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HUD Code Manufactured Home Producers Want Regulatory Fairness and Stronger Congressional Oversight

August 18th, 2014 Comments off

is=hud-making-home-less-affordable--graphic3-daily-business-news-mhpronews-com-A builder of HUD Code manufactured homes contacted MHProNews  Monday morning with comments regarding concerns that arose from a conference call with producers, HUD’s third party inspectors and others they said took place last Wednesday, August 13th at 2 PM ET.

The caller urged that we contact other independent producers, asking them for their take on allegations such as the following:

  • that no cost-benefit analysis is being done by HUD on the impact of their requirements,
  • that the consensus process is being ignored or bypassed,
  • HUD is going past its mandates, 
  • that third party inspectors are essentially benefiting when more regulations are put in place

among other issues raised. Asked about the above allegations, a C-Suite level official at another independent manufactured home (MH) producer made this statement to MHProNews, quoting verbatim:

Your caller is 100% correct, in my opinion, on each and every point made.”

Fear of Regulators?

The original source stated that HUD Code MH producers are “scared to death” about making public or on-the-record statements on such matters, because there are “…so many gray areas in the regulations that it would be easy to get shut down on a relatively minor point, and essentially be put out of business.”

MHProNews  contacted HUD about these allegations. We were informed that MH program director Pam Danner is “out until  Wednesday, September 3, 2014.”  Two alternative contacts were given, including Rick Mendlen, whose voice mail stated he would be “out until August 26th.” Patricia McDuffie  was the other alternate contact, and she nor others at HUD returned our inquiries as of press time.

gao-report-to-congressional-requesters-july2014-manufactured-housing-efforts-needed-to-enhance-program-effectiveness-and-ensure-funding-stability-The MH Industry’s Need to Know

I just do not think most people in our business understand the burden and arbitray nature of the regulations,” a C-Suite level HUD Code builder claimed.

An executive level producer’s comment – likewise shared off-the-record – was “There is no new revelation” in these comments, but empahsized that “It just needs to be better understood” by MH Industry professionals as well as by Congress, who is supposed to be providing oversight to regulators.

Indeed, a recent GAO report issued that was requested by members of Congress, dealt with HUD Code program challenges in some depth.

Regulatory Impact on Potential Home Buyers?

Young people aren’t buying homes,” said a builder, yet “rental rates continue to rise” in the housing market. The source’s point was that regulatory burdens – certainly not only for manufactured housing, but true for other industries including finance – are harming affordability and access by consumers to options they’d normally seek absent those regulations.

Another comment was that much of what comes out of Washington, DC is couched in legalize, making it hard for greater numbers in the industry to relate to the true impact of this or similar issues regarding “regs.”

The same could be said about finance and regulations,” a lender told MHProNews.  “Nor am I talking about MH regs alone, just look at the number of community banks that have shut down since Dodd-Frank went into effect.” Regulatory costs are easier for the larger banks to deal with, that source asserted.

Off the Record from HUD?

The Manufactured Housing Consensus Committee (MHCC) is the body that the Manufactured Housing Improvement Act of 2000 (MHIA 2000) established to insure reasonable and effective regulations. A source close to the HUD MH Program stated the following:

I assume the manufacturers are complaining about program guidance. The only thing that must be submitted to the MHCC for comment are actual regulation changes.  Guidance may be written, but unlike regulations, guidance does not have the force and effect of law.  While guidance may determine how HUD and its agents (IBTS, IPIAs and DAPIAs) will go about enforcing the regulations, they are not law and are subject to legal challenge.” 

MHProNews  was also told by an informed source:

Well, the new label fee is now law.  Honestly, I think it is justified.  Congress has stopped supplementing the program budget with tax dollars, so they really needed a big increase.   When you think about it, $100 per unit really isn’t that much to reimburse HUD for all the program activity that unit requires.  One problem I can see would be the windfall HUD would gain if the industry experiences a strong recovery. I’m for a label fee rule that would be based on a formula that would adjust based on production.” 

More than just hikes in HUD Label Fees…

A source who spent years with a major MH producer emailed MHProNews the following statement on these issues:

I can tell you the following.

· The HUD Label is a pass through to the end consumer. It is a line item like any other option and it is marked up like any option. The end consumer will bear the brunt of additional HUD Label cost. Just like the Beef industry. The end consumer ultimately pays for all material or labor increases.

