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A home built in a factory can be a home just like a site built?

November 11th, 2014 No comments

A recent court decision – linked below – has me scratching my head in bewilderment?

http://www.mhpronews.com/blogs/daily-business-news/jdsupra-spotlights-the-6th-circuit-ruling-in-bennett-v-cmh-homes-are-manufactured-homes-a-consumer-product/

  • Senator Moss stated in 1974, that a house would not be a “consumer product” because it is not “tangible personal property.” The Sixth Circuit, expanding on that understanding, held that the Bennett’s’ manufactured home was not a house-trailer or a mobile home designed to be moved; rather, it remained permanently on the land and was taxed as real property.
  • Further, because the triple sectional was as large and looked like a “regular house,” dictionaries for the words “consumer” or “consumer goods” described products that were expendable or replaced, quite different from a dwelling.
  • Judge Stranch dissented, taking issue with the majority’s distinction between “manufactured homes” and “mobile homes.” Stranch said so-called “mobile homes” are not built to be actually mobile, opining that the factory built home industry coined the term “manufactured home” to replace “mobile home” in response to negative stigma against “mobile homes.”

We were always lead to believe a mobile home or manufactured home is never permanent, it is a consumer goods or personal property. It has been a long held belief. The banks do not lend on it due in part to this one definition.

After many years, just when you think it is; it turns out it just ain’t so.

The mobile aspect came about because it is built in one place and transporting it to another location where it will reside. Many years ago these homes were much smaller and could be towed by a car or truck, a “Trailer.” I do not like it here, I am moving, give notice hitch it up and leave.

That image is still with us today even though it has no truth to it.

The homes today require semi-trucks to hitch it, to move it, after the demolition of the accessories and the home’s preparatory work needed to get it to be transported. The money to move it is expensive.

Where are these old mobile homes going anyway when a homeowner wants to leave a community?

Most Land Lease Community (LLC) owners do not want old mobile homes coming into their community so they are refused. They do not even have the distinction of being “Cool”or “Classics” as a desired retro home by the public.

I do not know about you but I have seen many a mobile home sitting for years in an LLC community never leaving its lot location. The term most used by LLC owners is, “Sell it in Place.” It is practice encouraged by management. It makes me think they are permanent because of selling it in place!

The LLC community owners are adamant it stay not wanting it to leave. The LLC owners do not want empty spaces due to the impression of blight and lack of interest in their community. They always hope that Dealer down the street will replace it sometime. It is a better belief to keep the light “On” and stay in place than having an empty lot.

used-mobile-homes=credit-steve-lefler-posted-industry-voices-mhpronews-com-4

The future for manufactured homes with this court decision could be the very change that impacts the old time popular belief and could change the image and acceptance of this home product. The idea of a consumer product nameplate placed upon someone’s home coupled this common-sense decision often effect old time beliefs to change. ##

Steven-Lefler-Vice-President-Modular-Lifestyles-posted-on-mhpronews-comSteven Lefler, Vice President, Modular Lifestyles, Inc.(888) 437-4587.

DJ Quixote’s Adventures In La Manufactured Housing

November 10th, 2014 No comments

This is my third attempt at writing this article. I had to trash my two previous efforts.

After a bit of time, a bit of reflection, and a bit of perspective I’m giving it another shot. This third attempt was born from my previous efforts to understand why I was having such a difficult time penning a response to the CFPB white paper as more discarded paper accumulated around my desk.

spanish-windmill-credit-dj-pendleton-mhpronews-com-executive-director-texas-manufactured-housing-association-

The only reason I can determine is that like the self-proclaimed knight, Don Quixote, turned crazy by an obsession of returning to a world of chivalry, I have at this point been driven…nuts.

The experiences I have had over these last few years reading federal laws, proposed regulations, final regulations, interpretations of regulations, readiness guides, flowcharts, and watching hearings, have finally infected my brain in a way that has put me on a course, for this article at least, into a world of perception distortion and fantasy.

Similar to Don Quixote’s obsession that he was a knight out on a noble quest, my incessant reading of CFPB publications has cast me down a path that is no less fantastical. Rather than fight against this effect, I’m choosing to steer into the mental skid.

