Industry Voices

After reading Eric Miller’s report on how the Manufactured Housing Institute (MHI) has supported so many Democratic candidates that voted for HERA, I had to ask myself this question: As an Industry, have we been lulled into somehow unintentionally feeding the hands that bite us?

If you haven’t read the article in question, please take a moment now to better understand the importance of this issue and the remainder of my comments.

http://www.mhmarketingsalesmanagement.com/blogs/industryvoices/mhi-pac-and-the-upcoming-midterm-elections/

The content of my monthly articles in www.MHMSM.com typically covers personal development topics. I am temporarily departing from this theme because there are issues that I feel need to be exposed to discussion. We face topics that are critical to the Industry and our nation as a whole. This may mean that my message today goes from ‘Feel Good’ to ‘Oh My Gosh, how can this happen?’

Eric’s fine election and MHI-PAC report was well balanced. It reminded me of the old TV show Dragnet’s “Just the facts, ma’am” style. Which is precisely why we have to ask, what is going on? Didn’t we read just days ago that MHI and various states are organizing an effort to lobby the government on laws our ‘friends’ in Congress passed? Let’s review, and you will see my point.

For about two years, we have heard about all the good things that will happen for financing for our industry as a result of the Duty to Serve provision and the reform of FHA Title 1. We got used to just calling those topics DTS and Title 1! But the reality is that Title 1 as it is currently structured is effectively limited to two Berkshire-Hathaway lenders. The FHFA and the GSEs have done nothing good for the Manufactured Housing Industry about the DTS. So where does that leave us?

We still have a vacuum waiting to be filled for chattel financing! With some 60% of all HUD Code home transactions being chattel loans, this is serious.

On top of that, the same law that gave us the DTS and Title 1 reform also gave us the so called SAFE Act. Do you feel safe from SAFE? Thousands in our Industry would answer that question with a strong “No!” The Industry is getting ready to spend big money to lobby federal bureaucrats and the MHI-PAC is funding legislators who put a knife to the throats of our great industry.

Am I missing something or are some in the Industry missing the fact that we are feeding the hands that have failed to deliver meaningful finance reform – AND – these same elected officials have put a choke hold on smaller operations that could drive many out of business?

Why would we fund with our PAC dollars candidates that are in trouble with voters over issues we typically don’t like ourselves? Do we like the ObamaCare legislation and the added costs it will force onto businesses of all sizes? Some 60% percent of Americans say no.

Do we like all these federal giveaway programs that arguably have failed at stimulating anything other than government growth? For those who are pro-life or pro-family, do you like funding with MHI-PAC dollars candidates that oppose those important principles?

Principles vs. Positions. I read that memorable phrase some years ago. Principles are at the core of what my messages are, learning how to serve our customers in part by listening to and respecting them. I respect the hard work that MHI and the many who volunteer time, treasure and talent give. But when some are saying we should get out the vote for candidates that gave us the SAFE Act, where is the logic in that position?

Believe it or not, Lily Tomlin is the inspiration behind this message when she said, “I always wondered why somebody didn’t do something about that; then I realized I was somebody.”

With that said, I want to ask the Industry’s leaders and readers to support candidates who have respect for sound moral principles and for candidates who are fighting for economic recovery vs. fighting for a more bloated government. It was George Washington who said, “Government is a dangerous servant and a fearful master.” I agree with Ross Kinzler’s point in his recent article ‘Hoping for Change Doesn’t Cut It:’ we need to work with government officials; they are people, too.

What we don’t need to do is give PAC dollars to candidates who may say they support us, but who have given us the SAFE Act, ObamaCare and nothing of much use. I would ask Community operators not to get out the vote for candidates who are biting the hands that feed us.

If we want positive change, we have to make positive changes. To reelect the same crowd to Congress that has failed us or fueled our ills makes no sense. Let us not feed the hand or vote for the hand that bites us. # #

Greg McClanahan
Durango, CO 81303
(970) 759-1767
gregm@masterylink.org
masterylink.org

WASHINGTON, DC – Indiana representative Joe Donnelly is the top recipient of contributions from the Manufactured Housing Institute Political Action Committee (MHI PAC). According to OpenSecrets.org, Donnelly received a $6,000 contribution during the 2010 election cycle.

As of October 13, 2010, receipts totaled $101,019.00 with $79,590.00 cash on hand. Total spent amounts to $118,584.00. Sixty-five percent of contributions were made to Democrats and 32 percent went to Republicans, with specific Republicans receiving some of the largest contributions.

Donnelly and several key members of the Manufactured Housing Congressional Caucasus are facing tight races. The biggest recipients in House of Representatives races include Barney Frank (D-MA) with $3,000 and Bill Posey (R-FL) also with $3,000 and Baron Hill (D-IN) $2,000. In the Senate races, top recipients include Blanche Lincoln (D-AR) with $4,000 and Richard Shelby (R-AL) with $3,500.

In terms of voting records on industry related issues and the S.A.F.E. Act, as well as Title 1 reform and Duty to Serve, were all contained in the Housing and Economic Recovery Act of 2008 (HERA). In the Senate, Reid, Shelby and Lincoln all voted for the Act. Then-Senator Obama did not vote. In the House, Donnelly, Hill and Frank all voted for the bill. Posey was serving in the Florida State Senate at the time. Would-be Speaker of the House John Boehner voted against HERA.

The National Association of Homebuilders (NAHB) and the National Association of Realtors (NAR) has also provided contributions to these candidates. As of October 13, Donnelly received $1,000 from the NAHB PAC. Frank received $5,000 from NAHB, as did Posey. Hill is not listed as having received a contribution from NAHB. In the Senate races, NAHB gave $2,500 to Lincoln and $5,000 to Shelby. In contrast to MHI PAC’s contributions, the NAHB gave 39 percent to Democrats and 60 percent to Republicans. The total spent by the Homebuilders in the 2010 cycle is $3,012,057.