· Larger manufacturers can implement regs much easier because they have a Quality Control Manager at each plant and this is his or her only job where at smaller independent manufacturer this job may be assigned to someone in the plant that has other responsibilities.

· The HUD Labels have to be purchased from the State SAA or whatever state agency has the IPIA Inspection contract and are issued after completed inspection. They are not purchased directly from HUD.

· All Manufacturers fear additional HUD Regulations because the HUD Code already takes up a 3000 page book of requirements and you can only teachlaborers so much.

· To interpret and build to a new HUD Reg wrong, even though unintentionally, can result to thousands of dollars in fines and Temporary Plant Closure.

· When HUD pinpoints a Reg that a plant has not adhered to it can also require the plant to go back and change every house in the field they have ever built which can cripple a Manufacturing facility. So yes, there is a high degree of fear by all plants.

·The lower your production levels are, the more dollars per unit new Regs can cost. All plants are operating at roughly 50% to 65% of their capacity.”

Feeding the above comment back to a previously cited producer drew this reply:

Well said and nice to hear how others live in fear as we do.

Yes, the labels are a pass through and in and of itself not crippling, but in context of all the regulation costs, why has there not been any cost benefit analysis?  If anything””there has to be some push back from the industry or they will frequent this well all too soon.

Keep in mind most of us are building several codes in our facilities because HUD numbers have dropped so far, making additional regulations and changes even more difficult to deal with. The more we have to deal with, the less ability we have to build our mandate: high value homes.”

This comment below from yet another industry professional/MH producer, likewise given the opportunity to be on or off the record with MHProNews, stated as follows regarding the impact of regulations by HUD on builders:

I agree on all fronts, I don’t seeing what naming anyone does to benefit the cause. The fact that no one can justify being on record should say more about how oppressive HUD and this administration is to our industry.“##

(Editor’s Note: On or off the record comments are welcome: iReportMHNewsTips@mhmsm.com.)

(Graphic credits: GAO Report cover, and Making Home Affordable – albeit modified – as shown.)

NAR releases 2013 Profile of Home Buyers, Sellers

November 20th, 2013 Comments off

Highlights-NAR-HBS-2013lawrence_yun,_nar_chief_economist=realtor-mag-realtor-org-The National Association of Realtors (NAR) recently released its 2013 Profile of Home Buyers and Selelrs. Saint Louis Today tells MHProNews the American Dream of home ownership is alive and well. Sixty-six percent of buyers surveyed are married couples, the highest percentage since 2001. The percentage of single home buyers dropped to 25 percent, which is a drop of 7 percent in the last two years. “Single homebuyers have been suppressed the last three years by restrictive mortgage lending standards, which favor dual-income households that are more likely to have higher credit scores,” said Lawrence Yun, NAR chief economist, about the survey results. “Affordability conditions remain favorable in much of the country, but consumers need access to safe and sound financing, particularly the 30-year, fixed-rate mortgage and with low down payment options for first-time buyers.”

You can download an abridged version of the NAR 2013 Profile of Home Buyers and Sellers here. ##

(Photo credit: RealtorMag)

Lot Shortage Sidetracks New Home Construction

September 5th, 2013 Comments off

A National Association of Home Builders (NAHB) survey reveals a shortage of buildable lots is contributing to the lack of a more robust housing market recovery. “In our August 2013 survey, 59 percent of builders reported that the supply of lots in their markets was low or very low—up from 43 percent September of last year, and the largest low supply percentage we’ve seen since we began conducting these surveys in 1997,” said NAHB Chief Economist David Crowe. “One reason is that many residential developers left the industry, abandoned certain markets or simply stopped buying land and developing lots during the downturn.” The shortage of lots leads to a higher price for the lots, which is ultimately passed on to the home buyer, further stymying a fuller recovery. Housing starts bottomed out at 550,000 in 2009, and has risen to just under 900,000 annually according to the Census Bureau. MHProNews has learned starts averaged 1.5 million from 1960 to 2000, always above the one million mark until 2008.

