Mobile homes aren’t too mobile and create financial risk

John Oliver’s “Last Week Tonight” may have a comedic bent, but is one of the best news shows around. The latest episode included a detailed look at the mobile home industry. The key takeaway is private investor groups prey upon the mobile (and modular) home buyers through a rigged system.

Between a truly captive audience (more on this later), the fact the significant majority of mobile home buyers rent the land underneath, and the predatory lending and sales practices, the buyers are at the mercy of greedy players in a shady industry. Adding to that, the value of the mobile home will only depreciate (like an auto), so the buyer truly must beware.

We have come to this problem as several conditions have culminated together. We have an increasing number of “have-nots” in America, so mobile or modular homes are the most affordable route. The mobile home park owners have consolidated and were purchased by several private investor groups, but even the larger regional players operate under this rigged system. These folks see a market to squeeze. Finally, if the buyers do not own the land, they are truly held hostage.

Why? Over 80% of mobile homes never move due to the cost of moving. The property owners know this, so they annually jack up the rent increasing by exorbitant amounts. The renters are then inundated by collection agencies who get them to pay. When they cannot, they eventually move, leaving their home behind. Then, the property owner takes possession of the abandoned home and rents it out.

Finally, the sellers of these products often own the financing agency offering a turn-key purchase. The loans are more like predatory car loans than they are mortgages. So, the interest is higher than normal at the same time the rent is getting increased.

Oliver’s show highlights a couple of the players in the industry. One property owner has sites in 25 states and offers seminars on how to gouge your captive tenants. In one instance, this property owner referred to his tenants as “like being chained to a Waffle House table.”

There is a small movement afoot which will allow homeowners to buy the mobile home park land en masse, as a right of first refusal. Nonprofit funders are helping make this happen. What is needed is more states to have right of first refusal laws, so that the property is not sold to a predatory landlord.

The other need is education. If you must buy a mobile or modular home, place it on land you own or in a tenant owned development. Also, seek better financing than what is offered by the seller. But, know going in this home will not go up in value. If you buy a modular home for $50,000, it may be only worth $10,000 in a few years.

The “have-nots” have little recourse in this industry. Education is a must, as you will truly become a hostage in your home.

 

 

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Renewable energy has become cheaper than coal

An article in The Guardian caught my eye yesterday, entitled “‘Coal is on the way out’: study finds fossil fuel now pricier than solar or wind.” This is not surprising to me as the production costs of solar and wind energy have significantly dropped over time, yet it likely catches some as a big surprise. Per the article:

“Around three-quarters of US coal production is now more expensive than solar and wind energy in providing electricity to American households, according to a new study.

‘Even without major policy shift we will continue to see coal retire pretty rapidly,’ said Mike O’Boyle, the co-author of the report for Energy Innovation, a renewables analysis firm. ‘Our analysis shows that we can move a lot faster to replace coal with wind and solar. The fact that so much coal could be retired right now shows we are off the pace.'”

When all of the costs are factored in, coal is even more expensive than indicated above. For example, coal energy continues to be costly long after it is burned through ash maintenance, leakage and litigation. Yet, now production costs are largely higher for coal than renewables. As the article notes the decline of coal is passed the tipping point.

But, don’t just take the word of this article. In the first two years of the Trump Presidency, more coal plants have been closed than in the entire first four-year term of Obama’s Presidency. This would have happened anyway regardless of who was President, but I mention Trump as even someone who campaigned on keeping coal plants open cannot stave off this trend.

If that is insufficient, note there are currently more than four times the number of solar jobs than coal jobs in the US. And, the wind energy jobs are growing very quickly in the Midwest, with Texas, Iowa, North Dakota, and Minnesota among others leading the way. In an article called “Will 2019 be the year of the turbine – wind energy continues to surge in Texas” in the Caller Times, in 2017 Texas provided about 15% of its energy through wind and has and will continue to increase that percentage in 2018 and beyond.

I feel for the coal miners, but they are owed the truth and help in retraining for new jobs and some transitional financial support. In the same areas where coal is found, the wind blows and sun shines. I implore legislators to help invest in the new economy in these areas. This should have been happening all along as this trend is not new.

 

 

Rural hospitals closing at an alarming rate

Rural hospitals in trouble is not a new topic, but the significant increase in closings and risk of such is finally getting some attention. The issue for years has been the large percentage of a rural hospital’s budget that went unpaid due to patient debt and indigent care. In some hospitals, the percentage of these two items is more than 1/2 of the budget.

Per a February, 2019 article in Modern Healthcare called “Nearly a quarter of rural hospitals are on the brink of closing” by Alex Kacik: “Twenty-one percent of rural hospitals are at high risk of closing, according to Navigant’s analysis of CMS data on 2,045 rural hospitals. That equates to 430 hospitals across 43 states that employ about 150,000 people and generate about $21.2 billion in total patient revenue a year.

