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Keeping Affordable Housing Affordable

June 8th, 2010

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This podcast of News at Noon is sponsored in part by MHMSM.com/solutions more information on MHMSM.com/solutions will follow this podcast.

Coming up, Pre-fab houses go Green.

But first…these stories.

Keeping Affordable Housing Affordable

To start with some good news, indications are that the twelve year decline in manufactured housing production and sales may be leveling-off and, hopefully, coming to a halt. Just as importantly, an MHARR analysis, including input from manufacturers and retailers, shows that as the first signs of a possible recovery begin to appear, positive indicators are strongest at the most affordable end of the price spectrum. Thus, confronted with unprecedented difficulty in obtaining and/or qualifying for purchase money financing, Americans are increasingly turning to the industry’s most affordable homes in order to meet their housing needs — providing just the latest vindication of MHARR’s founding vision and ongoing mission of maintaining the delicate balance between affordability and the proper protection of manufactured housing residents.

The basic underpinning of this philosophy and mission, is that of all segments of the housing industry, only manufactured housing has been recognized by Congress as providing inherently affordable home-ownership for all Americans, without the need for government subsidies. As the original manufactured housing bill was debated in Congress in 1974, a key sponsor warned against regulation that prices consumers out of the manufactured housing market by needlessly raising the purchase price of the home — “if these provisions become law, Congress will have the obligation to evaluate frequently their cost effect on mobile homes. If the cost effect is too great, it could price low income consumers out of the market….” This concern for purchase affordability was later written into law by the Manufactured Housing Improvement Act of 2000, which specifically requires HUD and the Manufactured Housing Consensus Committee (MHCC) to consider the cost impact of both new and revised standards and regulations on the cost of manufactured housing to consumers.

The latest trend toward affordability shown by MHARR’s analysis, thus underscores the importance of keeping the purchase price of HUD Code manufactured homes as stable as possible and ensuring that prices are not driven up by needless or unnecessarily costly standards and/or regulations. For the industry and consumers, this means insisting that proposed changes to existing standards and/or regulations include sufficient cost and justification information to properly and accurately evaluate purchase price impact. It also means rejecting guesswork and wishful thinking, and insisting that purchase price impact be fully considered by the MHCC, by HUD and by any other government agency considering action that could impact manufactured housing. Only by observing these guideposts can manufactured housing remain both safe & affordable for all Americans and continue to provide maximum freedom of choice for consumers to select the amenities they want, consistent with their means and ability to pay for a home. Indeed, with legislation pending in Congress (i.e., the “Restoring American Financial Stability Act of 2010″) that would require homebuyers to prove their ability to pay for a home, this will be more important than ever.

Unfortunately, despite the disproportionately negative impact of purchase price increases on lower-income consumers, there is constant pressure from regulators and others to impose new and more costly standards and regulations on HUD Code manufactured homes. Much of this has been — and is being — advanced by circumventing the major reforms of the 2000 law, and most particularly, as shown at the April 2010 meeting of the MHCC in Tulsa, Oklahoma, by downgrading the role, authority, functionality and independence of the MHCC, which was created by Congress with the specific mission of acting as a check and balance on the power of program regulators and not just as a run-of-the-mill “advisory committee.”

For those who missed the Tulsa MHCC meeting, or did not have an opportunity to review MHARR’s comprehensive meeting report, below are just a few examples of actions taken or advanced (albeit, like the meeting itself, based on decisions made by the prior HUD program management) without a legitimate basis or necessary cost and justification information:

  • Under a February 2010 “Interpretive Rule,” HUD has placed off-limits from MHCC review and comment, a myriad of agency interpretations and decisions affecting the standards and their enforcement. By reading “catchall” section 604(b)(6) out of the 2000 reform law, a provision designed by Congress to ensure that HUD would bring most standards and regulatory matters to the MHCC, the stage is now set for HUD to bypass the MHCC on major issues.
  • HUD has indicated that changes in reference codes that would relax or lower existing HUD standards will be ignored, leaving only upward revisions of reference standards to be considered. This one-direction-only policy for escalating the HUD standards surfaced during a recent MHCC task force debate regarding updated wind standards.
  • Sprinklers mandates. Existing federal standards already provide for the fire safety should be applied by HUD to preempt state or local sprinkler mandates. Instead, HUD is advancing a federal sprinkler standard under the guise that it is either “voluntary,” or triggered only “as needed” by a state or local sprinkler mandate. Experience shows, however, that there is no such thing as a “voluntary” standard and that this will end up as mandatory for all manufactured homes, unnecessarily raising the purchase price of those homes.
  • Proposed regulations to revamp the enforcement system, which failed to gain the consensus support of the MHCC because they were not supported with justification or cost-efficiency data are, apparently, still being pursued by HUD.
  • Ground anchor testing. HUD’s recent re-write of the anchor testing protocol developed by the MHCC is yet another example of wishful “life-cycle” thinking masquerading as cost analysis. The proposal, generated by a HUD contractor, states:… an accurate assessment of total costs cannot be determined at this time… However, the anticipated increase in cost is considered to be justified by the overall benefits achieved…” If total benefits cannot be determined, however, the relationship of benefits to costs cannot be determined.
  • Energy standards are being developed by the Department of Energy (DOE) and other energy mandates are being advanced simultaneously by special interests before the MHCC. The typical claim for energy proposals, without any actual cost data having been shown thus far, is that heightened standards will produce long term savings for consumers. To a consumer who cannot qualify to buy a home because of a higher purchase price, however, “life-cycle” savings mean absolutely nothing.

