Scores • Maximum 90% LTVs • Self-Servicing • Internal reserves for losses (self insured) • Risk sharing or participation The industry is prepared to address all of these issues! • THE INDUSTRY NEEDS ACCESS TO CAPITAL FOR OUR CUSTOMERS!

16. Consumer Finance:Mortgage Lending Traditional land-home and improvements financing

17. Mortgage Lending Issues • No Major Mortgage Lenders Doing Correspondent Lending for FHA Title II • GSE Changes Dating Back to 2003 Have Unfairly Penalized Manufactured Home Loans • Limited Private Mortgage Insurance for Manufactured Housing • Fannie Mae’s MH Select Program failed due to the lack of PMI and timing of program introduction

18. Critical Actions and Solutions: Mortgage Lending • Solicit Current Title II Ginnie Mae Issuers to Engage Industry and Approve New Title II Ginnie Mae Issuers • Solve Underwriting Burden on Specialty MH Title II lenders • Neighborhood Watch Compare Ratios • Compare loan product • FHFA Should Direct GSEs to Implement Fairer Underwriting Criteria for Conforming MH Mortgages • FHFA Should Authorize GSEs to develop and utilize a Self-Insurance Mechanism

19. Critical Actions and Solutions: Other Issues • Misapplication of SAFE Act on Industry Retailers and Salespersons and Lenders • HR 5369 “Manufactured Housing Licensing Clarification Act of 2010”

20. What We Can Accomplish Today • Identify Hurdles and Engage in Productive Discussion to Solve Them • Gain Understanding of Market MH Serves and Reasons We Are Unique • Expedited Deadlines to Expect Deliverables: • Publish Final Title I Mortgagee Letter • Action by Ginnie Mae to Approve Existing Issuers Under New Title I Program • FHFA Directive to Implement “Duty to Serve” Rule and Acceptance of Title I Loans • Urgent Action is Needed!

21. “The government wants high quality, low cost housing and manufactured housing provides that product” – Warren Buffett

22. Manufactured Housing Has Everything to Offer