Few Oregonians have done more to combat the state's chronic
shortage of low-cost housing than Dean Pollman. By his
own estimate, Pollman has sold 10,000 homes over the past
30 years, most of them to senior citizens and low-income
buyers.
Pollman sells manufactured homes, the pre-fab dwellings
formerly known as mobile homes.
In the mid-'90s, Pollman sold close to 1,000 homes a
year and employed more than 120 people. Today, he has
a tough time even luring people onto his run-down sales
lot in Southeast Portland, and his payroll has shrunk
to about a dozen.
He isn't the only dealer suffering. Sales of new manufactured
homes in Oregon plunged 16 percent last year to 5,202
homes. Through the first two months of this year, the
numbers look even worse--sales are off 44 percent.
The boom and bust of Pollman's industry has been well
documented in the state and national press. Most recently,
a May 9 Oregonian article detailed how the promise
of low-cost home ownership often proves to be hollow,
forcing homeowners to sell their dwellings at a loss or,
in some cases, abandon them completely. What's received
less attention is the role of dealers such as Pollman,
who many say are the architects of the industry's collapse.
Manufactured-home dealers operate in an environment almost
completely free from regulation. Overseen by the Department
of Motor Vehicles (a legacy of when mobile homes actually
moved), dealers need only post a $15,000 bond to do business.
Unlike Realtors, manufactured-home salesmen aren't licensed.
And unlike conventional mortgage financiers, manufactured-home
lenders are free from state and federal oversight. The
federal protection guidelines established by the Federal
Home Loan Administration to conventional mortgages don't
apply to manufactured homes.
State Rep. Jeff Merkley, whose Portland district includes
numerous manufactured-home parks, says the lack of regulation
leads to huge problems. "The rules in this industry are
completely inappropriate," he says.
The name of Pollman's operation--currently Factory Homes
Clearance Center--has changed nearly as often as the traffic
lights on Southeast 82nd Avenue, where the business is
located. The one constant is Pollman, 51, a stocky, red-haired
former Oregon State linebacker and lumberjack who rode
the manufactured-housing boom to a multimillion dollar
fortune.
In some ways, Pollman's career mirrors his industry;
his success reflects the unmet demand for reasonably priced
homes, while the dozens of complaints and lawsuits filed
against his companies reflect the reality that for buyers
who place their homes on rented land, home ownership is
often closer to a nightmare than the American Dream.
At a time of unparalleled prosperity in Oregon, the state's
manufactured-housing industry reels from crisis to crisis.
Thousands of repossessed and abandoned homes glut the
market. And in January, in perhaps the clearest sign of
how dire the situation is, Associates First Capital, the
industry's most aggressive lender (and Pollman's chief
financier) abandoned manufactured-home financing.
To Pollman, the industry is suffering through a cyclical
downturn, the third one he's seen in his nearly 30 years
of selling homes. Pollman got his start on his father's
mobile-home lot after a logging injury forced him from
the woods in the early '70s. He proved a quick study.
A measure of Pollman's business savvy is that in June
1998, when it looked like the manufactured-housing boom
would continue forever, he sold an 80-percent interest
in his dealerships in Oregon, Washington and New Mexico
to Texas-based American Homestar Inc. for more than $12
million. His timing was brilliant. The publicly traded
American Homestar's share price touched an all-time high
of $25 shortly after the Pollman deal; today those same
shares are barely worth a buck.
Homestar subsequently sued Pollman in Texas, alleging
in part, "Pollman and DWP [his management company] failed
to disclose to Plaintiffs certain sales tactics which
would have alerted Plaintiffs to the fact that the financial
condition of DWP and the Companies was significantly lower
than represented." The case was settled out of court,
but Pollman's "sales tactics" have been a bone of contention
for years.
As one of Oregon's largest manufactured-home dealers
for three decades, Pollman insists he has generated far
more happy customers than complaints. If anything, Pollman
says, he's the one who's been wronged. "I instinctively
trust people," he says, "and I've been shit on."
The public record suggests otherwise. Pollman has been
sued several times over the past five years. In at least
four cases, plaintiffs have won judgments against him
for everything from keeping down payments that should
have been refunded and not installing homes on time to
selling shoddy products and screwing up the construction
of a manufactured-home park. In the past four years, consumers
have lodged 39 complaints against Pollman companies with
the Oregon attorney general's office, alleging false or
misleading terms of sale, failure to deliver goods or
services and unconscionable sales tactics, among other
practices.
Those complaints all came after the AG hauled Pollman
into Clackamas County Court in 1994 and compelled him
to abide by the Oregon Unlawful Trade Practices Act, refund
improperly withheld down payments and pay a $2,500 fine.
Pollman made a far bigger splash in Washington. In the
past two years, customers there have filed 97 complaints
with that state's attorney general. Although officials
say state and federal investigations into Pollman's companies
continue, they have produced no results. In a rare case
of a trade group turning on one of its own members, Mike
Ryherd, a representative of the Washington State Manufactured
Housing Association, of which Pollman was a member, has
publicly testified against Pollman. "I'm at a loss to
figure out why nobody has brought charges against Pollman,"
says Ryherd. "We've identified any number of areas of
the law that he violated, but we're a trade association,
not investigators."
Despite his legal problems, Pollman has thrived because
consumers want manufactured homes--especially in Oregon.
