Jan 28, 2008 - 04:05:31 CST
In an experiment to encourage housing development in western North Dakota's oil patch, a state agency is planning to subsidize loans for prospective residents of a Williston mobile home park.It is the first time the state Housing Finance Agency will be holding loans made on mobile homes, which often are riskier than traditional real-estate mortgages, said its director, Michael Anderson. The HFA is best known for a program that offers low mortgage interest rates for first-time home buyers.
North Dakota's Industrial Commission has set aside $1 million for the initiative. It could be expanded to other housing-short regions of North Dakota if it accomplishes its goal of spurring development of Williston's Sand Creek mobile-home park. The park has about 60 units and space for 225.
"This should not only help (in Williston), but also it will be used as a pilot program to see if we can't develop it," Gov. John Hoeven said. "We may need to fine-tune it, but clearly our desire is to use it in other places around the state as well."
Sand Creek was built during western North Dakota's 1980s oil boom and abandoned when oil prices crashed. The park has city water and sewer service and curb-and-gutter streets. It is next door to the city's airport in north Williston, close to a municipal golf course and Hagan Elementary School.
WeDak LLC, a company whose investors include Jim Lund, a Fargo real estate agent, and his brother, Kelly, of Williston, bought the property from the city for $382,500 in July 2006, said Tom Rolfstad, Williston's economic development director.
Anderson said Housing Finance Agency officials spoke to Lund about ways to encourage the park's development and ease Williston's housing crunch. An influx of workers drawn by the region's oil boom has made it difficult to find apartments and moderately priced homes.
WeDak's principals have had to guarantee repayment of bank lines of credit and loans extended to the park's residents for renting or buying their homes, a Housing Finance Agency summary of the program says. Residents of the mobile home park rent their lots.
"He has stuck his neck out quite wide," Rolfstad said of Jim Lund.
Under the new initiative's terms, the Housing Finance Agency will assume some of the risk formerly borne by WeDak, which will free up money for additional development, Anderson said.
"We're trying to give him a little more capacity to fill up that park," Anderson said.
The program will help borrowers obtain 10-year mobile home loans from private lenders if they cannot get financing without the agency's backing. The agency then will buy the loans from the lenders and be responsible for collecting on them.
The $1 million authorized for the initiative should be enough to buy about two dozen mobile home loans, Anderson said.
Under WeDak's agreement with the Housing Finance Agency, the company is responsible for repaying up to 50 percent of the remaining loan if a borrower defaults. The agency would absorb any remaining loss.
For example, if a mobile home buyer borrowed $40,000 for his home and defaulted with $30,000 still owed, WeDak would be responsible for repaying up to $15,000 of the soured loan before the Housing Finance Agency would take any loss.
"There has to be a significant loss before we would actually have an exposure," Anderson said. "We don't believe that our risks are great, but there are risks there."
Mobile home loans carry more risk because the homes can be moved and become less valuable as they age. Permanent homes that are placed on a foundation often gain in value.
Lund said dwellings in the mobile home park are relatively new - usually five years old or less - and prospective residents must undergo criminal background checks. It has both rental units and people who own their homes. He expects to be able to fill the park within three years, he said.
"Everything we put in is new. We didn't go buy a bunch of junk to put in there," Jim Lund said. "The construction of these homes today is so good. It's as good as the home that I'm living in."
Lund said the idea of buying Sand Creek came up during a conversation with his brother in the summer of 2006. Kelly Lund was discussing the problems his son was having in finding a Williston apartment, and Jim Lund asked what had happened to "that abandoned mobile home park up there."
"It turned out that about six weeks later, it was being sold at auction, and we decided to buy it," Jim Lund said. "Timing is everything."
Mary F wrote on Jan 28, 2008 9:20 PM:
Jess wrote on Jan 28, 2008 9:15 PM:
They desperately need to house workers...all apartments and trailer parks are full except this one in the article...but it is hard to get a loan on a mobile home anymore. This is needed, and it is not like the state loses any money...like what "Guess What" says...the oil industry is the reason for ND's current economic boom, if you can't house the workers, they will not come...if they do not come, then the industry has to cut back...then...no millions of dollars in the state surplus. "
ND Taxpayer wrote on Jan 28, 2008 8:54 PM:
Guess what, wrote on Jan 28, 2008 4:18 PM:
PO3 wrote on Jan 28, 2008 12:58 PM:
Economic Conservative wrote on Jan 28, 2008 10:34 AM:
Displeased Taxpayer wrote on Jan 28, 2008 10:03 AM:
More Tazpayer Waste wrote on Jan 28, 2008 9:00 AM:
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