These proposals and actions represent just the tip of the iceberg that could undermine the affordability of manufactured housing without any corresponding benefit to consumers, and bring an abrupt halt to what appears to be a fragile recovery being led by the industry’s most affordable homes. More than ever, therefore, it is essential that the purchase affordability of manufactured housing be protected and defended by fully implementing all reform aspects of the 2000 law. With a new program leadership now in place at HUD, MHARR will work with the Department to focus on the importance of balancing purchase affordability and consumer protection as set out by Congress in the 2000 reform law – as should all program stakeholders, particularly the rest of the industry and consumers.

In MHARR’s view, manufactured housing is – and must remain – affordable housing for all Americans.

MHARR is a Washington D.C.-based national trade association representing the views and interests ofproducers of federally-regulated manufactured housing.

Prefab Houses Go Green

As reported in SmartMoney Magazine – On a remote home-building site outside the small town of Charlestown, R.I., Tom Dieterich is up on a roof, ducking beneath a massive slab of wood and steel that hangs from a crane. The craggy-faced crew foreman from Blu Homes has been riding his workers hard to finish this house, since they’re already so close: The bamboo floors are down, the foam-insulated walls are up, even the energy-efficient kitchen appliances have been installed. Now, with dusk approaching, Dieterich is anxious to fix the final segment of the roof into place. After all, he and his crew—and one of our reporters—are putting up the house in a single day.

Actually, not quite a day. But in less time than it takes most men to sprout a patch of chin stubble, this 836-square-foot structure, built and assembled largely in a Massachusetts factory, was lowered onto its foundation and nearly completed. “We’ll lay the other half of the floor and wrap up other minor finish work later,” Dieterich says.

For most people, the idea of factory-made homes conjures images of tacky, vinyl-sided shoeboxes on wheels. But boutique manufacturers like Blu and others are working to erase the lowbrow stigma with a new breed of prefabs that are hipper (hey, Brad Pitt’s nonprofit is building them in New Orleans!), more high-end (prices can run up to $3 million) and, above all, aggressively green.

The premier modular project by California firm LivingHomes was the first American residential structure to receive LEED (Leadership in Energy and Environmental Design) platinum certification, the highest eco-badge offered by the U.S. Green Building Council. Even the nation’s biggest factory-home stalwarts, All American Homes and Warren Buffett’s Clayton Homes, now tout their sustainable options like solar panels and nontoxic paints. “Everyone is so interested in green,” says Roberta Feldman, an architecture professor at the University of Illinois at Chicago. “That might remove the stigma itself.”
To read more, go to SmartMoney.com and search for  “Prefab Houses Go Green”

MHI Disappointed in FHFA’s Proposed Rule on “Duty to Serve”

MHI was very disappointed to learn the Federal Housing Finance Agency’s (FHFA) proposed rule on the “duty to serve” underserved markets, including manufactured housing, which will be officially released next week, will not consider any type of personal property lending on manufactured housing.

The fundamental reason given is that due to the fragile position of the GSEs (that they are in conservatorship), FHFA only wants them to focus on their core business of mortgage lending. They do not feel they are in a position to take on a new line of business, and indeed claim that the placement of the GSEs in government conservatorship in September of 2008 does not allow them to enter new lines of business – which they consider personal property lending to be.

The proposed rule does indicate that they will work to make improvements on the mortgage or real property side of business. However, given that personal property lending comprises at least 60 percent of the lending for manufactured housing, MHI strongly believes FHFA and the GSEs are not carrying out the spirit of the law. There will be a 45 day comment period on the proposed rule from the date of publication in the Federal Register. MHI will be submitting comments on behalf of the industry.

Additionally, and with the expectation that this proposal will not be reversed, this information raises a critical question about the industry’s position regarding the future of the GSEs which will be debated by Congress next year. This issue will be a critical topic of discussion at the upcoming MHI Summer Meeting and Legislative Conference to be held in Washington, DC on July 13-15, 2010.

This podcast of News at Noon is sponsored in part by MHMSM.com/solutions.

Do you have vacant homes or sites?  Does your financing, marketing, sales or management need a boost?  From high Return on Investment online marketing, to public relations, sales, lead and management systems and more, make us your Solutions Resource. When you are ready for the answers to your needs, visit MHMSM.com/solutions.

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