Industry Voices

Hi all! Your government is at it again. Just when we thought seller financing would finally be recognized as an alternative to clogged-up credit markets, it again comes under attack. This time it’s HUD’s interpretation of the 2008 SAFE Mortgage Licensing Act that requires our immediate attention AND ACTION.

Included below is the verbiage of an e-mail I received earlier today from a member of the national REIA. BE SURE TO READ THE PROPOSED RULES. Then, make your views known by commenting on the www.regulations.gov website.

This is extremely important. We could dissect the proposed rules and write volumes about why they are bad not only for our industry but our entire economy. However, there simply isn’t time. The deadline for comments is next Tuesday, February 16th. Deadline for comments has been extended to Friday, March 5th. PLEASE ACT NOW.

HUD Issues Problematic Rules Interpreting SAFE Mortgage Licensing ACT

HUD has proposed to eliminate ALL seller financing unless the seller lives in the home or becomes a licensed mortgage originator. The proposed HUD Rules interpreting the federal SAFE mortgage act can be viewed at www.regulations.gov Use the search parameter “HUD” and the keyword “safe”. Please review and comment regarding the impact of this broad interpretation of the law.
“In addition to establishing HUD’s responsibilities under the SAFE Act, through this rule, HUD proposes to clarify or interpret certain statutory provisions that pertain to the scope of the SAFE Act licensing requirements, and other requirements that pertain to the implementation, oversight, and enforcement responsibilities of the States. HUD solicits comment on the proposed clarifications and on the regulations proposed to be codified.”

History:
As you may recall, we lobbied hard last year to maintain the right for individuals to make up to five seller financed transactions per year before being subject to mortgage originator licensing, etc… However, that law was passed subject to the Department of Housing and Urban Development’s (HUD) approval of the law as “compliant” with the intention of the federal law. If any state does not have a compliant law, the SAFE act allows HUD to implement licensing for the state. HUD has since issued proposed rules. In a nutshell, seller financing would no longer be allowed for non-owner occupied homes.

How YOU can help:
We learned about the publishing of the rules very late in the process…
and the deadline for comment is upon us on February 16. However, we desperately need thousands of seller finance professionals across the country to go on record with HUD on this issue. We will be working to try to affect this law in other legislative ways, but cannot hope to gain traction unless you have clearly communicated you are opposed to this portion of the rules. This is your chance to be counted on this issue.

PLEASE SUBMIT YOUR COMMENTS TO HUD! We have less than one week to flood this system with comments.

Follow these simple steps:

1. Logon to www.regulations.gov
   You will see two white boxes for searching
2. On the left box labeled “Document Type”, pull the menu down and select “proposed rules”
3. On the right box labeled “Enter keyword or ID”, enter “safe mortgage”. Then, press search
4. Locate the blue search result “FR-5271-P-01 Safe Mortgage Licensing Act: HUD Responsibilities Under ….” To read the rules, click on this title. You will be taken to another page. You will see “views”. You can click on PDF file or another symbol which will show you the rule document online.
5. On the right of the screen, click on “submit comment”
6. Complete the form providing required information and your comments and then submit

What do you say?

Say what you feel, but say it politely! The message should include that you would like the definitions in the proposed rules to be changed so that private individuals can originate and service loans on properties they personally own.

Some ideas from others:

• bank loans are not available on some types of properties
• the tight lending climate has made bank financing “out of reach” for many
• seller financing is an “age old” tradition based on private property rights
• these rules would prohibit even partial seller financing – i.e. a “seller second”
• according to HUD’s “Residential Finance Survey” in 2001, roughly 40% of all non-farm residential properties in the US are owned free and clear
• an estimated 6 million Americans own a property other than their own primary residence
• an estimated 4.5% of Americans own three or more properties, many purchased solely as investment properties
• 40% of non-owner occupied residences are mobile homes which are more difficult to sell with bank financing
• approximately 5% of homes in US are for sale or for lease… seller financing may be key to liquidating this inventory

The continued success of our industry as we know it is threatened by these proposed regulatory changes. Please do not hesitate to follow the steps above and make your voice heard.