There are many industry responses on the recently published CFPB white paper on manufactured housing. Those lamenting the inadequate attention the Bureau gave to realties in our market and glancing over things like cost of funds, interest rate risk, borrower risk, lack of secondary market, and portfolio based lending are all well founded. For more on this I’d suggest Dick Ernst article Deconstructing the High Cost Mortgage Loan. In my two earlier drafts I did this too. And for follow up articles after I come back from my journey today atop my skinny stead, Rocinante, I might publish them as well.

But not today.

Today I’m asking that you travel with me and my trusty sidekick, Sancho, off into a distorted reality of a world of my creation. So indulge me for a little while, even if some of the suggestions are as preposterous as fighting windmills I believe to be giants. For this is my Don Quixote journey compelled by my most recent reading of the CFPB white paper on manufactured housing.

BACKGROUND

Before jumping into my La Mancha, a quick bit of context could be helpful for those not as familiar with recent CFPB happenings.

On September 30, the CFPB published a white paper on manufactured housing. If one were inclined to give the CFPB the benefit of the doubt, you could conclude they tried their best to present an objective analysis of our industry without injecting any intentional or unintentional biases. Of course, there are those that will assert they did not achieve this, and others still that claim this was never their intention. My goal will be to stay more positive than the cholericly tempered literary counterpart in my feeble attempt at analogy, but forgive my moments of weakness when certain angers are irrepressible (Note: I’m trying to up my level of analogy by turning to classic literature, but worry not as I’m sure Star Wars and Lord of the Rings themed articles will dominate my future efforts).

The white paper identifies the following seven “key findings:”

  1. Manufactured housing is disproportionately located in non-metropolitan areas.
  2. Compared with residents of site-built homes, manufactured-housing residents are somewhat more likely to be older and tend to have lower incomes or net worth.
  3. Manufactured homes typically cost less than site-built homes.
  4. About three-fifths of manufactured-housing residents who own their home also own the land it is sited on.
  5. An estimated 65 percent of borrowers who own their land and who took out a loan to buy a manufactured home between 2001 and 2010 financed the purchase with a chattel loan.
  6. Manufactured-home owners typically pay higher interest rates for their loans than site-built borrowers.
  7. The current state of manufactured housing production, retail, and financing reflects in part a rapid growth during the 1990s and subsequent sharp contraction.

If you would like to see the press release from the CFPB you can find it here:

If you want to read the 54 page white paper you can find it here:

http://www.mhpronews.com/home/industry-news/industry-in-focus/8460-cfpb-report-alleges-manufactured-housing-lending-is-expensive-sparks-controversial-comments-from-cfed-mhi-and-other-mh-industry-professionals (Editor's note: See download at the link above.)

I’m not going to address in detail or systematically attack the CFPB assertions. Quite the opposite.

I’m going to assume the basis for the examination of our industry and the subsequent white paper was intended to drive future policy based decisions and discussions. Where I might differ with the regulators is where I think the facts they have compiled should direct us, and the questions it brings to light that should be the focus of their future efforts.

However, I have a feeling my policy proposals will only come to be in fantasy and not in reality. But come on Sancho; I’m sure this will only hurt a little.

Here is my list:

  1. Why is manufactured housing disproportionately located in non-metropolitan areas? Shouldn't the policy be of inclusion and consumer choice rather than exclusion and limits?
  2. Wouldn’t it be nice if the housing playing field were level, markets not artificially influenced by selective polices, and either the removal of subsidies or, alternatively, bring the subsidization to manufactured housing to compete, rather than stacking the deck against us?
  3. Why was there no attention given to existing state laws, regulations, consumer complaint levels and consumer notices? And why does the white paper read as though there is a critical and immediate need for more regulations and notices?

WHY ARE CITIES STILL ALLOWED TO HATE US?

The white paper does list factors as to why manufactured housing is more of a rural housing option and not in more populated metropolitan areas. They mention zoning prohibitions as a contributing factor. Those of us in the industry know this is the factor limiting manufactured housings’ presence in urban settings. The question this should spawn is whether or not it is good policy to allow cities this type of prohibition. With new, modern, efficient, heavily regulated manufactured homes, what is the public policy that benefits a city from prohibiting manufactured homes and what are the benefits to removing these restrictions?

My case for the latter is simple – in city zoning restrictions modern manufactured housing should be treated exactly the same as all site-built residential construction. Equality. This would create a world where any type of discriminatory treatment directed exclusively towards manufactured housing placement is void.

Now some regulators and city officials might scoff in stern disagreement, but why?

