The Consumer Financial Protection Bureau (CFPB) now requires that consumers who finance most manufactured homes be provided with an independent, third-party home valuation three days before closing the loan. The rule applies to both new and pre-owned manufactured homes financed with either real estate mortgages or chattel loans. “Turning Lemons Into Lemonade: Profiting from the New Appraisal Rules,” to help you understand to what homes and loans these new rules apply, the new valuation products created to comply with these new rules, and how the new regulatory requirements can actually help you sell more homes. Don’t be caught unaware of the impact the new appraisal requirements will have on your business. Learn how to turn “lemons into lemonade” and put the new regulations to work in your favor. Presenter: Darren Krolewski, DataComp / MH Village

1. Turning Lemons Into Lemonade
Profiting from the New Appraisal Rules
Darren Krolewski
Executive Vice President,
Marketing & Business
Development

2. Profiting from the New Appraisal Rules
Datacomp Background
• Founded in 1987.
• Largest independent, national provider of market-based
manufactured home appraisals.
• Over 38K communities, 4M homesites and 1.2M comps in
database.
• Founded MHVillage.com in 2004 – largest website in the
industry with 16M+ visitors annually.
• Acquired JLT & Associates in 2014, publisher of rent and
occupancy reports for 80+ manufactured home community
markets nationwide. 2

3. Profiting from the New Appraisal Rules
New Appraisal Rules In Effect
As of July 18, 2015 for MOST Financed
Manufactured Home Transactions
These Are the “Lemons”
3

4. • Both new and pre-owned homes
• Higher Priced Mortgage Loans (HPML)
• 1.5% Above APOR (Average Prime Offer Rate)
• Most manufactured home loans are HPML
Profiting from the New Appraisal Rules
Where Do the Rules Apply?
4

5. • Home only (chattel) and land/home financing
• Loan value over $25,000
• Qualified Mortages (QM) are exempt
Profiting from the New Appraisal Rules
Where Do the Rules Apply?
5

6. Profiting from the New Appraisal Rules
What Are the Rules?
Land/home manufactured home transactions
(both new and pre-owned) now require a full
USPAP real estate appraisal just like a site-built
home.
6

7. Profiting from the New Appraisal Rules
What Are the Rules?
Home-only manufactured home transactions (new
and pre-owned) are exempt from the USPAP
appraisal if the lender provides the borrower one
of the following three types of information three
days prior to closing:
7

8. Profiting from the New Appraisal Rules
Options for Home Only
• Manufacturer’s invoice.
• Cost-based valuation (NADA Guide).
• Market-based valuation (Datacomp).
• Provided to the borrower three days prior to closing
by the LENDER.
(Until now, the industry has never had to provide a new
home valuation to the borrower for home only
transactions.)
8

9. Profiting from the New Appraisal Rules
Options for Home Only (Pre-Owned)
• May continue to use current NADA Cost Guide.
• May continue to use current Datacomp market-
based appraisal.
9

10. Profiting from the New Appraisal Rules
Options for Home Only (New)
• Have generally used lender Advance Formula.
• NADA new home cost guide tool.
• Datacomp Market-Suggested Retail Value, or
MSRV service.
10

11. Profiting from the New Appraisal Rules
What Is the Datacomp
MSRV?
“Market-Suggested Retail Value”
11

12. Profiting from the New Appraisal Rules
Why MSRV?
• Everyone familiar with MSRP.
• No one wants to pay MORE than MSRP.
• It is thought of as the highest retail price.
• Pay less than MSRP – it’s a DEAL!
• Pay more than MSRP – you’re paying too much!
• Datacomp’s MSRV sets an independent, local, retail
value based on actual market sales.
12

13. Profiting from the New Appraisal Rules
The Datacomp MSRV
• Designed for financed, new home sales (chattel).
• Uses a market approach based on comparable
new home sales transactions.
• Data provided by major lenders as well as cash and
in-house financed transactions.
• Highly automated for speed and to keep cost low.
• Dramatically lower price than a USPAP appraisal. 13

