Bankers warn: lenders lack products for factory-built homes and modular financing carries borrower risk

Don Costa (1st Security Bank) and Steve Brandenburg (Cashmere Valley Bank) told the committee that financing is a practical bottleneck for many projects. Costa said construction and spec lending to builders have declined recently as builders pause projects, and he summarized a practical mantra: "time is money, time is risk," stressing that long permitting timelines and delays increase interest and make projects unfeasible. He recommended sequencing changes (allow concurrent development and building steps where safe) and local discretion to segregate lots so building can begin earlier.

Both bankers said factory/off‑site financing is underdeveloped: lenders are reluctant to fund large factory costs before a structure exists on site because collateral is limited to dirt until delivery. Costa described losses when modular manufacturers failed mid‑project and recommended stronger builder performance bonds or escrow arrangements to protect borrowers and lenders. Steve Brandenburg added statewide mortgage origination context (about 78,515 purchase mortgages in 2025 in Washington) to show demand patterns and said local land scarcity and high land costs in certain counties make price compression difficult to solve with terms alone.

Why it matters: Financing constraints interact with permitting and land problems discussed earlier: long lead times and up‑front factory costs increase carrying costs, so reforms that shorten timelines and innovations in finance products could materially reduce unit costs.