Whatever the city restrictions are for site-built housing placement have those apply equally to manufactured housing. The preemptive federal construction code and state installation requirements modeled from the national standard satisfy any safety and soundness concerns.

Allow these standards that insure the homes are not substandard to serve the purposes they are intended. And if a city decides to impose some sort of home aesthetic mandates, energy efficiency standards, or any other requirements (so long as they don’t interfere with the federal construction or installation codes), simply require the standard to apply to all housing equally. This would allow manufactured housing to compete on the same playing field and increase consumer choice.

Another reason this is good policy is to consider the benefits the economy and labor force receive through a manufactured setting.

We are talking about factories with skilled, well paid, middle class, labor jobs. They draw paychecks, pay taxes and receive benefits. Not to mention worker protections and oversight from internal safety and quality control, to regulatory oversight and redress like worker’s compensation protection and OSHA. They are also U.S. jobs that are not outsourced.

In manufacturing you have greater efficiency in construction, less waste, organized and predictable supplier networks benefiting those producers down the line. How is it that this reality isn’t championed like other manufacturing industries?

How much more do you think your car would cost if instead of being produced in a factory all the parts were shipped to your driveway where contract workers showed up and built it on site. How long do you think it would take to build it? What about your television? How about your cell phone? If the market is allowed to work without manipulation efficiencies in production lower costs allowing some consumers the opportunity to pay less for an equivalent product. The white paper addresses the fact that on a square foot basis manufactured homes cost less than half as much as the estimated $94 per square foot site-built home.

Some consumers would like to have this choice when it comes to housing. And for others it would open up the chance for them to be homeowners who otherwise would not because they were priced out of the site-built market.

And yet, I’m not even advocating for a wild swing in the pendulum away from site-built to manufactured housing. I’m simply saying remove the non-level playing field, and allow us to compete equally.

Could the CFPB impact this? Sure.

With its broad authority and charges for greater equality, fair housing, transparency and consumer choice there are measures the Bureau could take to level the field.

One quick suggestion, when dealing with a new manufactured home in a metropolitan area that conforms to the federally mandated code and equivalent site-built restrictions for a given area, in order for a local government to pass a housing restriction on only manufactured housing and not any other residential housing, they must demonstrate an overwhelmingly compelling reason as to why they believe such a restriction is superior policy. In their required justification they would have to defend why their selective exclusion would not have an adverse or disparate impact on housing choice and any protected classes such as families who would like to live in something larger than a one-bedroom apartment or elderly retirees on fixed income who need a lower cost home choice. Failing to meet a much higher burden in ordinance creation would result in the ordinances being deemed void as either against public policy or a violation of fair housing ideals.

I know, such things are crazy talk from a guy wondering around in the sun in an old suite of armor. Completely irrational, right?

Well, I got the outfit on, and I’m on the damn horse so I might as well go for it, so here it goes.

The CFPB is big on consumer notice and consumer choice, so why not add a consumer notice for any site-built home being financed that says, WAIT. Before you sign, did you know you might be able to buy an equivalent house for less than half the cost per square foot of this one?” The same notice mandate could be applied to Fair Housing regulations requiring disclosures prior to a home purchase or a residential rental that a manufactured housing option would be hundreds of dollars less per month in all-in housing costs.

Reading between the lines of the white paper it sounds like more notices and warning mandates are coming down the pike for the manufactured housing industry, so I’ll ask another crazy question. Why don’t we ever get notices showing our clear advantages for consumers?

WHERE ARE YOU SUPPOSED TO LIVE IF YOU MAKE $26,000 YEAR?

The demand of affordable housing is undeniable. As incomes stagnate and living costs increase the demand for affordable housing will continue to grow. The manufactured housing story in this equation is one of “haves-and-have-nots.” But in our story the multi-billion dollar issue is subsidization. And we are in the “have-not” camp.

Any way you slice any of the myriad of “affordable housing” incentives or programs, at their core is government subsidization. I know there are the Libertarian minded readers out there disgusted at the idea of government subsidy. And similar to the city ordinance restriction argument I previously made, all things being equal and all subsidy removed, I know manufactured homes would compete for a much higher market share of housing.

However, while I’m admittedly crazy in this current effort, I’m not crazy enough to ever think all subsidization in all forms could practically be removed. I might think I’m a knight on a horse, but I’m not so nuts to think I’m the back-end of a horse (though some may beg to differ).