Marc Faulkner
michiganmoney@hotmail.com

Please comment below:

William Matchneer, HUD’s Associate Deputy Assistant Secretary for Regulatory Affairs and Manufactured Housing addressed over 100 members at MHI’s Winter Meeting on February 2 in Savannah, Georgia. Matchneer outlined the Department’s priorities for the manufactured housing program in 2010 as follows:

• The long awaited proposed rule on the new Title I loan insurance will be published within the next few weeks.
• A Manufactured Housing Lenders Summit hosted by FHA Commissioner David Stevens and Congressman Joe Donnelly (D-IN) will be held to find solutions to the financing issues affecting this industry.
• Action will be taken to protect preemption of the HUD code by publishing a proposed rule on the changes recommended by the Manufactured Housing Consensus Committee (MHCC) and it would be in the industry’s best interest for this to be on a three year cycle of code changes consistent with other nationally recognized building codes.
• Changes to the MHCC by-laws and rules as prescribed by the Federal Advisory Committee Act were finalized to improve the MHCC process.
• Efforts will continue in working with manufacturers to provide technical assistance to update manufacturing plant quality assurance manuals. He emphasized that HUD is not viewing these actions as an enforcement issue, but rather an opportunity for HUD to serve as a resource to assist manufacturers in putting updated quality assurance procedures in place.
• A proposed rule to Manufacturer Inspection and Certification Requirements and Primary Inspection Agency responsibilities (24 CFR Part 3282 Subparts E and H) will be published by this Summer.
• Serious and thoughtful review of all comments submitted to HUD in response to its proposed rulemaking on the SAFE Act will be made. Matchneer encouraged everyone to submit comments to the proposed rule by February 16.
• The non-career administrator position will not be filled in the next few months due to budget constraints. He assured members that we have an excellent industry advocate in FHA Commissioner David Stevens who is a highly regarded official. Matchneer is the industry’s point person at HUD. He knows how critical these issues are to the industry and is there to help. He encouraged members to continue to work through the MHI staff with which he has a great working relationship.

Other topics discussed at the Winter Meeting were weather radios, Energy Star Tax Credit extender legislation, pre-1976 replacement home legislation, FEMA emergency housing and financing issues. The two-day meeting concluded with a meeting of the MHI Board of Directors. Resolutions were passed on the SAFE Act and federal preemption. MHI will be working hard during the upcoming months on these critical regulatory and legislative issues.

MHI is the 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. For more information on MHI, visit www.manufacturedhousing.org.

Senior HUD officials, at a December 2, 2009 hearing of the House Financial Services Committee, were asked why the non-career Administrator position for the HUD manufactured housing program — authorized by Congress as part of the Manufactured Housing Improvement Act of 2000 — is vacant and has been vacant for most of the past ten years. When they answered that such “Schedule C” appointees were more urgently needed elsewhere and that manufactured housing did not merit a Schedule C appointee, a Committee member asked whether Congress had been “wrong” or “stupid” to provide for a non-career program Administrator. While HUD had no response, the industry itself had better have a firm grip on why Congress wanted a non-career official to head the HUD program if it is to have any hope of securing such an appointment and the significant benefits that Congress intended to result.

For ten years, the tendency has been to focus on the non-career Administrator as a regulatory position. Thus, Congress — in response to program deficiencies that had been exposed over a nearly 25-year period — authorized a non-career Administrator to ensure a transparent and accountable manufactured housing regulatory program that is responsive to its stakeholders, senior HUD management and the public at large. And while this view is accurate – as far as it goes — it is much too narrow and misses many of the key reasons why Congress concluded that the HUD program must have an appointed non-career Administrator.