Contributions by the National Association of Realtors far exceed that of either the NAHB or MHI. As of October 13, the Realtors gave 58 percent to Democrats and 41 percent to Republicans. Donnelly received $6,000 from the Realtors, Frank received $6,000, Hill received $6,000 and Posey was handed $5,000. In the Senate races, Lincoln received $14,000 and Shelby $3,000. Total expenditures for Realtors in the 2010 cycle are $11,218,449.00.

Democrats currently hold a 256-178 majority in the House of Representatives, with one vacancy. The battle for control of the House focuses primarily on 64 competitive races–58 Democratic-held seats and 6 Republican-held seats including 9 members of the Manufactured Housing Caucus.

According to MHI, two races that are particularly important to the manufactured housing industry are those including Congressman Baron Hill (D-IN) and Congressman Joe Donnelly (D-IN). Beyond financial contributions, MHI says it will be working with members in these key districts to get-out-the-vote for their candidates.

According to their report to members at their Denver meeting in September, MHI believes as do many political analysts that a Republican takeover of the House of Representatives is possible. If so, House Minority Leader John Boehner (R-OH) is in line to become Speaker of the House. A GOP majority would mean major changes as a number of senior Democrats chairing committees important to manufactured housing would face demotions to lesser roles including Housing Financial Services Chairman Barney Frank (D-MA), a staunch supporter of manufactured housing.

The current Senate line-up is 57 Democrats, 41 Republicans and 2 Independents. The Republicans must win 10 seats to recapture the Senate. The odds favor continued Democratic control, but a significant surge by Republican candidates could lift the Republicans into striking distance of gaining control of the Senate.

More information on the MHI PAC is available at http://www.manufacturedhousing.org ##

With consumers of affordable housing facing unprecedented obstacles obtaining financing and with the small businesses that constitute the heart and core of the manufactured housing industry struggling every day to survive, HUD regulators have demonstrated once again that they remain woefully out of touch with – and insensitive to – the struggles of the federal program stakeholders.

As was shown at the recently-concluded HUD-COSAA meeting, HUD program regulators, in the face of terrible economic times for the industry and its consumers, are not only continuing – but are intensifying and expanding – efforts that will cause even greater harm. Worse yet, most of those efforts have been tailored to appease the industry’s largest businesses at the expense of smaller entities and consumers. Thus, while Congress and the Administration – with critical elections impending – are focused on helping “Main Street” businesses and consumers weather the current economic storm, out-of-touch regulators are busy pushing schemes to undermine the industry’s “Main Street,” on both production and financing, while advancing the interests of its largest entities. They simply do not seem to understand – or care – that every time they unnecessarily increase regulatory compliance costs, they are excluding huge numbers of homebuyers from the market.

This insensitivity to economic reality and the core mission of the federal program was particularly evident when the HUD-COSAA meeting addressed two of the most important regulatory issues facing the industry and its consumers: (1) expanded in-plant regulation; and (2) state and/or local fire sprinkler mandates and federal preemption.

From the start, there was no credible discussion of either of these critical and costly regulatory matters, because discussion panels on both topics were doctored to exclude the industry’s small businesses and consumers, and were instead stacked with supporters of the positions and policies favored by HUD. As a result, representatives of the program stakeholders who would be the most drastically affected by the regulatory compliance cost and retail price increases that would result from HUD’s approach to both issues, had no opportunity to point out and explain the fallacies of those positions and policies, let alone suggest alternatives or improvements.

Even worse, HUD did not bother to invite either the members – or even just the officers – of the Manufactured Housing Consensus Committee (MHCC) who, by law, must be fully engaged on these matters. This should not be surprising, however, given the fact that HUD regulators have done – and continue to do – everything in their power to weaken this important regulatory check-and-balance. They have done this by, among other things, excluding the collective national representation of the industry’s smaller businesses from the MHCC and by refusing to trigger the MHCC consensus and rulemaking provisions of the 2000 reform law regarding these – or other major regulatory actions. As HUD program regulators have tacitly acknowledged, however, the Department has taken these steps precisely because, in the past, the presence of industry collective representatives, as voting members of the MHCC, provided other members with years of accumulated factual background and accurate information that led them to question HUD positions during MHCC debates and even to reject certain HUD proposals.

Thus, rather than consider alternative viewpoints, the Department is attempting to impose the single largest expansion of in-plant regulation since the inception of the federal program – changing its entire “focus” – without bothering to run the core elements of that expansion past the MHCC, or through required rulemaking. Bypassing these procedures, HUD has never had to justify its actions. Nor could it, as the simple fact that there have been fewer than 10 cases handled thus far under the federal dispute resolution system, shows that in-plant regulation is working properly now and is not a problem. Neither has HUD, or anyone else, ever produced any hard numbers on the dollar ($) cost of that expansion on the industry and consumers.

And, while confusion reigns as to exactly what this expanded regulation requires – for example, a process marketed to manufacturers as “voluntary” is now characterized by HUD “Field Guidance” as “not voluntary” – more demands and even higher costs could be on the way. According to program personnel at the HUD-COSAA meeting, compliance audits will be returning soon – for everyone. Furthermore, according to HUD, expanded regulation will soon require manufacturers to engage in a “constant improvement process” to continually assess and upgrade their quality control procedures, subject to oversight by PIAs, the monitoring contractor and HUD. Asked what “constant improvement” means for regulated parties, and particularly small businesses, or under what circumstances it might be required, HUD personnel had no specific answer, leaving manufacturers to chase – at great cost – an elusive, undefined ideal, at a time they are struggling just to survive.

And HUD’s sensitivity for lower and moderate-income consumers is no better regarding federal preemption of state or local fire sprinklers mandates. Instead of triggering preemption based on current HUD fire safety standards to prevent or nullify state and/or local sprinkler mandates that could add thousands to the cost of manufactured homes (up to 4% of construction costs in some studies), make some rural placements impossible, and exclude even more homebuyers from the HUD Code market, HUD is poised to impose its own federal sprinkler mandate. HUD claims the only way it can preempt state or local sprinkler mandates is with a federal sprinkler standard. But as relevant court decisions show, a federal standard that addresses the exact same piece of equipment as a state or local standard is not a prerequisite for preemption.

