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Banking & Finance

Banks Offer Non-traditional Housing Loans

By Jenny Callison, posted Jul 5, 2019
David Parker (left), regional president for SouthState Bank, and developer Leslie Smith stand in the courtyard of the Cargo District’s first project, which SouthState financed. (Photo by Jenny Callison)
As affordable housing becomes ever more scarce, people are looking to alternatives to single-family homes and apartments. One option is mobile homes.
 
In recent years, mobile home manufacturers have upgraded the quality of materials and the amenities available in their products, said Chris Shugart, South State Bank’s mortgage sales services and technology director. It’s not unusual for models to boast granite countertops and higher-end appliances.
 
“I was in a couple recently that had barn-wood doors, hand-scraped floors and wine refrigerators,” Shugart said. “These homes are built with the least amount of waste because of factory efficiencies, they use higher-quality materials, and they are built to be more environmentally friendly.”
 
Shugart should know. South State Bank is one of a growing number of financial institutions that provide mortgages for mobile homes. In the past, lack of good financing options could make it hard for low-income people to purchase mobile homes.
 
While some banks are just now seeing lending for manufactured housing as a viable market, South State has been offering such mortgages for some years.
 
“It’s always been important in our markets and performed very well for us,” he said of this lending segment. “We have an experienced team of underwriters and mortgage salespeople, and we [provide these mortgages] all over, outside of our traditional bank footprint [of Georgia and the Carolinas]. We do some in Virginia, Florida, Alabama, and not just in rural markets but in middle-tier and urban markets. Myrtle Beach is a good market for us.”
 
While mobile homes, as Shugart pointed out, can get people into home ownership sooner than can traditional homes, they are also an affordable second-home option for many.
 
“Younger families trying to get into a resort area or folks who are looking for a retirement home can get into markets they want to be in,” he said. “We see that in resort areas between Savannah and Hilton Head.”
 
First Carolina Bank, which recently announced it is building a full-service branch in Wilmington, has offered mobile home mortgages and other non-traditional mortgages along with traditional mortgages since its establishment in 2014, according to David Rizzo, First Carolina’s Wilmington market executive.
 
“We’ll do [mortgage loans] for anything: condos, mobile homes, anything outside the norm, because we do not sell our loans,” Rizzo said. “We treat it like, ‘Can you pay us back?’ Our capability is the non-traditional side of financing because we are not checking off checklists because we don’t sell our loans.”
 
First Carolina has a market servicing agreement with Angel Oak Mortgage that allows the two lenders to refer borrowers to each other depending on which entity can best serve the borrower. For example, Rizzo said, if someone applies to Angel Oak for a construction loan, the mortgage company refers that applicant to First Carolina.
 
South State is also expanding its presence in non-traditional housing arenas. It wound up financing Wilmington’s first cargo housing development, part of The Cargo District, last year, said David Parker, South State’s regional president.
 
All nine 620-square-foot units were preleased and are occupied, he said.
 
South State didn’t seek out the project, but after getting to know developer Leslie Smith a couple of years ago, Parker said he was impressed at Smith’s vision and ability to get things done.
 
“It was outside what we were doing, but it seemed extremely interesting, from my perspective,” Parker said, adding that South State originally had no plans to finance the development, but as the bank’s relationship with Smith developed, providing financing appeared to be a viable possibility. So when Smith got approval to build, South State stepped up.
 
“When we got [the units] appraised, they appraised for more than the cost of building them,” Parker said. “Their utilities costs are very low because they are so well insulated. People are looking for alternative housing in Wilmington, and [The Cargo District] is nearly in the center of the city with shopping, work and downtown within walking distance. There’s bus service. We have been extremely pleased with the project.”
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