In addition to being a regulatory position, the non-career Administrator is, even more importantly, a policy position with critical policy functions that parallel the main goals of the 2000 law — (1) ensuring the fundamental reform of the HUD program; and (2) ensuring the full recognition and treatment of manufactured homes as housing, rather than “trailers,” both within and beyond HUD.

First, Congress correctly anticipated that key reforms of the 2000 law would be resisted by career regulators at HUD. It thus provided for a non-career appointee to head the program and act as a guardian for every other program reform included in the law, in order to ensure their full, proper and timely implementation. Consequently, it is no surprise that, in the absence of a non-career Administrator, the implementation of multiple reform aspects of the 2000 law has been — and continues to be — obstructed, minimized, ignored, undermined, altered, delayed or rolled back. Indeed, the track record of the last ten years shows — as Congress is now beginning to understand — that without a non-career Administrator, the fundamental character and culture of the HUD program will not change and the program reform and modernization envisioned by Congress will simply not occur.

Second, and even worse, the absence of a non-career Administrator leaves the industry and its consumers without a seat at the policy-making table in Washington, D.C. The 2000 reform law established the non-career program Administrator to act as the lead advocate for “the acceptance of the quality, durability, safety and affordability of manufactured housing” under section 620 of that law. This advocacy role extends well beyond the HUD regulatory program — to issues including parity in financing, placement, utilization and acceptance, among others – and was designed to ensure, at a minimum, that manufactured housing and consumers of manufactured homes would have a full and equal place in all policy decisions at HUD and in all HUD housing programs, during every Administration.

Without a non-career Administrator to interface with each presidential administration at a policy level, however, both manufactured housing and the HUD manufactured housing program have effectively been segregated from the senior political leadership and decision-makers at HUD, and frozen out of the mainstream of that agency. As a result, manufactured housing has remained under the control of career regulators and an entrenched enforcement contractor who are not interested in change and are more concerned with the nuts and bolts of regulation rather than effective policies that promote the availability, utilization and financing of affordable manufactured housing. Manufactured housing, therefore, does not show-up, either literally or figuratively, on HUD’s policy radar screen and remains today — as shown at the December 2, 2009 congressional hearing — a second-class “step-child” at HUD.

A small but telling example of this disconnect is HUD’s internet website. The initial page has direct links to a multitude of housing programs, but no reference whatsoever to manufactured housing, no indication that either HUD or the Federal Housing Administration (FHA) even have programs for manufactured housing, and no direct link to either program. Thus, the nation’s leading source of affordable, nonsubsidized housing is not even acknowledged by the primary public information resource of the federal government’s housing agency. And while this might seem minor, in itself, it is a symptom of the broader exclusion of manufactured housing from the mainstream at HUD and illustrates why the HUD manufactured housing program and the HUD Code manufactured housing industry are both in a state of severe decline.

Some may contend that a non-career appointee is heading the program, because HUD’s manufactured housing office falls under the jurisdiction of the Assistant Secretary for Housing. And while, again, this is true as far as it goes, the reality — as confirmed by repeated experience over the course of 35 years – is that these officials, with extremely broad responsibilities, cannot, do not, and do not want to get involved with the unique complexities and intricacies of the manufactured housing program, on a policy or any other level. As a result, the Assistant Secretaries, historically, have simply gone along with the decisions and recommendations of career program regulators and program attorneys within the Office of General Counsel. This is a far cry from the independent, non-career appointee envisioned by Congress, who would be immersed in manufactured housing 24-7, have direct contact with each Administration, and the latitude, freedom and will to alter the status quo as necessary — instead of being part of that status quo.

Similarly, many within the industry a about the importance of a non-career Administrator for the HUD program and the need to fill that position as quickly as possible. Unfortunately, though, except for MHARR – representing the industry’s smaller businesses that are the most directly and negatively impacted by the program’s decline – no one has done any heavy lifting on this issue and others, in fact, are helping to preserve the status quo. And while MHARR will continue to leave no stone unturned in its effort to have a non-career Administrator appointed, others who thus far have paid only lip service to this matter need to recognize the far-reaching negative implications of not having a non-career appointee in charge of this important housing program.

