Repos, Vanderbilt, Clayton, Buffett and MHP Financing

I had the disctinct pleasure of spending the day yesterday with Jim Clayton, Steve Waite, Matt Daniels and team in Knoxville. Understanding that this opportunity doesn’t present itself everyday, I arrived armed with several questions and concerns that many of you have posted on this forum.

Our first stop was the beautiful Clayton Homes, Inc. corporate office. This place was unbelievable, much different than some of the old, outdated plants and large office buldings belonging to other mobile home companies that scatter the Southeast. Of the 1,600 plus employees working there every day over 1,000 belong to Vanderbilt Mortgage. Still following Jim’s style of “team building” and keeping it simple, the office space was one big open area where everyone can actually see and communicate with each other. Even Kevin Clayton (CEO) had an open cubicle for an office.

I had the opportunity to meet the current President of Vanderbilt Mortgage and learn first hand why repo homes are becoming harder to acquire at decent prices. Vanderbilt has streamlined their operations, cut overhead and become smarter in liquidating these homes. Even more important is the fact that they have become much better in saving accounts before they become full blown repossessions. Their collections department is one of the most streamlined operations I have seen in a long time. Employees are rewarded financially for salvaging marginal accounts and this reward goes department deep, which puts a lot of people in the process.

So, I am going to put an end to the rumor that Clayton Homes is keeping the repo homes, refurbishing and placing on sales lots. That is simply not true. The real story is that Vanderbilt has become much better in salvaging bad accounts and getting higher prices for the homes that do end up in the repo inventory.

One other interesting fact I learned was the push Vanderbilt is making to work with park owners. Let’s face it, if Vanderbilt can sell a repo to the park owner where the home resides, it’s much easier on everyone. The problem in the past is that many park owners wanted to steal these homes from Vanderbilt and just a few years ago they could because repo inventories where at an all-time high…NOT ANY MORE. As a park owner, I understand that I will have to pay more for repos now and my margins will be less on the sales of homes. That’s OK with me because I know the real money in this business is in the dirt. I encourage every park owner out there to accept this and start working with these finance companies.

As many of you know, I just completed my first MHP financing and receivable line of credit financing with Clayton Bank. It wasn’t the smoothest transaction and quite frankly was complicated. So, Jim and his team earnestly asked for input on how they could make the process better for everyone. We spent several hours talking about ways to make it much easier for the small to medium park owner to gain access to their aggressive lending program. I’m confident that we will be able to work out some of the obstacles within a few weeks.

Time permitting, Steve Waite and myself plan on having a “boiler plate” package available for anyone seeking park financing or mobile home receivable financing from Clayton Bank. Once this is completed, it will cut your workload easily in half preparing the loan package.

I know this have been a long post, but I wanted to let you know that Jim Clayton is still very confident in the mobile home industry. He still talks about the people he met at Mobile Home Millions IV in Orlando and how impressive they were. He also is very excited about loaning money to operators who understand the business and have plans in place to turn properties around and make them viable mobile home communities.

More to come in the future…

Steve Case

Thanks for this great information. I think it’s so valuable for us to have the facts about the big changes taking place in the industry. I really enjoyed hearing the speakers at Mobile Home Millions, and this new information is the missing piece of the puzzle for me.

I am curious to know if Clayton Bank is interested in funding turn-around projects with a current and projected 18 month negative cash-flow. It’s an easier “yes” when you can cover debt-service from the get-go, I’m sure. I have a 53 space park under contract that was built from scratch less than 10 years ago and never filled. There are currently only 4 occupied lots and 2 park-owned homes. The price is under $7k per lot (approximately .24 ac each) and there’s an additional unimproved 60+ acres included in the purchase.

This is a beautiful property with nice wide paved streets, curbs, off-street parking, city services and individually deeded lots that accomodate doublewides. It’s not your typical park, it was meant to be a “community.” The demographics and trends in the region suggest a 55+ community might be in highest demand. This project is going to make money, but it’s a long road to break-even when you’re starting with a 7% occupancy, and I need to find a lender or partner who understands that it’s not quick and easy, but that patience will be rewarded.

Is this even a candidate for Clayton Bank, or am I better off finding a private lender or money partner?


Thanks for the information. I had a similar meeting with the folks at 21st Mortgage two weeks ago, Vanderbilt