According to RV Daily Report, on October 1, 2010, a law will go into effect that requires banks to escrow property taxes and insurance on any RV or boat that is the borrower's primary residence. Ken Rishel, a principal partner at Precision Capital Funding, a company helping RV and manufactured home dealers develop lending alternatives, said, "RV owners pay some type of privilege or personal property tax in addition to vehicle registration fees in states where the RV is licensed. It is that tax that banks are required to escrow."
Since this amount may be difficult to determine because local taxes could be imposed as well, the fear is that banks will stop lending money unless the RV is purchased for recreational use only. Purchasers may have to sign an affidavit to that effect.
Rishel also stated, "Banks may be able to get around the escrow requirement by collecting a year's worth of taxes at the time of sale and remitting it in advance to the appropriate taxing authority. The same holds true with RV insurance, which would also have to be collected a year in advance at loan closing and submitted by the bank to the insurance company." This would mean the purchaser would need more cash up front for the deal, making it less affordable for someone to purchase an RV. Fortunately, this provision only applies to year one and not subsequent years.
Another provision of the law, according to RV Daily Report, is that starting Jan. 1, 2011, RV dealers will be required to disclose the interest rates on loans and give buyers three days to cancel the loan. That is good news for buyers!
The RV industry has had plenty of challenges lately. RV loans were very scarce for awhile, even for buyers with good credit. The industry does not need this new regulation reducing money for RV loans. And, it is frustrating for willing buyers who find a good deal, but can't obtain a loan to purchase it. Let's hope everyone involved gets their act together. Jaimie Hall Bruzenak