Strong Real Estate Growth Projected and a Fund that is Positioned to take Advantage of it.

The MHC lending market has now been strongly impacted by the mortgage meltdown. Always considered to be a specialized asset class by banks, this historically underserved market constricted further as risk weary banks restricted their lending practices in the second half of last year. Some of the larger, national banks like Citigroup and La Salle were the first to go in 2007, followed by many lesser peripheral lenders in 2008. The remaining local and regional banks sought to manage risk by raising rates, tightening underwriting guidelines, reducing territories or exiting the market entirely. In 2008 the CMBS (Commercial Mortgage Backed Securities) lending market imploded, drying up the source for most conduit and larger balance MHC financing as institutional lenders like insurance companies curtailed their buying of these securitized loans and borrowers became priced out of the market by excessively high rates. Eventually this shake-out process may weed-out the weaker, less committed players and make the market stronger overall, but where does it leave us now?

Although the economic crisis has impaired credit markets for MHCs, there are still some viable sources of funds available. Rates are very attractive (a silver lining) and lenders are fewer and more cautious but do still exist. MHCs are an asset class that deserves financing. Because of stricter lending policies and tighter credit there is now, more than ever, a real need for quality affordable housing. Many of the structural changes that are taking place will eventually be resolved, resulting in a stronger and more efficient lending market for MHCs. The future still looks very promising for this unique and evolving industry

Communities/Borrowers must meet as many of the following Loan Qualification Criteria as possible: High quality properties, well maintained, paved (with curbing), lighted, 50% of spaces large enough to accommodate double-wides, off-street parking, amenities (club house, swimming pools, etc) and be located in an area of population density where local economic and occupancy trends remain favorable. Also, there should be no more than 10% park-owned homes and 10% vacancies. Borrowers should live near the community, be creditworthy and experienced, with other sources of income and good liquidity and net worth greater than the requested loan amount.

The good news is that waivers for these criteria are possible under certain circumstances if there is a plausible explanation. Exceptions can be made if the situation is temporary or can be remedied and other compensating factors such as the quality of the guarantors and the property are taken into account.