I 'm contemplating the idea of using 21st CASH program VS becoming a certified MLO for selling POH.
CASH program seems to charge high interest with long term loan and I don’t want my tenants to look at their balance a few year from now and find out they have little equity into their own home.
However, become a a certified MLO seems to have a lot of liability as well.
Is there anyone out there who has hands on experience becoming MLO and financing POH yourself?
What’s the good , bad and ugly part of doing that?
I don’t know what liability you really are facing if you’re going to finance the sale of your own homes that you already own. You already have that liability to begin with (more or less). See what I am saying?
Becoming MLO requires taking an online course and passing the exam. Plus Continuing Ed.
It is not that difficult. It is designed to teach you the consumer protection laws applicable to financing transactions on dwellings.
You would then have to register with your state authority for lending, which varies state-by-state.
You can learn the official requirements for each state here:
The good: it’s more or less just like rent-to-own, but legal. If the tenant pays off, you have the lot rent plus the interest and principal repaid at [interest rate]. Tenant owns their own home. Win-win!
The bad: If you sell the home on credit, maintenance becomes an issue. The homeowner should take care of it, but you are footing the repair bill if they don’t pay off the loan.
The ugly: How are you going to recover the home if the tenant stops paying? The legal, technical process?
Another ugly: Are you going to escrow for insurance and who is the insured party and who decides what policy?
Appreciate the input. I’ll explore more on this option. It seems to be the way to go.
I think CASH program is a win for 21 mortgage but lose for tenant and park owner.
mhpcommunity - interesting to see your comment on the CASH program. I had a similar experience with them in trying to finance homes. Their business model seems to be that the park owner take all the risk and they take all the money (the reason they call it the CASH program perhaps?).
I could not get any attention from 21st Mortgage in financing homes for buyers unless I (essentially) guaranteed the loan.
If anyone has a success story with them, I’d love to hear it.
Brandon, To get a MLO I believe you have to be licensed under a licensed company. Did you have to affiliate with an existing lender or broker, or did your company have to get its own license of some sort?
I’m applying to the 21st program, but I am not in the the CASH program yet.
The big benefit that is not being mentioned is that you do not have to be the bank. Some people want to (and find it lucrative) to be the bank, but others do not.
My (limited) understanding of the CASH program is that they are willing to lend to a wider array of applicants (lower credit scores) so long as the park is willing to buy the house back if they default. This is a HUGE benefit to me as a park owner, with limited options of banks willing to lend to MH buyers, and I’m very willing to accept that risk. I’d much rather take lump sum cash and put it into buying more housing (upgrading park, pursue different deals, etc.) than wait 20 years for the tenant to finish paying off their home.
I think this is most beneficial if you are trying to do significant infill and would be less beneficial if you were in a stabilized situation.
I agree. If you only have a couple of homes to replace each year, you can do that out of cash flow. 20 homes per year generally requires outside financing.