Pennsylvania Code & Bulletin
COMMONWEALTH OF PENNSYLVANIA

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10 Pa. Code § 39.5. Investment practices in inventory financing.

§ 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.

Source

   The provisions of this §  39.5 amended April 25, 1980, effective April 26, 1980, 10 Pa.B. 1661. Immediately preceding text appears at serial pages (2016) and (33901).



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