Hospitals are often the economic drivers of rural communities. Per capita income falls 4% and the unemployment rate rises 1.6 percentage points when a hospital closes, a related study found. Ninety-seven rural hospitals have closed since 2010, according to the University of North Carolina Cecil G. Sheps Center for Health Services Research.

They also broke the impact down by state, revealing that half of Alabama’s rural hospitals are in financial distress, the highest percentage in the country. At least 36% of the hospitals in Alaska, Arkansas, Georgia, Maine and Mississippi are in financial jeopardy.”

Most of the states in trouble chose not to expand Medicaid, but there are some who did or are now doing so. Per several studies by The Commonwealth Fund, RAND Corporation, Economic Policy Institute and George Washington University, expanding Medicaid would help patients, state economies and rural hospitals. Why? It would allow these hospitals to get paid and paid closer to the time of service reducing accounts receivables. Getting paid has an echo effect on employees and consumers.

This issue was brought home by two Republicans pleading with their party to acquiesce in states like North and South Carolina that did not expand Medicaid. GOP Governor John Kasich of Ohio, who ran for President, said Medicaid expansion is a “no brainer” and would add over $13 billion to Ohio over several years. Yet, the most dramatic plea was from Adam O’Neal, a GOP Mayor of a North Carolina town called Belhaven.

After failing to get the GOP majority in Raleigh to help save his town’s Vidant Pungo Hospital that served 20,000 people, he walked 273 miles to Washington, DC over 14 days. “You can’t let rural hospitals close across the country. People die,” O’Neal, told Modern Healthcare in 2014. Unfortunately, Vidant Pungo closed later that year (note a non-ER clinic opened in 2016).

You can add my pleas for help back then (and now). Folks, this stuff is real. I do not care if your tribe is blue, red, purple are chartreuse, hospital closings impact people’s lives and people’s livelihoods. Closings also hurt their community’s economy. My strong advice is for legislators to stop political posturing and do something. I do not care who wins or loses a political game. Stop focusing on keeping your job and do your job. You could start by expanding Medicaid, joining the other 36 states.

Hey Dems, focus on these four issues

One of this Independent voter’s frustrations with politics, which is exacerbated by this President, is pressing issues are not getting discussed. And, some are made worse or are sabotaged by the current White House incumbent as we are told to focus our attention on issues he has overstated in importance or sold on fear.

While there are many issues, it is hard to boil the ocean. So, my advice to all politicians, but especially the Democrats who are pushing these ideas, is to narrow the focus to the following four issues.

– Stabilize the healthcare system and have a good debate on Medicare for All, which is a hard sell. The GOP has failed to realize that a reason they lost the House is not listening to most Americans, instead sabotaging the ACA reneging on commitments to insurers and trying to repeal it. As a retired benefits actuary, consultant and manager. I would suggest an idea to stabilize the ACA is to expand Medicare to retirees at age 60 or 62 and measure the impact for its veracity. But, we need to start by paying insurers what we committed to them.

– Climate change is real, is happening and is man-influenced. AOC is dramatizing a little about the end of the world, but the data point she is citing is if we do not make huge strides by 2030 (12 years), our ability to stop the warming trend impact is minimal. She has been ridiculed for he Green New Deal by the GOP, but I would rather discuss her plan than Senator Marco Rubio ignoring the fact the largest city in Florida is the most at risk city on the planet and is seeing a larger number of sunny days flooding from the rising tides. Who is the crazier person, the one speaking to a problem or the one ignoring it altogether?

– Job retraining is key, but we need to understand the major reasons the jobs are going away are technology/ robotics and CEOs chasing cheap labor. It is not immigration or trade, which are down the list. This especially true in those impoverished areas where industry has left them behind moving or closing a plant.

– Finally, the debt and deficit are critical to discuss. The debt just passed $22 trillion and is headed to $34 trillion by the end of 2027. The annual deficit will pass $1 trillion this year, which is nearly 1/3 of our annual revenue. My former party and, in particular, the Freedom Caucus, are as hypocritical as they come. When the Dems had the White House, the Freedom Caucus screamed bloody murder when the debt was $8 trillion, then $13 trillion. But, I give the same caution to Dems I give to the GOP, we must reduce spending and increase revenue. The math will not work otherwise, so says the CBO, Committee for a Responsible Federal Budget, The Concord Coalition and Simpson-Bowles Deficit Reduction Committee.

Of course, there are other critical issues. But, if you focus on the important few, it will resonate. This is especially true for younger folks – climate change, debt, future jobs and healthcare are important. In my view, the GOP has lost its way on issues of import. When I left the party twelve years ago, a key reason was its global warming denying stance. My thesis is if you are denying the greatest threat facing our planet, how can I trust you on resolving other issues?

We are behind the eight ball on too many issues. We are leaving our problems to our children and grandchildren. They will ask us, why did you do that? Why, indeed?