More importantly, a federal standard must be justified and cost-effective, regardless of its purpose. A study conducted nearly 25 years ago, however, by Foremost Insurance Company, the leading national insurer of manufactured homes, showed that manufactured homes, under the HUD standards, have half the incidence of fire of other types of housing. And it stands to reason that if those homes had half the incidence of fire of other types of housing, today’s manufactured homes would be even safer. And, indeed, other more recent studies show that the existing federal fire safety standards work. Thus the need for a costly federal sprinkler mandate has not been – and cannot be – shown. So why require costly fire sprinklers that are unnecessary?

Unfortunately, with a pass from some of the industry’s largest entities, HUD is taking a course that will put manufactured housing out of the reach of even more “Main Street” American families. And, while every other segment of the housing industry is fighting to prevent such unnecessary and costly mandates – and mostly winning – HUD, with one stroke of the pen, will make it easier for jurisdictions to require sprinklers in every manufactured home produced and, at the same time, will undermine robust federal preemption.

In MHARR’s view, HUD’s continuing unnecessary and costly impositions on the manufactured housing industry and consumers reflect a gross disconnect between the federal program and the people it is supposed to serve.

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

Mark Dillard, Executive Director at the Manufactured Housing Institute of South Carolina (MHISC) uses a photo of a vacant lot near his office, just blocks from the state Capitol to demonstrate the potential to place manufactured homes on vacant lots throughout the state. In the state capital of Columbia, Dillard says there’s already a trend of bringing condos and retail downtown, and the addition of more moderately priced workforce housing in the form of manufactured homes makes sense.

Most manufactured homes produced today are destined for suburban and rural locations, and Dillard’s vision would defer to the exception rather than the rule.  Experts say an increasing amount of residential development in the coming years will be in urban areas and inner suburbs. Even within the suburbs, development will not be of the ranch-style-home-on-half-acre-lot most manufactured homes emulate, but of the new urban sort with sidewalks and a mix of retail office and residence. It’s a cost-effective thing for the utilities and municipalities, says Dillard. “What we’ve seen thus far is condos, but we’re talking about individual affordable homes. It seems like it fits the trend.”

Even so, this may present a problem as well as an opportunity for the manufactured housing industry.

An article in the Journal of the American Planning Association (JAPA) earlier this year argues that manufactured housing could solve the affordable homes crisis in urban areas, but only if planners help local people to overcome their prejudices.

Writing in the winter issue of JAPA, two leading urban affairs and planning experts—Professor Casey Dawkins and Professor Theodore Koebel from the Center of Housing Research at Virginia Tech—urge urban planning officers to support proposals for manufactured homes. The research was sponsored by HUD and has yet to be released in its entirety.

In the research, Dawkins and Koebel argue that the planning process discriminates against people with low incomes unless planners speak up for the design improvements, longevity, and value for money that make manufactured housing a feasible and affordable alternative to traditionally built homes.

Their new research shows that planners see high land prices and citizen opposition as the biggest barriers to manufactured housing developments in urban areas.

According to the journal article, government subsidies—including grant and loan programs supporting low-cost housing construction and rehabilitation, tax incentives and gap-financing programs for low income borrowers, tax credits for affordable housing production, and public and nonprofit ownership—have been the most common tools for increasing the supply of affordable housing in the United States. Alternatively, policy could focus on reducing market barriers to low-cost housing producers.

In South Carolina, Dillard says a major barrier is zoning restrictions.

“A lot of the municipalities in South Carolina banned manufactured housing 20 or 30 years ago,” Dillard explains. “We’re looking for opportunities to talk to them about affordable housing and the declining population a lot of municipalities have.”  It’s that window for conversation, opened by the sagging economy that may help bring changes to zoning laws to welcome manufactured housing.

The potential application for manufactured housing in this arena is significant. Absent subsidies, the researchers at Virginia Tech say manufactured housing costs less per unit than any other housing type because of economies of scale in production and because it uses standardized inputs and labor processes. In metropolitan areas with high land costs, manufactured housing offers potential for substantial cost savings by substituting other inputs for land.

Koebel told MHMSM.com that high land costs in urban areas make residential development with a low price point problematic. That has been helped with the use of modular housing, and it can also be addressed with manufactured housing, but builders are not likely to mix the two.

“Most builders are not going to do mixed-production types in a subdivision,” Koebel says.  “It’s a question of how are you going to do subdivisions that are going to pay for the cost of land. It’s hard to do it with any type of construction with a modest price point. If they’re going for a modest price point, they’re either going to go modular or manufactured, I don’t think they’re going to be mixing and matching.”

If the zoning laws can be amended to allow manufactured housing, Dillard says there are benefits for South Carolina’s cities and towns. The first is a reduction in suburban sprawl, which he says is a frequent goal in the state. The second is a savings on infrastructure costs. Another prong of their approach has been to contact power companies and explain the benefits of using manufactured housing for infill development. He points out that a power line with 10 houses on it is more efficient than one serving six. Municipalities can realize those same benefits with transportation and sewer and water infrastructure.

Previous Efforts at Infill and Brownfield Development

There have been efforts and successes over the years to bring manufactured housing to both brownfield and infill sites in urban areas. Most notable perhaps is Oakland, California.

“Oakland is certainly an example of using HUD code to promote infill,” Koebel says.

Structural innovations now allow modestly pitched roofs, as well as two-story stacking of units, although most manufactured housing units do not have these attributes. Those innovations have helped the East Bay city to demonstrate the utility and cost advantages of placing manufactured housing on infill lots in a built-out city.

