One of the most important things we can do for our members is help them secure safe and affordable housing. As home prices continue to rise across much of Montana, manufactured housing, including mobile homes, is an increasingly important source of affordable home ownership. However, due to lending regulations, these homes generally do not qualify for traditional mortgages, and financing for them is excessively expensive if it is even available at all.
Lending a hand
In 2017, Clearwater Credit Union launched a loan specifically tailored to provide affordable financing for manufactured homes. But owning the home is only one half of the problem. Most mobile homes sit on rented land, and what happens if the landlord decides to sell?
“It is a terrible limbo to be in when you own your home but not the land on which it sits,” says David Rook, Senior Vice President of Business Banking at Clearwater Credit Union. “To not have that peace of mind and to feel that your home can be pulled out from under you, that is scary.” That’s where Resident-Owned Communities, commonly referred to as ROCs, come in.
Building cooperative communities
A ROC is a cooperative of mobile home park residents who purchase and collectively manage their park. ROCs are a way for home owners to own, and democratically manage, their community. A national group, ROC USA, was established in 2008 to assist homeowners in forming communities, which now number more than 235 ROCs with 15,000 homes nationwide. NeighborWorks Montana is a certified ROC USA Technical Assistance Provider, working to bring ROCs to Montana.
When a property goes up for sale, NeighborWorks Montana reaches out to the residents to see if they are interested in forming a cooperative and buying it. NeighborWorks provides education and walks residents through the process of forming a ROC, including establishing a board, determining lot rents and management plans, and securing financing. “It’s a very grassroots process,” says NeighborWorks Montana ROC Program Manager Danielle Maiden.
However, NeighborWorks Montana’s typical partner, ROC USA Capital, only finances projects with 25 or more units. This poses a problem for smaller parks like Country Court, an 11-unit mobile home park in Kalispell, Montana. That is where Clearwater Credit Union came in.
Clearwater was amazing. They matched the level of financing we usually receive from ROC USA. There was no other lender that was going to do that.— Danielle Maiden, ROC Program Manager, NeighborWorks Montana
A ROC to stand by
Working with his business lending team, Rook set out to determine how to make the ROC model work for a park of 10-12 units—half the size of a typical ROC project in Montana. The team put together a proposal that made sense for both the credit union and park residents. The Country Court ROC transaction closed on June 29, 2018, making it the first “small” ROC formed in the state of Montana.
“Clearwater was amazing,” says Maiden. “They matched the level of financing we usually receive from ROC USA. There was no other lender that was going to do that. We were surprised and impressed with what David and his team were willing to do for us.”