Up until a year ago, Alberta’s factory-built home industry was suffering from a collective migraine. From customers to builders to financers, it seemed like one giant headache to buy and sell one of these homes.
ATB team members Bonnie Kroeker and Ryan Kubryn saw this problem and decided to relieve the headache like two extra-strength painkillers. Not only were they able to ease everyone’s pain, but they also helped kickstart the entire industry with one simple change.
“The problem was that the guidelines and rules for lending hadn’t been updated in at least 25 years. Our team members would go into a 42-page document that had scanned fax paper to use for reference,” explained Ryan a strategy manager on ATB’s Retail Credit team.
The outdated guidelines came with overly onerous home inspections and unrealistic qualifications that often turned customers and builders away in frustration.
“Factory-built homes are much more efficient and elaborate than they used to be. They’re built to the same code as site-built homes now,” said Ryan. “We had one builder that told us every time a customer came in and they told him that ATB was their bank, he’d throw his hands in the air and say ‘Here we go’.”
Ryan knew there were a lot of underlying symptoms to a problem no one was treating. Something had to be done even if factory-built homes seemed like a low priority in the larger lending picture. That’s when he remembered Bonnie, a manager of retail operations, whom he worked with frequently and had brought to light the factory-built home situation a few times.
“The thing you have to realize is that some of the builders and dealers are also ATB customers. When we listened to the builders, their industry has basically shrunk by two-thirds in the last decade. One of the reasons why that has happened is because lenders don’t understand how to finance them. We listened to these entrepreneurs who were struggling to diversify their businesses,” said Bonnie.
Bonnie, living in a rural community in a factory-built home, knew the marketplace and the needs of her customers. Ryan understood the need to make people’s lives easier. Together, they rolled up their sleeves and got to work.
Where do you even begin?
Bonnie and Ryan’s first step was to review the outdated guidelines. They trimmed outdated information by talking to industry vendors and customers alike
They took all of their findings and recreated a lending guide and a financing workflow.
“We ended up going from 42 pages to 17. That was huge,” explained Bonnie.
One of the outdated rules they revised stated the homes needed to be anchored to the ground. Full stop. But the rule didn’t take into account new and innovative foundations that have been developed by the industry over the past decade.
“In northern Alberta, for example, if you tie your home down, the frost heaves can actually damage the home whereas in southern Alberta, if you don’t anchor your home down, it might blow away. So these changes in wording and updating really needed to occur to fit the different areas of Alberta,” explained Ryan.
Bonnie and Ryan also found that creating a Frequently-Asked-Questions resource for mortgage specialists on the various types of factory-built homes helped address some of the confusion.
“Even just some of the terminology that was used needed updating. Mobile home, modular home, ready-to-move home were all used and it was really confusing for our team members and customers because these are all quite different products,” Ryan said.
There was also the creation of a Factory-Built Homes Mortgage Specialist Experts Team with 10 ATB specialists located throughout the province.
A jump-start the industry needed
It wasn’t long after Bonnie and Ryan started seeing the positive effects of their changes.
“We had a customer that was pre-approved with us before the changes were made and the deal evolved after the rules went through. We had placed all these restrictions on their dream home and the really beautiful part is just by revisiting the deal as a result of the updated rules, we were able to save the customer over $10,000. They didn’t know what to say. That was a huge impact,” said Bonnie.
The pair have heard from the industry, customers and team members alike that the new guides and processes make life much easier.
“We had to work with our insurers to help update their rules, as well,” explains Ryan. “They look at factory-built homes on a national level and it turns out that a lot of their rules were also outdated.”
Bonnie and Ryan knew they were punching above their weight by approaching national mortgage insurers.
“I mean we’re a smaller lender in Alberta compared to the big five and we’re telling them ‘Hey, you should change these rules’,” laughed Ryan.