(Image credit: Fotosearch)

More Home Buyers Purchasing Property All Cash

September 2nd, 2013 Comments off

american_cashThe tougher standards for mortgage lending – a result from Dodd-Frank – combined with rising mortgage rates has made it difficult for many buyers to get loans. This has lead to more all-cash deals on home buying. RealtyBiz tells says recently data released by RealtyTrac shows that 40% of home sales in July 2013 were made “all cash,” without a loan. This compares with 35% in June, and 31% in July last year. ##

(Image credit: WikiCommons )

 

View Oak Creek’s Homes with Mobile App

March 28th, 2013 Comments off

PRWeb reports from Houston, Texas that while noting more internet searches for homes are being done on mobile devices rather than desk or lap tops, Oak Creek Homes has developed a mobile version of its website, enabling shoppers to view the entire line of manufactured and modular homes and request information. The Oak Creek Homes Mobile App will also indicate any current “Specials, as well as locate, by GPS tracking, the nearest dealer. An Android version is expected to hit the shelves soon. Saying “this is a first for the factory built home industry,” Ronnie Richardson, Oak Creek’s Chief Marketing Officer, adds, “You don’t want a home buyer visiting your web site on their smartphone to get frustrated because all they can see is a tiny version of your web site.” As MHProNews has learned, Oak Creek is part of American Homestar, an employee-owned (partially) company  working in manufacturing, finance, insurance, and retail.

(Image credit: PRWeb–Oak Creek Home)

Self-Directed IRA Earns 15% from MH

December 3rd, 2012 Comments off

Bloomberg reports Marilyn Cotterman of Brownsburg, Ind. put $40,000 in a self-directed IRA that allowed her to invest in manufactured housing, earning a multiple of the original investment in three years. As a Roth Ira, gains and income accrue tax free providing you do not benefit in any financial way outside the IRA, and you do not take money out before 59 1/2. All repairs, property taxes, management and other expenses must be paid from the account. Sweat equity is not allowed. Neither you nor any immediate family member can rent the manufactured home (or other real estate) or receive income from the property. Cotterman sells the homes she restores using a promissory note, in effect becoming the mortgage lender. “Buyers don’t care about the interest rate, just the total monthly payment,” she says. If the home buyer wants to site the home in an MHC, the community management does screening of would be residents, saving her a step. If the buyer defaults, she gets the home back and resells it. On one $10,000 promissory note she earned 15 percent after costs. Companies that offer self-directed IRAs do not check the legitimacy of where you invest, which opens the door to ponzi-type scams. As MHProNews has learned, compliance issues of Dodd-Frank and the SAFE Act should also be considered when making such investments.

(Photo credit: Pine Grove Mfg. Homes, Inc.)

Modular Homes go up Despite Obstacles

October 3rd, 2012 Comments off

WVPubCast tells MHProNews two new modular homes now dot Route 52 just outside Welch, West Virginia in the southwestern corner of the state. Penni Padgett, Housing Director of the Council of the Southern Mountains, notes it is a milestone. “It is a small start but it is a start,” she says. “These are the first new houses built on this side of the county in seven years.” With 70 percent of McDowell County’s housing considered substandard, according to a University of Pittsburgh study, the median value of the 14,000 homes in the county is $32,000, well below the national average of $188,000. The average median value in neighboring Mercer County is $73,000. The West Virginia Housing Development Fund provided the majority of the construction funding, but guidelines do not permit new homes in flood plains or in hollows, and the home has to be a certain distance from train tracks. Much of the county, Padgett says, is in a flood plain, and tracks are everywhere because this is coal country. The main obstacle, she says, is that 85 percent of the land in the county is owned by people or companies outside the state, making available land difficult to find. While qualified home-buyer applicants are being considered for the two new modular homes, Padgett is looking for land to site a third home.

(Image credit: Modular Homes Network)

2012 Manufactured Home Buyer’s Survey

August 14th, 2012 Comments off

mhbuyer's-survey-MHVillage-MHProNewsA survey of manufactured home buyers was done recently by an industry-leading business-to-consumer service provider.

 

The survey by MHVillage revealed the following results.

 

 

 

How soon would you like to move?

Now 22%
Next Month 25%
Next 6 Months 26%
Next Year 10%
Just Looking 17%

Are you looking to rent or purchase a home?

Buying 67%
Renting 33%

Which of the below will most influence your decision where to live?

Price 33%
Living in a single family home 5%
Amenities (pool, recreation center, etc.) 6%
Location 43%
Activities 1%
Have a friend/relative that lives in the community 1%
Move-in specials 3%
Living in a brand new home 1%

MHProNews.com plans to publish the complete survey, which included insights on the budgets and payments of buyers. ##

(Graphic credit: MHVillage)