In MHARR’s view, every possible effort must be made to secure a non-career Administrator for the HUD manufactured housing program and bring the HUD Code industry to the policy table in Washington, D.C.

Read MHARR’s latest news release on this subject »

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

American modular, pre-fab and manufactured home producers interested in exporting homes to another country – in this case Haiti – face many problems to export houses to another country. The most important matter is transportation and shipping of 400,000 units. One option to consider is to establish a large American Housing style Manufacturing plants to build the same house there in Haiti, to help their local economy. One drawback is time to build the facility.

The Alternative Option:
American modular, prefab and manufactured home producers could build suitable homes for Haitians almost immediately. As the inventor of a Modular Housing System, I know a firm such as ours could build 1000 prefabricated component homes a month or more based on the plan and facility with installation manual ready for assembly on the site with one certified builder, simple tools and local unskilled worker.

Our firm would certainly like to be considered for this type of project and I’d be pleased to personally help with alternative and sustainable modular aluminum framing solution utilizing other industries prefabricated panelized products like SIP or stud wall, roof (wood or steel) for quick construction of affordable housing for Haiti.

Finally, there could be a blend of the two options: we could use American producers like ourselves to build homes for Haitians immediately, and we could also begin the task of building a facility in Haiti for local construction efforts. I’d be willing to help with establishing a facility in Haiti as would other factory built home producers.

The key is to get a firm plan and begin to act.

Tim Siahatgar
MHS Building System

In a reply to correspondence with President Barack Obama by our www.MHMSM.com editor, here is the message that came in from the White House…

Dear Friend:

Thank you for writing. The images from Haiti of
collapsed hospitals, crumbled homes, and men and women
carrying their injured neighbors through the streets are truly
heart-wrenching. As we learn more about the extent of the
devastation, our thoughts and prayers are with the people of
Haiti.

I have directed my Administration to respond with a
swift, coordinated, and aggressive effort to save lives. The
people of Haiti will have the full support of the United
States Government in the recovery and rebuilding effort,
including the humanitarian relief–the food, water, and
medicine–that Haitians will need in the coming days.

This is also a time when we are reminded of the
common humanity we all share, and Americans have
always responded to these situations with generosity of
spirit. If you would like to support the urgent humanitarian
effort in Haiti, I encourage you to visit our website where
you can learn more about how to contribute:

http://www.WhiteHouse.gov/HaitiEarthquake

Americans trying to locate family members in Haiti
are encouraged to contact the State Department at (888)
407-4747.

We will continue to stand with the people of Haiti
and keep them in our thoughts and prayers.

Sincerely,

Barack Obama

This response came in prior to the President’s State of the Union Address, where he often spoke about jobs. His reply does not specifically address the pressing issue of using America’s factory-built housing industry as part of a concerted response that would house Haitians and create American jobs building strong, modest homes and installing those homes under American leadership. The http://www.mhmarketingsalesmanagement.com/blogs/tonykovach/a-call-to-action/ still makes sense, and we as Industry members should continue to press for a specific response from the President and from your Senators and Congressman.##

Posted by Danny Ghorbani – MHARR

Sprinkler Mish-Mash Designed to Mislead Industry
HUD Takes Shot at Industry, Consumers and Defies Congress
Unexplained Delays Continue on Financing – Suspicion Grows

Sprinkler Mish-Mash Designed to Mislead Industry

Grassroots industry concern over the erosion of federal preemption is wellfounded, as a combination of HUD regulators, industry enablers and research consultants continue to press yet another backroom “deal” — this time on fire sprinklers. This is another example of the type of ill-advised industry “compromise” on key issues – while most grassroots industry members are kept in the dark or provided misleading information – that has devastated the industry in Washington, D.C.