14. Profiting from the New Appraisal Rules
The Datacomp MSRV Report
• Web-based service designed for multiple devices and
ease of order entry.
• Takes just 5-7 minutes to order a valuation for a stock
or custom home with no knowledge of industry jargon.
• Appraiser-reviewed for accuracy and reliability.
• Simple, easy-to-read, valuation report.
• Priced at $49 and completed in less than 24 hours.
14

15. The Datacomp MSRV Report
15

16. Profiting from the New Appraisal Rules
The Datacomp MSRV
• The official Datacomp MSRV Report will be
ordered by the lender and will be provided to the
borrower three days prior to closing.
BUT…
• There has been a lot of interest from
communities and retailers to obtain their own
valuation in advance of submitting a deal to a
lender.
16

17. The Datacomp Pre-Sale MSRV Certificate
17

18. Profiting from the New Appraisal Rules
Turning Lemons Into Lemonade!
• MSRV valuation pre-sale
Certificate designed as a sales tool
for retailers and communities.
• Displayed in the home to show
value to the customer.
• Establishes an Independent Retail
Price to give buyers confidence in
the selling price of the home.
18

19. Profiting from the New Appraisal Rules
Turning Lemons Into Lemonade!
• The same market-based valuation
approach, appraiser review, and ease of
use.
• Simple, easy-to-read, independent
valuation certificate.
• Introduces the concept of a valuation
that will be received from the lender, so
it is a non-event when it happens!
19

20. Profiting from the New Appraisal Rules
Turning Lemons Into Lemonade!
• It’s a competitive advantage at the
point of sale.
• Provides insight into the value that
the buyer will receive from the
lender.
• Results in more sales at higher
margins.
20

21. Profiting from the New Appraisal Rules
Turning Lemons Into Lemonade!
• Pre-Sale Certificates available now.
• Priced at $39 through at least the end of
the year.
• Same valuation process as official
MSRV that is ordered by the lender.
• Go to orders.datacompusa.com, login,
enter payment, enter subject home data,
done!
21

22. 22
Datacomp MSRV: Select Type of MSRV

23. Datacomp MSRV: Order Entry

24. Datacomp MSRV: Order Entry

25. Datacomp MSRV: Upload Documents

26. The Datacomp Pre-Sale MSRV Certificate
26

27. Profiting from the New Appraisal Rules
Why a Pre-Sale Valuation?
• Gives the retailer insight on how a new home is
going to value BEFORE the sale.
• Introduces the valuation requirement to the buyer
BEFORE they get it from the lender.
• Same new home valuation the lenders are using.
• It’s an inexpensive “insurance” policy.
• Buyers are saying “Let Me See the MSRV” 27

28. Profiting from the New Appraisal Rules
What If A Home Won’t Value?
28

29. Profiting from the New Appraisal Rules
If a Home Won’t Value...
• The lender can still finance it based on their
advance formula.
• The customer can still go forward with the
purchase.
• Worse case scenario: you might need a standard
Datacomp appraisal.
• Standard appraisal uses more comprehensive
research by an experienced appraiser. 29

30. Profiting from the New Appraisal Rules
How Are Things Going So Far?
• Datacomp has valued over $80 million worth of new
homes to date using the MSRV service.
• Client feedback on ease of use and the quality of
valuations has been extremely positive.
• Over 25% of MSRVs are pre-sale certificates being
ordered by retailers.
• Turning around most orders within 4 hours vs the
24 hour turnaround originally promised. 30

31. Profiting from the New Appraisal Rules
31
The Importance of Comps

32. Profiting from the New Appraisal Rules
The Importance of Comps
• Help us ensure a robust database of comparable
new home transactions for each market.
• Report cash sales, in-house financed transactions
and deals NOT financed by one of the 4 national
lenders that are already providing data.
• Submission form setup at the MHICAS.org website
or download a spreadsheet template to submit data
in bulk.
32

33. 33
MHICAS: Instructions for New Home Sales Entry

34. 34
MHICAS: “Report a New Home Sale” Page

35. Profiting from the New Appraisal Rules
Questions?
or email them to darren@datacompusa.com
35

36. Profiting from the New Appraisal Rules
Don’t Forget to Complete the
Conference Survey
Include your name on the survey for a chance
to win the Grand Prize!
36

37. Turning Lemons Into Lemonade
Profiting from the New Appraisal Rules