This, that and another thing

Now that the state of the union and Democrat rebuttal are behind us, it would be nice if an independent voter had a turn. On the talk (and some shouting) shows, the independent views do not get heard enough and that is disappointing. For once, it would be illuminating for a member of neither party to share their thoughts.

For example, we might learn:

  • Global warming really is a concern and we should be doing something about it. On Bill Maher’s Friday show,  he noted that Senator Marco Rubio used the argument against the President for declaring a national emergency to build the wall, as what would stop President Kamala Harris from doing so to address climate change? Maher correctly pointed out the latter is becoming a national emergency, while the wall is not even a top ten issue and is overblown as a solution. He also noted, with the very real concerns over Miami, Rubio may become the Senator of Atlantis.
  •  A growing debt which is around $22 trillion with an annual deficit about to hit $1 trillion is a problem, especially with the deficit in a good economy. The Committee for a Responsible Federal Budget models the debt to be around $34 trillion at the end of the 2027 fiscal year. We must have spending cuts and revenue increases both. The math will not otherwise work. If a politician tells you differently, he or she is lying to you. Don’t let them.
  • The Affordable Care Act and Obamacare are the same thing. So is KyNect in Kentucky. Too many people still don’t realize this in the GOP. But, don’t look to politicians to solve this, as they really do not understand how our complex healthcare system works. We need to stabilize the ACA and stop sabotaging it, as the GOP has done.  My recommendation as a retired benefits consultant, actuary and manager is to fund money promised to insurance companies to pay for adverse selection and committed to deductibles, copays for people beneath 2 1/2 times the poverty limit. I would also expand Medicare as a pilot, measured effort to retirees below age 65, such as 60 or 62. This will reduce the cost rate in the exchanges and Medicare. The remaining states need to get off the dime and expand Medicaid – it is a no brainer per GOP Governor John Kasich.
  •  Addressing America’s crumbling infrastructure would help rebuild assets and provide good jobs. We also need to build on the community college system with some added funding to retrain people to do the jobs of the future, as technology claims even more (this is the major threat, not immigration or trade). Also, building on the bipartisan idea pitched to the President last year by Senators Sherrod Brown and Rob Portman from Ohio, we should co-invest with car manufacturers to retool plants to make the cars in demand and keep the factories open. This idea was ignored and the President was offended when GM announced some plant closings.
  •  There are so many more ideas around rethinking ill-conceived tariffs and trade fights, poverty issues, and gun governance, but let me make a general statement that is important. Start treating our allies and citizens with fairness and dignity. Stop the adversarial BS. A country and business makes more money long term by having a productive long term relationship. We need to stop measuring success on short-term transactions. Listen to your advisors as they actually study our problems. And, stop beating up on a free press. From where I sit, they are not perfect, but the true journalists try to get it right. The main source of fake news in the country sits in the oval office and he only cares about looking good.

Well, that is enough for now. I would love to hear your thoughts.

Real problems are not getting addressed

In lieu of focusing on problems that have been overstated by fear and misinformation, several real problems remain. Just to name a few – $22 trillion in debt with an expected $1 trillion annual deficit; ill-crafted tariffs which are slowing the global economy; increasing poverty and hunger; climate change interventions; infrastructure needs that are ticking time bombs; retraining workers impacted by technology; domestic terrorism and gun deaths; and stabilizing the ACA. These are the concerns of this independent voter, who has belonged to both parties.

Note: I wish to applaud Germany for announcing last Friday they plan to phase out coal energy by 2038. It should be noted that in 2018, renewable energy surpassed coal energy in Germany. This is what can be done when real problems are addressed with planning. The US is doing many good things with renewable energy, but it could do so much more with supportive federal leadership.

Saturday in the park – once again

The rain has stopped and the sun is shining. So, we will celebrate with a nice hike in a close-by park trail. Hopefully, the trail won’t be too slushy.

Here are a few thoughts to chew on this weekend, in no particular order.

Note to expressive incoming Congressional representatives. Even though the President acts like what you call him, derogatory name-calling is not productive. It is even more true with this President who relishes mud fights simply because he does not need to know facts to win. Please stick to the issues and his actions and words.

Speaking of said man, he says he will do what it takes in shutting down the government to get his wall. Excuse me, but what sacrifices are you making Mr. President? It seems the federal workers who work under your watch are worried sick about mortgage, rent and bill payments and spending on groceries and prescriptions. What precisely are you sacrificing Mr. President?

What saddens me about the Republican Senators is they know their leader is largely untruthful and does not deal in good faith. This man screwed them over before Christmas reneging on a deal, yet again. Conservative columnist David Brooks said it best on PBS Newshour last night. If you get a deal with Donald Trump, get it in writing.

Lastly, let’s give a shout out to our newly elected Congress that looks more like America. It is indeed an exemplar of what our country should be all about. Whether people like the new Speaker or not, Nancy Pelosi is an effective leader and has a bipartisan record to prove it. She is far from perfect, but she is much closer to that paragon than another person in a place of leadership who I may have mentioned above.

Happy trails to you, until we meet again.