Read more…

Posted by:
Richard J. “Dick” Klarchek
President, Capital First Realty
(MH Retailer and Manufactured Housing LLCs)

Working with the government has become an integral part of most businesses today, and since the construction side of the manufactured housing industry is HUD regulated, our industry is perhaps more impacted than many by government. While it is critical to seek to work effectively and positively, it is equally important to balance the desire to ‘get along’ with the need to advocate and advance the causes critical to the success of manufactured housing in the future.

Read more…

Posted by Danny Ghorbani, MHARR

As has previously been reported, a steadily expanding number of members of Congress have been making inquiries to senior officials at HUD regarding the declining state of the HUD Code manufactured housing industry, the continuing inability of consumers to access public and private financing to acquire affordable, non-subsidized manufactured homes, as well as the Department’s management of — and plans for — the unique HUD (Title VI) manufactured housing program and FHA manufactured home financing. Throughout 2009, these congressional inquiries became more urgent, more specific and more pointed, as industry production and sales fell below 50,000 homes (its lowest output since 1950), and members of Congress became more concerned about closures of manufactured housing businesses (particularly smaller concerns) and related job losses, as well as the unavailability of manufactured home consumer financing in their districts and states.

Although HUD officials responded to these inquiries anecdotally and in a fragmented manner at various meetings and as part of congressional hearings, an extraordinarily articulate and well-focused December 2, 2009 inquiry from Rep. Travis W. Childers (D-MS), has now elicited a January 11, 2010 written response from HUD that provides a bleak and shocking window into HUD’s views concerning — and plans for — the federal manufactured housing program, consumers financing, the HUD Code industry and consumers of manufactured housing that have not previously been exposed in such frank detail. The revelations in this response — both stated and implied — are remarkable and should spur all program stakeholders to take stock now and address their implications for an industry and consumers already facing unprecedented challenges and obstacles.

Enclosed with this communication are copies of Congressman Childers’ December 2, 2009 inquiry letter and HUD’s January 11, 2010 response, together with a complete paragraph-by-paragraph analysis of HUD’s response. This packet is a must-read for all those with an interest in manufactured housing, including industry members, consumers and elected officials.

Based on the information exposed by these documents, the following priorities need to be pursued and implemented:

Regarding the HUD manufactured housing program and public financing –

• The appointment of a non-career Administrator for the HUD manufactured housing program as provided by Congress in the Manufactured Housing Improvement Act of 2000 (2000 reform law). Based on the track record compiled while this position has been vacant for the past five years, without such an appointed Administrator, nothing else about the program will change.
• Issuance of final rules implementing improvements to the FHA manufactured housing program approved by Congress in the Housing and Economic Recovery Act of 2008 (HERA) and the removal of the existing Ginnie Mae moratorium on the securitization of FHA Title I loans.
• Full and proper implementation of all manufactured housing program reforms contained in the 2000 reform law.

And regarding private consumer financing, on a parallel track, with the Federal Housing Finance Agency (FHFA) –

• Full and expeditious implementation of the HERA-based “duty to serve underserved markets” mandate for the two Government Sponsored Enterprises (GSEs).

Each of these priorities is critical to the recovery of the manufactured housing industry and to the availability of affordable non-subsidized housing to millions of Americans and particularly lower and moderate-income families. Accordingly, their implementation should be vigorously pursued by all stakeholders in the HUD manufactured housing program, by Congress and by the Administration.

Click to download Analysis of HUD’s Response to Congress

This guest blog is provided so that Industry Voices can sound off on topics of interest or concern to the factory built housing business.  You can provide a brief, moderate or long column  – which should be emailed to the www.MHMSM.com editor Tony Kovach at latonyk@gmail.com -   with the words Industry Voices Blog in the subject line for editing checks and placement.  We will promote Industry Voices blog comments and columns, so thousands can hear these perspectives.