Instead, this Don Quixote is on a different quest of insane ideas. If you are going to subsidize programs to foster home affordability, why don’t you provide subsidy and incentive to clearly the most affordable housing option of manufactured homes?

Manufactured housing is, at times, somewhat eligible for some types of current programs. But in practice the government policies and attentions applying affordable housing subsidy in large scale to manufactured housing are more of a unicorn than an everyday work horse.

The subsidy is pervasive starting at the federal level, but also at state and city levels. Site-built and multi-family developers are granted incentives, tax breaks, and many other subsidies if they are building affordable homes or units. Most of the time the requirement to get the subsidy is that only a small portion of the total development provide affordable options. This is most common in apartment construction, but site-built and condo development also share in these subsidy treasures.

I know I’m the crazy one on the horse here, but let me see if the sane world has clearly figured this out.

The government will provide incentives, tax breaks and subsidy to build affordable housing that only serves a small percentage of the total development, then additional government subsidy is layered on to the buyer or renter in down payment assistance, reduced principal programs, subsidized lower interest rates, forgivable loans or rental housing vouchers to get people into “affordable housing.” I’m sure this makes perfect sense to everyone else, but in my clearly delirious mind it begs the question, “Why not just focus on housing that costs the least?”

Granted, there is a lot of dangerous substandard housing. The Colonia problem in Texas to name just one. But for safe, efficient, and easily replicable affordable housing, how is it that manufactured housing is either ignored or purposefully overlooked?

The white paper provides the facts on the superior affordability of manufactured housing in Table 5 when they compared manufactured housing in both metro and non-metro areas to both site-built and renters. Manufactured housing was less expensive ranging by more than half the monthly costs (metro site built $1,505 to metro manufactured housing $686) to about $100 less per month (non-metro rental $654 to non-metro manufactured housing $551). This means we win in all categories in all locations on affordability.

Table 5 Source, CFPB Report.

If manufactured housing is the least expensive compared to any other safe, regulated, quality living accommodation, then imagine the benefit of subsidization directed at manufactured housing. Wouldn’t such a crazy idea better serve the goal of providing affordable housing to more people?

Coming out of the recent housing crash, the idea of people choosing a home they could afford and living within their means seemed to penetrate the psyche of most of America. However, there seems to be some terrible stigma in maintaining this simple idea, even in the context of affordable housing, if the result is a conversation about homes that cost less than $100,000, less than $70,000, less than $50,000 and especially homes below $30,000.

Why?

If the home is regulated to ensure consumer safety, efficiently produced, and in nearly all cases larger than any other option at a similar price point, why then is the idea so ludicrous that this might be the best choice some buyers or renters could make?

I can’t get an answer out of my horse or Sancho on this, so I guess I’ll have to accept the idea that the saner approach for a person who can only afford a $45,000 house is to live in a $165,000 house with $120,000 worth of combined developer and individual subsidy attached to it.

It sure seems to make sense that subsidy dollars could go further and help more people if applied to the type of housing clearly superior in affordability. But then again, I’ve lost my marbles.

By the way, just under $40 billion was budgeted to be spent by HUD for all of its subsidized affordable housing programs in 2012, and this does not include any of the loan guarantee dollars and authority to incentivize securitization of mortgage loans that drastically underutilize manufactured housing.

I’m not saying manufactured housing programs should receive all or even the bulk of the subsidies. I’m merely suggesting that when doling out billions of dollars some focus and some programs specific to manufactured housing should be adopted. Such programs would better achieve the goals of providing safe, affordable housing while preserving the dignity and self-worth of recipients who receive the benefits.

NOTICE, TRANSPARENCY AND CONSUMER PROTECTION

The white paper has been read by more than just this crazy rider as a volley of shots across the bow and foreshadowing of possible new regulations for manufactured housing.

Here are just a few excerpts:

“At the same time, these same groups include consumers that may be considered more financially vulnerable and, thus, may particularly stand to benefit from strong consumer protection. “

“Thus, manufactured-home owners who can choose either chattel or mortgage financing (generally, those who own the land to which the manufactured home is being permanently affixed) may face a tradeoff between lower costs at origination and a quicker closing with less collateral, on the one hand, and lower total costs over the life of the loan along with greater consumer protections on the other.”

“The extent to which consumers are aware of theses tradeoffs and how consumers weigh them remains an open question. It is not clear to what degree upfront costs and convenience, lack of availability for mortgage financing, or lack of relevant information about financing options drive consumers to chattel financing.”