In 1998, nearly 30 percent of all new homes sold here
were factory-built. Unfortunately, repossessions and home
abandonment are also soaring, according to local tax collectors.
The are no official figures available for the number of
such homes currently on the market, but one park manager
estimates that in the past year, there were 2,000 repossessed
homes for sale in the Portland-Albany corridor alone.
Conditions turned ugly in the industry for several reasons.
The first has to do with mortgages. An increasingly popular
practice has been to sign manufactured home buyers up
for a "step-mortgage," in which the interest rate increases
sharply after the first year of the loan. Dealers also
adopted the practice of rolling extensive improvements,
such as landscaping and garages, into the mortgage. "When
the first year is up, buyers are just walking away because
they don't have any equity," says Kathy Swanson, a tax
collector in Clackamas County.
A second problem is depreciation. Like automobiles, manufactured
homes sited in parks typically lose value over time. Larry
Brown, a Canby resident who bought his home from Pollman
for $86,000 in 1995, recently discovered the assessed
value of his home is $61,500. And with all the repossessed
homes available around his, Brown says, he'd have a hard
time getting that price on the market. "I guess I'm just
stuck," Brown says. "These things sell very slowly."
Pollman is far from the only dealer whose customers have
encountered such problems, but where he set himself apart
from others was his willingness to sell to nearly anybody.
"Pollman was dealing with people who had been turned
down by virtually every other dealer," Ryherd says. "They
simply didn't qualify for homes." As evidence that Pollman
was selling to people he shouldn't have, Ryherd and others
estimate that 150 Pollman customers in Washington have
lost their homes in the past year. Consider the narrative
from a 1999 complaint from Elizabeth Toma of Chehalis,
Wash., who had trouble coming up with a down payment for
a home she and her husband bought from a Pollman dealership:
"They gave us $2,500 trade-in on [our] vehicle," Toma
wrote in her complaint. "Now this car didn't run and had
to be towed into the lot, but that didn't matter to him.
Two weeks later, we bought the car back for $1.07."
A buyer's ability to make a down payment is crucial to
establishing creditworthiness, but according to complaints
made to the Washington attorney general and local media
reports, Pollman's salesmen accepted microwave ovens,
jewelry and even chickens as down payments.
Pollman insists that his salesmen were instructed to
accept only cash or checks.
He says that buyers, who are often on the razor's edge
of creditworthiness, are quick to look for someone else
to blame when they fall behind on payments. "Maybe I haven't
educated people enough," he says, "but is that my job?"
Given the lack of government oversight, some people would
answer that question in the affirmative, particularly
when you look at who is visiting Pollman's lot. Given
the low costs and promise of easy financing, the manufactured-housing
market tends to draw first-time buyers--many of them elderly,
poor, or both--who are unfamiliar with the intricacies
of financing.
"The manufactured-housing industry is essentially a scam,"
Merkley says, "the premise of which is the buyer doesn't
have any idea what he's getting into. They say 'Let the
buyer beware,' but these aren't sophisticated buyers."
While most of the pitfalls of manufactured housing seem
beyond the scope of government regulators, there is one
area where reform may be possible: The rent charged for
the land underneath homes.
For many home owners, rent is a bigger cost than mortgage
payments. In the metro area, according to the advocacy
group Elders in Action, the average monthly rent for a
lot is $430 and climbing.
Unlike people who rent apartments or houses, manufactured
home owners can't just leave when their rents increase.
"Moving a dwelling is not an option," says David Sheelar,
the state's manufactured-home ombudsman. Owners can charge
whatever rent they choose, Sheelar says, provided they
give residents 90 days' notice of increases.
Such a landlord-tenant relationship has evolved predictably.
Take Royal Villa Mobile Estates in Tigard, for example.
According to park resident Clara Clifford, when Royal
Villa opened in 1968, it cost $57.50 per month to rent
a space. Today, that same space costs $511 to rent, on
top of whatever mortgage payment the owner has. That's
an increase of 788 percent, more than twice the increase
in the federal Department of Labor's consumer price index
over the same period.
Rent hikes, which are particularly hard on seniors on
fixed-income, also lower the value of homes because prospective
buyers factor in the additional burden. "There's a crude
rule of thumb in the industry," Merkley says. "For every
$100 increase in rent, the value of the home declines
$10,000."
Vermont, Nevada and Los Angeles County all have some
forms of market controls on rent, says the Oregon State
Tenants Association's Pat Schwoch. But in Oregon, proposals
for similar controls have been soundly defeated in nearly
every session for the past decade.
Despite the widespread gloominess, there are signs of
hope for residents. Three metro-area park residents are
trying to bypass the Legislature. They launched the first-ever
rent control ballot initiative this spring--the first
real show of political activism on the part of a large
bloc of voters. Perhaps more promising is a program pushed
by state housing czar Bob Repine that would allow residents
to buy the parks in which they live. "That would cure
all the problems," says Jerry Duerksen, who owns and manages
several manufactured-home parks in the Willamette Valley.
"It's a no-brainer because park residents are already
paying enough in rent to make mortgage payments."
But the most powerful force for change may be the market;
if lenders are fleeing, sales are down and homes are sitting
empty, something has to give. "Owning a mobile home was
OK for 40 years," Duerksen says. "It isn't anymore."
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Willamette Week | originally
published May 10,
2000