There are other examples including several in the Pacific Northwest the researchers looked at. Also in 1997 the Manufactured Housing Institute (MHI) undertook a pilot project to bring manufactured homes to five major urban areas. Working in conjunction with architectural firm Susan Maxman & Partners, the project focused on Wilkinsburg, Pennsylvania; Washington, D.C.; Louisville, Kentucky; Birmingham, Alabama; and Milwaukee, Wisconsin. Later in a 2003 showcase example, the Mills of Carthage project in Cincinnati brought 15 manufactured and modular homes to a brownfield site there.

MHI says on its web site the initiatives were intended to address the outdated assumption that manufactured homes are not appropriate for placement in major urban and suburban areas. Also in the case of the 1997 initiative, the project was designed to highlight any impediments and challenges to using manufactured homes, and help pave the way for a more extensive use of manufactured housing in future efforts.

The North Carolina Manufactured Housing Institute (NCMHI) began another venture to demonstrate that manufactured homes can be architecturally compatible with existing homes in urban settings and also be a solution to the affordable housing crisis facing many of the state’s urban and inner suburban areas. 

The result was an attractive three bedroom, two bath, 1500-square-foot home in the shadows of the North Carolina statehouse in downtown Raleigh. Designed complete with a factory-constructed front porch, the house blends in with the 1920s bungalow-style architecture of the neighborhood in the southwestern part of the city. It was also priced some $80,000 less than comparable homes in the neighborhood.

Yet despite its affordability and quality, manufactured housing continues to face opposition and legal barriers. In Raleigh the new home was allowed under an exception to a Raleigh city ordinance, which currently prohibits manufactured housing within the city.

Those issues are not confined to North Carolina. As the Virginia Tech researchers point out, perhaps the most significant barrier to siting new manufactured homes in metropolitan areas is the presence of zoning codes that restrict the size, design, location and even existence of manufactured units. 

Overcoming Barriers

According to the research, several factors motivate local governments to adopt these and other manufactured housing regulatory barriers, including general prejudice against all forms of low-cost housing and the low aesthetic appeal of the traditional but outdated “trailer park” community design. Citing a variety of research, the authors conclude that planners are also influenced by erroneous perceptions that manufactured home residents constitute a transient population, that manufactured housing is substandard and unsafe, and that manufactured housing appreciates more slowly than traditional site-built homes and negatively influences adjacent housing prices.

However, as the authors point out, evidence suggests that nearly all of these claims are either illegitimate or unwarranted. Despite this evidence, negative stereotypes of manufactured housing persist, making it likely that local government officials will continue to impose regulatory restrictions on such housing.

A 1996 survey of 1,172 communities conducted by the American Planning Association, found that while almost all communities permit manufactured homes in some residential districts, on individual lots, considerably fewer allow them in all or in the most restrictive residential districts. Only 29 percent of responding communities had regulations that treated site-built homes and manufactured homes comparably.

“Our research shows that having a HUD code subdivision increases the number of homes going into an area,” Koebel says. “Having more land already zoned—small lot development at modest price points—and having areas of that sort identified and pre-zoned helps increase the number of units.”

The authors received responses from 940 communities regarding the perceived barriers to placing manufactured housing. The survey respondents were asked to rate a list of potential barriers to HUD-code homes. The potential barriers with the largest share of respondents saying they were significant or would prevent placements were: the high cost of land (42.4 percent), citizen opposition (36.1 percent), no new parks (35.6 percent), zoning codes (33.4 percent), not much land (31.1 percent), deed restrictions (26.8 percent), and historic district regulations (26.1 percent). Fees, permits, wind codes, snow load standards, fire codes, and environmental regulations were the most likely items to be identified as “not a barrier” or a “minor barrier.”

The authors also found that by-right zoning, when manufactured housing is treated equally in single-family housing districts, has a positive impact on unit placement that is greatest when explaining whether a community has any manufactured housing placements at all as opposed to none. The effect of by-right zoning on the odds of placing one unit or more is three times higher than it is on the odds of placing more than 20 units. Above 50 units, the impact of by-right allowances diminishes in magnitude even further, although it is still statistically significant.

To some in the industry the idea that local zoning can impact the placement of manufactured homes in urban areas, or anywhere, runs counter to the intent of the Manufactured Housing Act of 2000 that says the HUD code should be broadly and liberally interpreted. Local zoning or aesthetic requirements, as well as building requirements, cannot be placed on homes built to the HUD code.

But Koebel says most manufactured housing placement has come by way of state preemption that allows manufactured homes in single-family neighborhoods. 

“I think HUD and the federal government would be highly reluctant to get into the details of preemption in terms of land-use regulations,” Koebel comments. “That’s just such a heavily state-oriented function. Some states require that you allow manufactured homes in single-family zones as a by-right use. You usually have that with some design standards. I personally don’t think the federal government is going to take on state and local governments on that.”

HUD Program Manager Edwin Stromberg told MHMSM.com the research was part of a wider effort to gain insight into barriers to affordable housing and that the report should be released within the next few months.

How Big is the Potential Market?

According to a 2009 study by RCLCO, both retiring baby boomers and maturing echo boomers are looking to move away from the suburbs. Both groups reported wanting to live in more urban, mixed use, mixed age areas that offer services, community and walk-ability. A study released in 2009 by the U.S. Environmental Protection Agency titled “Residential Construction Trends in America’s Metropolitan Regions” shows that there has been a striking move back to the urban core in many markets. While Generation X is small, experts say the larger Generation Y will be looking for urban amenities, but may not be able to afford living downtown. 

Manufactured Housing Institute Executive Vice President Thayer Long says Generation Y, the next generation of homebuyers, is a group bigger than the baby boomers and just coming of house purchasing age. The group is more environmentally aware and as far as preferring urban areas, Long says there may be more opportunities for the manufactured housing industry to get involved.

