10 Pa. Code § 39.5 - Investment practices in inventory financing
(a) An association shall obtain an
application for approval on a form provided by the association. Such
application shall state the location of all of the sales and storage lots
operated by the dealer as well as his primary business address. It shall name
all manufacturers represented and include a general description of the units
sold by the dealer (advertising literature is helpful). The application shall
state positively whether each manufacturer represented subscribed to the
Uniform Invoicing Code adopted by the Mobile Home Manufacturers Association. It
shall also state whether the dealer is willing to sign recourse or repurchase
agreements in favor of the association. Preferably, the dealer shall do both.
The application shall include the names of all persons having a proprietary
interest in the dealership and state the amount of such interest in terms of
percentage of the whole.
(b)
[Reserved].
(c) In approving an
application for inventory financing, an association shall obtain a profit and
loss statement for the last fully completed semi-annual period, supplemented by
a similar statement for the months since the close of that semi-annual period.
The Department does not prescribe a particular form for this statement,
although the form shown in the appendix of the "Study of the Mobile Home
Industry" is considered appropriate in form and detail.
(d) A written credit report on the dealer
submitted by a recognized credit reporting agency shall be obtained.
(e) In order to insure that a dealer
maintains high standards, current financial statements shall be obtained at
least every 6 months for review by the board of directors. Such semi-annual
review shall be noted in the minutes of the director's meetings.
(f) After a dealer has been approved an
association may operate through that dealer to the full extent permitted by
regulation. The following safeguards are considered necessary and proper:
(1) An association shall maintain a
continuous register of paper originated through a dealer in order to have
readily available knowledge of its status with that dealer. Such information
may be included as part of an overall register, but the following items are
considered the minimum:
(i) Loan
number.
(ii) Amount of
loan.
(iii) Date of loan and date
of purchase.
(iv) Borrower's
name.
(v) Dealer's name.
(vi) Recourse provision included in
assignment.
(vii) Repurchase
provision included in assignment.
(viii) Interest rate.
(ix) Term of loan.
(x) Date loan repaid.
(2) Where an association makes any floor plan
loans to a dealer, the association shall be responsible for determining that
the merchandise so financed is not sold out-of-trust. The only effective way of
doing this is to make unannounced physical inventories of that merchandise at
intervals of not more than 30 days. Individuals making such inventories should
be rotated from time to time. The records of completed inventories shall be
retained in the dealer file along with the application for approval, financial
statement, and the like. Where the inventory reveals that any merchandise has
been sold out-of-trust, that is, without repaying the association's wholesale
loan, steps should be taken to see that it is repaid immediately and operations
with the dealer discontinued. Where an association has engaged services of a
servicing corporation, it is suggested that the personnel of the servicer make
the physical inventory, rather than association personnel. The inventory record
shall still be maintained by the association.
Notes
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