Chattel crisis of the 90's

I have often heard Frank talk about the “chattel crisis of the 90s” but this was before my time. Does anyone have any information/links they can share about this crisis? What happened?

As a follow up:

What is different about today’s 21st mortgage CASH program?
Is there a risk of having too many tenants in one park on the CASH program?
Is there an ideal ratio to managing that risk of TOH’s/POH’s/CASH-Clayton Homes?

The CASH program seems like a win-win but my major concern is how will it be affected in the next recession. Will these tenants be able to support the notes? Will they be the first default?

Any thoughts/comments/insights appreciated.

Prior to 20000 most parks were filled with tenants bringing in homes and thus the burden of debt was with tenants plus the homes could be bought cheaply when foreclosed. People like Buffet got real smart and with the CASH program etc. switched the great burden to the park owners and thus avoided weak buyers plus received an outrageous +9% interest rate. Yesterday got numbers on a 134 site park in Florida; the horrible news was over 55 homes were owned by outside investors and the seller was passing on the cost of the 22 more homes he owned to a new buyer. Over 50% of the homes were rentals thus no different than a motel and I believe most people in the MH parks did not get into this business to be a motel operation. The program fills spaces but seems like when sellers have +85% occupancy they sell—wonder why??? Personally when tenants have NO skin in the game what happens–police reports increase and the very best tenants leave quietly!! The CASH program etc is a short term remedy of a much greater problem. RVer’s are buying new rigs at a very high rate and like the ability to move EASILY–the younger generation is still spending money but just on different items. Some of those new RVer’s we have in our parks are 3 times the cost of a mobile homes–times are a changing!! RV parks are being built all across the fruity plain and full; while MH parks are trying to fill empty spaces from parks built 25-40 years ago that WERE ONCE FULL. There are problems that need discussion–just like horses are seldom used for modern farming

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Thank you for the reply.

So outside of the burden of default now being held responsible by the park owner (as a backup) is there any difference?

My fear with the CASH program is if most or a great amount of the park pads are occupied by homes on this program, should a recession hit these tenants hard then the vacancy + these home notes could be too big of a burden for the park owner. Is this a valid concern?

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Try to stay positive–really no difference–except Buffet has a much better equity source being the park owner WHO will not default?? The 2008-2010 episode was very trying since some park owner had little equity but owned lots of parks and some of my friend s lost it ALL. This time of crazy low interest rates has brought a lot of junk parks up for sale that normally would be passes on and most good operators WILL NOT sell since they cannot find good quality parks for replacement and thus we have a feeding frenzy for any kind of property that is called a MH park. The big boys have very little interest in 75 or less spaces, small population areas or wells and septic systems. Most quality parks will never be seen on this site–the good ones are gobbled-up and picked over before the general public will ever see them–thus you knock on doors and realize the ONLY possible viable properties for sale are ma and pa’s before the big boys snatch the last remaining good properties and finally the big players with fight with each other for the remains. So sad–we have been unsuccessful for over 3 years trying to find quality, reasonable priced properties–one quality is very simple for us–if we would not live in the park we will not buy it–in the past we have lived very happily in 3 excellent properties.


This was before my time but one think i wiill add is the 30 year mobile home mortgage. I am not sure how prevalent it was but i think that may be a variable…

We bought one of these from someone that just paid one off in our park ( they had pitbulls) and we offered to do this rather than force their home to move.

And this came up at the TexCO event. It was supply and demand , with all the defaults etc, the homes could be bought cheap at that time.

But if this is true, when you think about it , the 30 year mortgage would seem to carry a lot of risk with the rest of the model.

I like to check in what terms are from dealers to consumers. I hear 15 pretty regularly. But then on some stuff , i hear 23 year , i think i have seen that on this forum. I haven’t heard 30 but 23 seems like a stretch.

So really you want to have a basic understanding of what type of loans are coming into your park.

And then you also talk to customers who are doing outside buys with 5% down? I read over and over the default stats are low but just keep that all in the back of your head, what type of indirect exposure you have with loans in your community.

Im personally not on board with the Cash model for your customer, i inquired but i dont like the idea of the risk structure but some good comments here on that but thats not the general consensus from what I gather.

I agree. I think you have to be cautious about how much debt/risk your tenants carry in your park relative to their home. Especially if the park owner is responsible for the default at the end of the day. I could see benefit in the CASH program but personally I lean towards no more than 10% of the homes on this program.

It is a tough balance. As a park owner I want nicer, newer homes that will attract a better tenant base but the older models carry less risk.

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