Most manufactured homes produced today, and at any time in the past, however, are destined for rural and suburban areas. For the past half-century the bulk of new residential development has occurred in greenfields, which is land that hasn’t been previously built on. Researchers now say the amount of new development occurring in brownfields and urban infill is on the rise. Manufactured home producers may wonder what the risk is of not meeting the needs of the urban market or homebuyers who prefer walkable urban districts.

“If we reached the point of having 25 percent infill/brownfield, that would be achieving a great deal,” Koebel says. “There’s some evidence that infill and redevelopment has increased market share.”

Koebel says modular products are well suited to infill development and that there are systemic barriers to significant placement of manufactured housing in high-priced urban areas.

“The industry got itself into a market segment that’s targeted to a rural, lower-end product and has never figured out how to take advantage of other market segments,” Koebel says. “Partly it’s the retail structure. The industry has serious problems with path-dependency. It got itself into a rut in terms of how you use the product and who is the market for the product, all the way down to how it gets advertised and sold; all of that becomes reinforcing and limits its use in urban areas.”

Conclusions

The researchers conclude planners can promote affordable housing by projecting the potential demand for manufactured housing in a number of ways including devising educational programs to promote community acceptance, reviewing and modifying existing regulations so they treat manufactured housing the same as site-built single-family housing and by designing incentives to promote affordable redevelopment using manufactured housing on vacant infill lots.

Dawkins and Koebel want planners to educate their local communities away from thinking that manufactured housing means “mobile” homes, “trailer parks,” and anti-social behavior. 

For Dillard, the solution is about education, but also about promotion. Part of his vision is to have major producers set up a cul-de-sac showcase of manufactured homes where they can be on display and later purchased.

But that’s down the road. For now, with the photo of a vacant lot in hand, he’s working to win over municipalities one at a time.

Notes:

HUD photos: Thanks to Steve Hullibarger

(Raleigh Photo: http://www.manufacturedhousing.org/developer_resources/urban_design_raleigh.asp

Please see the message below from the Midwest Manufactured Housing Federation regarding the status of the Louisville Show. We encourage all IMHA members to support this event.

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As a part of the manufactured housing industry, you know how tough business conditions have been for the last several years. These same business conditions have taken a toll on the Louisville Manufactured Housing Show, reducing the number of show homes in 2009 and forcing its cancellation in 2010. As caretakers of this industry event, we’re doing everything possible to make sure it happens successfully in 2011 but we need your support to renew this tradition.

Maybe you’re a manufacturer who can take one home to the show. Maybe you’re already taking two homes but can take one more. Maybe you’re a supplier who has not yet committed to the show. Please call Dennis Hill at 770-587-3350 and make that commitment today! Maybe you’re a retailer or community owner who can call your manufacturers and tell them you hope to see their products at the show. Let your suppliers know you’ll be in Louisville in January. Maybe you can even make arrangements to purchase one of the show homes.

We’ve cut expenses by eliminating set management fees and reimbursements to the Midwest Federation members and have revamped the advertising campaign. With 7 manufacturers, 20 floors and 45 booths already committed we’re just 6 floors away from being able to finalize our contracts to make the 2011 show a reality.

We are quickly running out of time to get these final commitments. Everyone has a part in making this event happen, and with the support of the industry it will happen. Please do your part to support the Louisville show and plan on being there in January.

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3210 Rand Rd., Indianapolis, IN 46241 • 317-247-6258 • Fax: 317-243-9174

by Thayer Long

The National Manufactured Housing Construction and Safety Standards Act of 1974 and subsequent changes found in the Manufactured Housing Improvement Act of 2000 laid the foundation to bring manufactured housing into the mainstream housing market. Over 35 years has passed, and great strides have been made in fulfilling this destiny. Over the past two decades we have represented over 20% of all new single family homes built in this country. This is a significant achievement, even given the fact that the last decade has seen some dismal numbers for this industry. But even the biggest industry supporters agree that the manufactured housing industry has yet to realize its tremendous potential. When will manufactured housing be considered mainstream housing?

That day will come when the industry fully embraces the concept that we belong in the mainstream housing arena.

America needs manufactured housing to be mainstream housing. We build high quality homes at a price most can afford. This concept is nothing new. I think we all see the benefit of having manufactured housing considered as an equal in the housing world. But the effort to get there has been the real challenge. We need to think outside of our traditional core set of issues. We need to acknowledge that the mainstream housing world is bigger than anything our regulators at HUD throw at us. We need to throw out some of the rules we used to play by and adopt some new ones.

First we need to start thinking of ourselves as mainstream housing. In the past, we have traditionally thought of ourselves as a niche in the overall housing market. If an issue didn’t specifically mention manufactured housing or there wasn’t a direct connection to our business, we chose to ignore it. Frankly, this way of thinking worked in the past. But those days are quickly coming to an end. The housing market is evolving, the consumer is changing. If we want to expand our presence and increase our business, and above all if we want the parity in the housing market we all desperately seek – we need to think broader in scope. If we want to be taken seriously, then we need to be prepared to think mainstream.

I know there are some that like the niche that we operate in and think the market and conditions need to change to us, instead of us to them. Some are afraid of what being part of the mainstream will mean, that we will lose our identity as affordable housing. As long as we can provide value to our customer, the demand for our homes will be there. But if we cut ourselves off from the rest of the housing market, we will be marginalized.

Indeed, in many ways we are being pushed into the “mainstream” market whether we like it or not. MHI, for instance, has over two dozen issues that we consider priorities for the industry because of the way they will impact your business. Only a handful of them could be considered “manufactured housing only” issues. In reality, we are touched by a large set of regulations, including things like the SAFE Act, Truth in Lending, and Fair Housing laws. This has caused angst for many, yet these laws, and many others, are found in the rest of the housing world. Please don’t misread; I’m not calling for additional regulation by any means. But I am pointing out that if we want a “level playing field,” if we want the same access to capital that the site-built world has, if we want to be treated fairly, it will require us to understand a different set of rules and adhere to laws and regulations that we are unfamiliar with.