“Chattel loans may close more quickly than or have lower upfront costs than loans secured by real property, but chattel loans tend to have higher interest rates and provide borrowers with lesser consumer protections than mortgages secured by real property.”

“The relative scarcity of data on manufactured housing compared with data available on site-built housing and mortgage finance in general remains a challenge for research related to manufactured housing. This gap in data availability may begin to narrow, however, in the coming years.”

“The classification of some manufactured-housing retailer activities as loan originator activities provides consumer protection for homebuyers in what may be a high-pressure sales environment.”

However, nowhere in the white paper, in particular when addressing consumer protection and apparent perceived abuse by the industry, does the paper mention state law or state regulation. Manufactured housing is arguably the most regulated form of housing stemming from both the federal level and state level.

At least in Texas there are numerous consumer disclosures and cooling off requirements prior to buying to address the often mentioned “high pressure sales.” Texas also has a three day right of rescission for all consumer funds. In fact, in Texas the consumer is so protected that an equivalent contract agreement that exists in the site-built world were a buyer may end up losing earnest money is not allowed in Texas for a manufactured home purchased from a licensed retailer.

The CFPB fails to acknowledge that state regulators and auditors are enforcing consumer protection laws and regulations. These state level “cops on the beat” audit consumer files to ensure disclosures are provided, and the goals of consumer choice and transparency are achieved.

In Texas, there is also a specific chattel manufactured housing lending regulator, the Office of Consumer Credit Commission. With existing state laws and regulations this additional regulator is there to protect consumers who obtain chattel manufactured home loans. Texas state law requires any chattel loan contract contain the name and contact information of the OCCC notifying all Texas chattel manufactured home borrowers who the consumer protection regulator is and how to get in touch with them to file a complaint.

The white paper implies there are great injustices and consumer harm befalling those extremely vulnerable who are forced, as a last result, to purchase manufactured housing. The CFPB’s perception of consumer harm prompts them to allude to future CFPB regulation. But before we run to put out some blazing inferno, maybe we should ask if there is even a fire burning.

Let’s look at Texas’ manufactured home chattel financing. In 2013 HMDA data shows there were 7,094 manufactured homes sold with financing in Texas. The titling data at TDHCA actually has the number of chattel financed manufactured homes sold in 2013 at 9,759. As many institutions are currently exempt from HMDA reporting, and by the CFPB’s own admission the HMDA data is lacking when it comes to manufactured homes, we are going to use the Texas titling data. However, in order to align with the fiscal year used in the reporting of the OCCC, the apples-to-apples time frame we need is August 2012 through September 2013.

In Texas we had 9,509 manufactured homes sold with chattel financing between August 2012 and September 2013. In this same time frame the total number of consumer complaints processed at the Texas OCCC for manufactured housing lenders of chattel loans was 15. This means the percent of complaints compared to chattel manufactured home loans is .157 percent. I hope I’m not being too crazy to think that any industry would love to have less than 1/5th of a percent as their ratio of consumer complaints to sales.

I know the skeptics and supporters of increasing regulation might take issue with my facts. In order to cover all my bases I also looked at the CFPB’s own consumer complaint database. According to the CFPB their complaint database for mortgages dates back to December 1, 2011. The complaint data does not distinguish manufactured home from site-built, nor does their mortgage category separate chattel from real property mortgage loans. But you can filter to just mortgage complaints in Texas where the consumer disputed the company’s (lender or servicer) response.

When you filter the data to those categories there are 1,419 consumer disputed, mortgage complaints in Texas. Again, we can’t narrow down the complaints to chattel manufactured housing, but the companies’ names are listed. Based on the names of the common lenders who make or service manufactured chattel loans, the total count I have for companies who possibly have chattel mortgage complaints lodged against them with the CFPB is 64. Obviously, all 64 of the complaints are not manufactured chattel loans, but there is no way for me to tell with the data presented. It is easy to assume, especially with manufactured housing accounting for only 7.6 percent of the Texas housing stock that if one were able to dissect the 64 only a small percentage might be manufactured housing chattel based complaints.

But let’s err on the side of very conservative assumptions. Let’s take all 64 as if all of them were the result of consumers complaining about chattel mortgages on manufactured housing in Texas. Since December 1, 2011 when the CFPB database begin populating complaints on mortgages through July 31, 2014 there were 23,292 manufactured homes sold with chattel loans in Texas. Again, knowing the real number is lower, most likely much lower, than 64, but using that for a conservative estimate the ratio of complaints to sales with chattel loans is .274 percent.

