Originally posted by @Bryan H.:
Originally posted by @Ken Rishel :
I've been researching MHP investing for a couple years now, and I've never heard of this. Can you elaborate?
There are a number of threads in Mobile Homes & Mobile Home Park Investing on the topic going back several years. In short:
The federal government and some states have a number of laws that community owners are expected to comply with or face fines, sanctions, penalties, etc. The federal government (and some states) require the community owners to set up a compliance management system to prove and assure they are doing so. Failure to have such a system is prima facia evidence that the company is willfully failing to comply and most fines and penalties are doubled.
Compliance Management Systems are not new. Every hospital, bank, credit union, major business, and even prisons have them and have had them for years. The problem in the manufactured housing industry is that many community owners are small businesses, and have little or no in house capacity to put such a system together, and frankly, resent having to invest the time and money to do so. That does not change the legal obligation to do so.
Compliance Management Systems are also not just something that can be guessed at, or copied off the internet. If you are a community owner who does not retail, your needs are simpler than a community owner who does. If you are a community owner engaged in some form of seller finance, the system must reflect that as well. This is not a do it yourself project.
Rishel Consulting Group had been helping captive or related finance companies set up their Compliance Management Systems as lenders for a number of years. We were dragged into doing the same for retailers and community owners who were not lending when the federal government made it clear a few years ago that retailers and community owners had an obligation to set up a CMS for their businesses. Because we had our own internal setup for doing these, and because we had already invested in the legal research and help, it only made sense for us to offer these to people that we would not normally have done business with because they were not engaged in lending. Over 6,000 community groups have paid us to help them since we made that decision.
As to being unaware of these requirements, I don't know what the answer is but I wish I did. Consultants for our firm has spoken at hundreds of state trade association events on this topic, and we have been featured speakers at special events run by both state and national associations. This subject has been discussed in The Journal which is the only industry trade publication, in the Allen Letter and the Allen Confidential as well as in The Chattel Finance Newsletter. State association executives discuss this regularly in their newsletters and sometimes on their association websites. As I wrote earlier, this topic has also been discussed here off and on for several years now.
It will also be an educational topic at the Annual Virginia Manufactured and Modular Housing Association Convention on August 4th in Virginia Beach.
I hope this helps.