Second, we need to act like mainstream housing. MHI’s Three Point Plan to industry success includes 1) improving financing, 2) aggressively updating the HUD-Code, and 3) protecting preemption. All three points are geared to both moving the industry ahead in the mainstream and ensuring that our homes remain affordable to those who need it.

In the area of financing, all lender practices in the housing world are under increased scrutiny by the government and investors for safety, soundness and transparency to consumers. We need to be part of this debate, to show that we are willing to, or in some cases already have, put in place the same principles other market participants share. Without it, our ability to access capital on the same terms as the rest of the housing market will be limited. Second, by promoting updates to the HUD-code on a regular basis, we ensure our homes are designed and built using new, efficient and innovative construction techniques, and are built using codes and standards that are relevant in today’s building environment. We cannot build to codes adopted years ago and still expect equal status from the rest of the housing world. Third, by following points one and two, we will protect the preemptive status of manufactured housing, the most potent advantage our industry enjoys and which is the single largest contributing factor to our affordability. Thus, by thinking and behaving mainstream, we will ensure our viability for years to come.

The path to success and prosperity will be found when manufactured housing is no longer considered a stigma. What is required to make that leap can appear very frightening, which is why as an industry we have spent so much time using the same arguments and expecting different results. No amount of arm twisting from HUD or legal wrangling will change that perception. That change will happen only when, as an industry in a unified voice, we make the conscious effort to move manufactured housing into the mainstream housing arena. ##

Thayer Long is Executive Vice President of MHI, the preeminent national trade association for manufactured and modular housing industries, representing all segments of the industries before Congress and the Federal government. From its Washington, D.C. area headquarters, MHI actively works to promote fair laws and regulation for all MHI members and the industry. He can be contacted directly at (703) 558-0678. For more information on MHI, visit www.manufacturedhousing.org

Americans are dissatisfied with both Republicans and Democrats and voters are turning out to turn out establishment candidates. This has played out in primary elections from Alaska to Delaware. The general election in November also threatens some in Congress important to the manufactured housing industry, including Joe Donnelly (D) and Baron Hill (D) of Indiana, Nevada Senator Harry Reid (D) and Massachusetts Senator Barney Frank (D).

In an August 16-21 survey of likely voters in the Midwest, the American Action Forum found that 54 percent of respondents chose “It’s time for someone else” over “deserves reelection”. Voters in the heartland also say the country is on the wrong track by more than a two-to-one margin. Sixty-five percent of the likely voters in these districts say the country is off on the wrong track, while just 26 percent say the country is heading in the right direction.

A plurality of voters also prefers a Republican on the generic ballot test. Voters in these districts say they prefer a Republican to a Democrat as their next congressman by a 38 to 33 percent margin.

INDIANA
Joe Donnelly, the author of several recent pieces of legislation concerning manufactured housing, is running for re-election for Indiana’s second congressional district and is being challenged by Libertarian Mark Vogel and Republican Jackie Walorski.

According to ElectionProjection.com, Donnelly has a slight edge in a tight race. The site projects he will save his seat, beating opponents by 6.7 percent. However, more recent polls show a closer margin and a tightening of the race. Donnelly could be hurt by important recent endorsements, including the Indiana Chamber of Commerce, which just this week threw its weight behind Walorski. Walorski currently serves as a state representative from Elkhart. A second district congressional race debate involving incumbent Donnelly plus Vogel and Walorski will air at 8 p.m. EDT Oct. 27 on Indiana station WNIT-TV.

Fellow Hoosier Baron Hill is also having a challenging campaign. Hill faced no primary opposition, but is now projected to lose his seat to Republican Todd Young by about two percent. Rep. Hill introduced the Energy Efficient Manufactured Housing Act (H.R. 1749) in 2009. A Tea Party favorite also carrying the Republican moniker of “Young Gun,” Young is married to former Vice President Dan Quayle’s niece, Jennifer Tucker.

NEVADA
In Nevada, Senate Majority Leader Harry Reid is running neck and neck with his opponent, former Nevada State Assemblywoman Sharron Angle. Electionprojection.com gives Reid only a .6 percent lead over his opponent. Earlier this summer, Angle held an 11 point lead in a Rasmussen poll.

MASSACHUSETTS
In the Democratic stronghold of Massachusetts, Barney Frank has a larger comfort zone than Donnelly, Hill or Reid, but with the help of conservative commentators and bloggers, is still facing a tougher than usual challenge from former Marine Sean Bielat. A poll conducted by OnMessage Inc. Sept. 15-16 of 400 likely general election voters showed Bielat at 38 percent and Frank at 48 percent, providing a comfortable lead for Frank, with 13 percent undecided. While the race has not yet been labeled as competitive, the big news accompanying the poll was that Frank had dropped below 50 percent.

In all, the House is expected to turn some 40 seats over to the Republicans from the Democrats. In addition, seven or eight seats in the Senate and six Governorships are expected to switch from blue to red.

Thayer Long, executive vice president at the Manufactured Housing Institute (MHI) says MHI is non-partisan, and will support those who support our industry, including the millions of Americans who live in manufactured homes and the tens of thousands of American jobs dependent on providing high quality homes at a reasonable cost.

Up to Date Election Info:
www.electionprojection.com

Watch an ad for Joe Donnelly:
http://www.youtube.com/watch?v=QdagMZWCo6w&feature=related

Watch an ad for Jackie Walorski
http://www.youtube.com/watch?v=dtKINfzrVBo&feature=related

Watch an ad for Baron Hill
http://www.youtube.com/watch?v=S1ufeiHS6Gg

Watch an ad for Todd Young
http://www.youtube.com/watch?v=XBLjmj7YHd0

Are you doing your share to spread the good news? Are you helping spread positive words about manufactured housing? About the diverse placement opportunities (communities, subdivisions, co-ops, private property, residential lots)? About the improvements in appearance and quality (drywall, vinyl lap siding, shingled roof, skylights, innovative kitchen designs and floor plans)? About the customer-friendly finance programs (lower down payments, twice-a-month payments, no pre-payment penalty loans)? About the other quality people who own manufactured homes by choice (professionals, white collar office workers, retirees, single parents)?

