Arlington, Va., June 17, 2002 – The Manufactured Housing Institute’s Lender Best Practices (LBP) program today announced that it had certified two applicants as complying with its performance standards and awarded the “LBP Lender” designation to Chase Manufactured Housing Corp. and Vanderbilt Mortgage and Finance.
The LBP program is a voluntary program that lenders involved in manufactured home financing may use to help enhance the integrity of all aspects of the credit transaction. Lenders with the “LBP Lender” designation will be able to demonstrate to their funding sources that they have the appropriate business systems, procedures and standards in place to improve portfolio performance.
The LBP program, launched by the Manufactured Housing Institute (MHI) in Feb. 2002, establishes a minimum set of performance standards. A participating lender develops and adheres to a plan that outlines the systems, policies and procedures it has in place to comply with the LBP performance standards.
“We are proud to have been a part of Lenders Best Practices from its earliest stages of development,” said Len Zych, executive vice president of Chase Manufactured Housing. “We recognize the value of programs like this, and I hope that in the future, we will see other areas of our industry using Lender Best Practices as a model for their own best practices.”
Clayton Homes and Vanderbilt Mortgage and Finance President Kevin Clayton concurred, “The Lender Best Practices certification recognizes the high standards and dedication of our team members in originating and servicing high quality mortgages and in providing superior customer service.”
The LBP performance standards cover the various aspects of the credit transaction, from training of employees, verification and record-keeping systems, written standards for underwriting, collection and foreclosure procedures, monthly loan performance reporting, consumer protection, and other quality control systems. A summary of the LBP performance standards are on the MHI Web site, www.manufacturedhousing.org.
“The LBP program establishes a framework for all parties involved in the credit transaction to ensure the integrity of the financial transaction,” MHI President Chris Stinebert said. “Properly used, this framework will provide the necessary assurances to rating agencies, investment bankers and others about the quality of the credit being generated by ‘LBP Lenders.’ We are very encouraged by the positive response to the LBP program from the financial community and are pleased that Chase Manufactured Housing and Vanderbilt Mortgage and Finance have completed the certification process and earned their LBP Lender designation.”
Currently, Origen Financial L.L.C., Conseco Finance Corp., Triad Financial Services Inc., CIS (formerly known as Cavalier Acceptance) are also in the process of having its submitted compliance plan reviewed for certification. Other firms are in the process of become LBP candidates.
Certified LBP Lenders must submit to an annual independent performance audit that will review that their day-to-day practices match their compliance plans. This independent assessment function will be performed by an MHI-approved external audit firm, which can utilize internal audits, regulatory compliance reports and quality control programs to ascertain compliance with LBP.
Vanderbilt Mortgage and Finance, a wholly-owned subsidiary of Clayton
Homes, was incorporated in 1977 and services $5 billion in loans. It operates in
39 states and employs 600 team members.
Chase Manhattan Mortgage Corporation is a subsidiary of J.P. Morgan Chase & Co. (NYSE: JPM), a leading global financial services firm with assets of $713 billion and operations in more than 50 countries. With headquarters in Edison, New Jersey, Chase Manhattan Mortgage Corporation is one of the nation’s largest residential mortgage lenders and servicers, according to Inside Mortgage Finance. It employs 12,000 people in major servicing and operations sites and over 280 offices across the country. The Chase home finance businesses include first mortgage, home equity and manufactured housing loans.
The Manufactured Housing Institute is the national trade association for the factory-built housing industry, representing all segments of the manufactured and modular housing industries, including producers, component suppliers, financial service providers, retailers, community owners and operators, developers, insurers, and other parties interested in factory-built housing. From its headquarters just outside Washington, D.C., MHI works to promote the benefits of factory-built housing to relevant audiences.
MHI’s Lender Best Practices Program Adopted in February 2002
Adopted by the Manufactured Housing Institute in Feb. 2002, the Lender Best Practices (LBP) program is a voluntary program that manufactured home financing lenders may use to help enhance the integrity of all aspects of the credit transaction. Lenders with the “LBP Lender” designation will be able to demonstrate to their funding sources that they have the appropriate business systems, procedures and standards in place to improve portfolio performance.
The LBP performance standards cover the various aspects of the credit transaction, from training of employees, to various record-keeping systems, to consumer protection provisions, to quality control systems. Specifically, these performance standards include:
· Establish written policies and procedures that clearly define steps to prevent fraud and misrepresentation, ensuring that all employees involved in origination of retail loans fully understand and adhere to these policies and procedures. An internal quality control review team will check for compliance with these policies and procedures and initiate corrective actions where appropriate.
· Establish written procedures for verifying borrower income, employment status, and any down payment prior to the funding of the loan. Also establish procedures for loan closings and maintenance of each loan record. The quality control review team will review these procedures randomly and ensure employee compliance.
· Establish written policies and procedures for loan underwriting, including specific limits for overriding these underwriting policies.
· Independently validate all internal scoring models and other automated underwriting systems.
· Establish written policies and procedures for the collection of delinquent loans, foreclosures and repossessions, with close monitoring for compliance.
· Establish a loan performance reporting system with monthly pool performance and analyses of historical loan performance indicators.
· Establish methods using reasonable sampling or other methodologies to independently verify information provided by loan applicant or other relevant parties. Also obtain reports from independent credit bureaus and validate information provided on credit applications.
· Provide applicants with the opportunity to have credit bureau reports corrected in cases where discrepancies occur between information provided on credit application and credit reports.
· Establish procedures for funding loans that are exceptions to stated policies and procedures.
· Establish guidelines for corrective action if fraud or misrepresentation by loan applicant is discovered.
· Establish policies and procedures for approving and qualifying financial business partners, including checking for fraud, civil and criminal records, and verification of credit/financial status. Utilize reasonable sampling processes and frequencies for reviewing business partners.
· Develop Lender-Partner standards for each group of business partners.
· Establish policies and procedures for corrective action if fraud or misrepresentation is discovered. Establish a dispute resolution process for resolving differences of opinions by and between business partners.