Are you taking advantage of every opportunity to improve the image of the manufactured housing industry? Does professionalism show in your dress? In your language? In your way of doing business? In your personal and business ethics? In the way you treat your customers? In the way you treat your employees? In the number of referrals previous customers bring you?

Opportunities abound for each of us to shine in this area. No one person can possibly do it alone. It takes all of us, all of the time, working together to improve the image of manufactured housing, to increase sales – which in turn will increase production – and to continue to make inroads in the areas where zoning and image issues thwart our growth.

Look for speaking opportunities if you are a good public speaker. Take advantage of “Career Day” at your local high school. Talk at a Rotary Club meeting or other business gathering where a speaker is needed. The Chamber of Commerce usually holds a “Business After Hours” in most areas of the United States. Volunteer to host one. Invite public officials and chamber members to see our product, view the lifestyle your community offers and learn about manufactured housing.

Display your community name, logo and phone number proudly on vehicles, uniforms, caps and literature. Employ people who have enthusiasm for our product and are outgoing in dealing with the public. Keep your office and community sparkling – just as if it were an “Open House” every day – and, indeed, it is!

Advertise more than just a low price, low monthly payment or free rent to convince potential homeowners to visit your location. Advertise the beauty and efficiency of the homes you sell, the quality of the lifestyle your community offers, the professionalism of your staff. Spread the good news with well-written flyers, brochures and literature.

Attend zoning meetings, planning meetings; join the Chamber of Commerce; run for a local office; turn your clubhouse into a voting precinct; become a volunteer for Meals on Wheels or the Fire Department. Get involved in the surrounding area and make a difference. Just by being yourself, by making new friends and broadening your horizons, and by constantly being professional, you will be spreading the good news.

The good news is that we are more than just affordable – we are desirable! We are more than just “somewhere” to live – we are a lifestyle of choice! We are more than low investments and low monthly payments – we are efficiency, durability and quality! We are more than just “landlords” – we are real estate investment managers of multi-million dollar properties. We are more than just sales people, managers, activity directors and maintenance crew – we are the people who provide the backbone for the industry that has proven housing solutions, and also has the confidence of the buying public who live in our homes! We are more than just occupants for used-up agricultural land at the edges of town – we are a compatible housing product that fits into any environment through our superior design and engineering capabilities!

We are MANUFACTURED HOUSING – and we are proud of it! Spread the good news – it’s a challenge – from me to you! ##

Chrissy Jackson
President, Chrissy Jackson & Associates, Inc. www.chrissy-jackson.com
President, Florida Writers Association, Inc. www.floridawriters.net
Vice President, Florida Writers Foundation, Inc.
P. O. Box 66069
St. Pete Beach, FL 33736-6069

Editor’s Note: Be sure to check out Chrissy Jackson’s series of Feature Articles:

• Upgrading your Manufactured Housing Community – Introduction: It’s an inside job!
• Upgrading your Manufactured Housing Community – Part II: What values remain?
• Upgrading your Manufactured Housing Community – Part III: Enter your community
• Upgrading your Manufactured Housing Community – Part IV: What to do about older homes
• Upgrading your Manufactured Housing Community – Part V: Retain residents by…
• Upgrading your Manufactured Housing Community – Part VI: Improve the infrastructure, cont’d… coming in October!

Federal Housing Administration (FHA) Commissioner David Stevens testified at a hearing of the House Financial Services Committee on September 22, 2010 regarding “Implementation of Higher FHA Loan Fees and Pending Legislative Proposals to Strengthen the FHA MMIF Fund and Improve Lender Oversight.” Both this and a similar congressional hearing last week on private consumer financing (see, your copy of MHARR’s September 15, 2010 memorandum, “Hearing on Federal Role in Housing Finance”) concern the key issue – the availability of public and private consumer financing – that has been at the root of the industry’s difficulties since its decline began in 1998 (see below).

Commissioner Stevens was the only witness at this latest hearing and mainly addressed steps that FHA has already taken and is still considering in order to ensure the future stability and solvency of the Mutual Mortgage Insurance Fund (MMIF) that backs-up most FHA-insured loans.

As previously reported by MHARR, FHA, in a final rule published in the Federal Register on September 3, 2010, raised the eligibility criteria for most FHA-insured mortgages, including some insured through the FHA Title II manufactured housing program. FHA sources have confirmed to MHARR that only Title II mortgages insured under the MMIF will be affected by this rule. Title II manufactured housing loans that are insured through funds other than the MMIF, will not be subject to these new requirements. Similarly, the Title I manufactured housing chattel program, by contrast, according to FHA, is exempt from these changes and is not affected.

As Commissioner Stevens explained to the Committee, under the new rule, a minimum FICO score of 500 would be required to be eligible for an FHA-insured mortgage. For those with FICO scores between 500 and 579, the maximum loan-to-value ratio (LTV) would be 90% (i.e., a minimum 10% down payment would be required) while for those with FICO scores at or above 580, the maximum LTV for purchase loans would go to 96.5% and the maximum LTV for re-financing would go to 97.5%. In accordance with the rule, the new criteria will go into effect on October 4, 2010.

It is important to note, though, as Commissioner Stevens explained to Congress, that other possible changes to the FHA criteria, including stricter limits on seller concessions and/or revised underwriting requirements, are still under consideration by FHA, even though they were not part of the September 3, 2010 rule.

Much of the questioning at the hearing focused on efforts to scale back the role of FHA in the housing finance market. Commissioner Stevens pointed out that the steps being taken by FHA would have that effect. Committee Republicans, in particular, focused on the need for FHA to reduce market share in order to encourage the private market to resume financing. Committee Chairman Barney Frank (D-MA) also urged Commissioner Stevens – who will testify at a similar Senate hearing on September 23, 2010 – to emphasize the need for Senate action on the House-passed FHA reform bill (see, your copy of MHARR’s March 11, 2010 written testimony regarding the FHA Reform Act of 2010) during any lame duck session, since he considers it a bipartisan bill with broad support.

All of these actions (and impending actions) by FHA, and Congress’ interest in reducing FHA’s role within the housing finance market, point to a number of serious issues for the manufactured housing industry that need to be carefully considered. First, manufactured housing primarily serves lower and moderate-income consumers. FHA, like the Government Sponsored Enterprises (GSEs) was created for the specific purpose of helping lower and moderate-income Americans become homeowners. It is thus unconscionable that manufactured housing mortgages are being swept up into “fixes” for problems that our industry and our consumers did not create – that affordable manufactured housing is being lumped together with the six and seven-figure mortgages, sub-prime and otherwise, that today threaten the stability of the MMIF. FHA, instead of discriminating against lower income home buyers, should instead facilitate their ability to obtain financing for homes that they can truly afford – such as manufactured homes. Second, Congress’ expressed interest in reducing the total market share of FHA makes it all the more important that the “duty to serve” mandate is properly implemented by the Federal Housing Finance Agency.

Yet, the message that pairing consumers with affordable manufactured homes would strengthen FHA and the GSEs – and is fundamental to their congressionally-mandated mission (i.e., what MHARR has termed and is promoting in the nation’s capital as manufactured housing consumers’ “exceptionalism” within the overall housing market) – has not been effectively promoted by the finance, retail and post-production segment of the industry’s representation over the 12 years of steady deterioration of the industry’s financing base. Further, this inability to maintain the availability of adequate consumer financing for the industry’s consumers, has had other damaging consequences, as it has spilled-over into – and has negatively affected – the industry’s crucial Title VI regulatory program, where necessary improvements and efforts to put the program back on the correct track based on the 2000 reform law are being undermined and effectively held hostage to financing concerns because the HUD regulatory office also deals with FHA financing.

Full details of these issues will be addressed, in light of continuing economic decline and the impending mid-term elections, at MHARR’s upcoming Fall 2010 Board of Directors meeting.

Back from its Summer recess, Congress has embarked on a process that will ultimately determine – as soon as 2011 – the future role of the federal government in private-sector housing finance and the future role, structure and character of the Government Sponsored Enterprises (GSEs).

On September 15, 2010 the House of Representatives Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises held a hearing on “The Future of Housing Finance – A Progress Report on the Government Sponsored Enterprises.” Although the “duty to serve underserved markets” (DTS) mandate imposed on the GSEs by the Housing and Economic Development Act of 2008 (HERA) was not addressed as part of this more broadly-focused hearing, both the implementation of the DTS mandate and the future availability of private consumer financing for manufactured homes will ultimately be at stake in this process. Moreover, the challenges that the industry faces in this process were underscored in testimony by both the Administration and the current federal regulator of the GSEs, the Federal Housing Finance Agency (FHFA), as well as in statements by Subcommittee members.

While the Administration has not yet offered a detailed plan for the future of the GSEs, and is not expected to do so until early 2011, Michael S. Barr, Treasury Department Assistant Secretary for Financial Institutions, reported on the steps taken by the Administration in response to the financial crisis as they relate to the GSE’s as well as the Administration “Objectives and Goals for Housing Finance Reform” – i.e., widely available mortgage credit, housing affordability, consumer protection and financial stability to achieve those goals. He then outlined several policies including the necessity for “clear mandates.” Specifically, institutions that have government support, charters or mandates should have clear goals and objectives. Affordable housing mandates and specific policy directives should be pursued directly and avoid commingling in general mandates, which are “susceptible to distortion.”

Follow-up questioning by the Subcommittee focused on who was responsible for letting the GSEs get out of control and what contributed to their collapse. Some Republican members alleged that the housing goals forced the GSEs to get involved in sub-prime lending and to acquire sub-prime mortgage backed securities. Democrats and Secretary Barr responded that the GSEs acquired sub-prime mortgage backed securities to increase profits and that the housing goals did little to impact the GSEs collapse.

Significantly, though, subsequent testimony by FHFA Acting Director Edward J. DeMarco, expressed reservations about the Administration’s strategy, stating:
“Recently there has been a growing call for some form of explicit federal insurance to be a part of the housing finance system of the future. The potential costs and risks associated with such a framework have not yet been fully explored.”

Without either explicitly endorsing or opposing such a role for the government, he stated three specific concerns in his testimony:

First, he rejected the premise that no private firm would risk funding a 30-year mortgage, “at least at any price that most would consider reasonable.” Rather, he asked “whether there is reason to believe that the government will do better?” noting that “if the government backstop is under-priced, taxpayers eventually may foot the bill again.”

Second, he stated that a government guarantee could allow politicians to favor some areas or demographic groups, noting the government “would likely want a say with regard to the allocation or pricing of mortgage credit for particular groups or geographic areas.”

Third, he stated that a guarantee would shift capital toward housing, which already benefits from other government support.

Discussion among Subcommittee members then addressed moving forward – with some Republican members favoring complete privatization and the elimination of all housing finance goals. Their view is that goals will distort the market and lending will be to higher risk or with less of a down payment.

Regardless of whether there is any such specific guarantee, however, and regardless of the ultimate nature of the GSEs or successor entities going forward, the original mission of GSEs – as embodied in and strengthened by the DTS mandate – to provide home ownership opportunities for lower and moderate-income Americans, was not responsible for the GSEs’ failure and must be maintained in order to ensure that home ownership remains available to as many Americans as possible.

Another hearing on the GSEs is slated to take place later this month. MHARR will continue to carefully monitor these hearings and take further steps relating to DTS and proper GSE support for manufactured housing consumer financing as appropriate.

MHARR will keep you apprised as new developments on this important matter unfolds.