In the face of this data, I’m forced to take off my helmet to scratch my head in confusion. Where is the extreme injustice? Where are consumers being harmed at such startling degrees that require significant federal regulatory reaction?

Let’s assume it is impossible to eliminate in any market all consumer complaints. If everyone can agree zero consumer complaints is not possible, then there must be some threshold goal. Ideally this goal is very low. In my delirious state I might suggest that less than half of one percent is very low. Everyone should further be able to agree that any additional regulation comes with additional costs that must be absorbed, almost assuredly in the form of pass through costs to all consumers. There is also the reality of diminishing returns triggered when each additional costs only produces fractional changes. The question then is, how much consideration and cost benefit analysis is being done when additional regulatory burdens are contemplated? If the reporting by consumers of all alleged harm is incredibly low, but the cost of additional regulations with the goal of reducing consumer harm further are felt by 100 percent of the consumers, is the additional regulation really in the best interest of the consumers?

I’ll put this another way. I’ll put it in the form of a consumer disclosure and consumer choice.

Consumer Notice: This industry historically experiences less than half of one percent in consumer complaints. Knowing this would you choose to pay an additional $175 to lower that amount by an additional .002 percent?

OBVIOUSLY RAMBLINGS OF A CRAZY OLD COOT

Clearly many of the points in this article are being made with hyperbolic language, rhetorical questions, sarcastic tone, and wild assertions. This was done with the purpose of trying to shock the system so that for some maybe these extremes make them see things or think of things differently.

For those that took the time to indulge my efforts in this article and leave with the same impression you started that I’m off tilting at windmills, well, then I’m sorry to have wasted your time. However, my hope is for most there were at least some things and some ideas that provoked more questions or ideas.

And finally, for the others who found themselves agreeing with me, nodding your head while you read, and pumping your fist thinking, “man, he is right,” (ok, that last one I know was a stretch), well I have news for you too…I hope you have lots of metal polish around to shine up your suite of armor because you are clearly just as crazy as me. ##

dj_pendleton__credit__mhpronewsDJ Pendleton

Executive Director

Texas Manufactured Housing Association

An analysis of The Atlantic’s report on Manufactured Housing, CFPB and MH Financing

October 27th, 2014 No comments

One thing that strikes me about the article in “The Atlantic” is that there was a great deal of good press for manufactured housing. It touted the energy efficiency, the lack of waste in the factory building process and the ability for more modest income families to become home owners. All great points.

On the negative side, it seems to focus on what truly plagues this industry and that is undeniably, the difficulty in financing manufactured homes. Unfortunately, the industry is caught between a rock and a hard place. Chattel loans are under the exact same strict CFPB regulations that apply to mortgages, but there are no lenders or secondary markets that consider them the same as a mortgage.

If CFPB is going to continue this interpretation, they should also mandate that any lender allowing conventional mortgages cannot simply deny a manufactured home loan.

Many manufactured home consumers are elderly, disabled and families with children. The refusal of lenders to loan on manufactured homes in a land-lease community seems to me to cause a disparate impact on at least three protected classes; age, disability and family status. The industry is not making this argument and I truly believe this is a talking point we should make for our cause.

In addition, some non-profits that are pro-manufactured housing are advocating for manufactured homes in land lease communities to be considered real property. If this would bring lenders to the table, I would say it might be worth looking into. Unfortunately, this is not a real solution and in fact can cause some serious problems. Some states already have this type of arrangement and they have no more lending than any other states.

Let’s keep the conversation going and try some new arguments and strategy to get this industry motivated to the point where we see retail sales centers popping up in high visibility locations.

Let’s try to get communities filled with NEW homes that will revitalize the community and provide that affordable housing the entire industry is so proud of. It is time to move forward and that will take the voice of the entire industry speaking to Federal, State and Local officials that are motivated to help. ##

Amy-Bliss-CAE-wisconsin-housing-allianceAmy Bliss, CAE
WI Housing Alliance/Tomorrow’sHome Foundation
258 Corporate Drive, Suite 200C
Madison, WI 53714
608.255.3131

(Editor's Note: Amy Bliss' response is to the article inThe Atlantic entitled, The Case for Trailer Parks, linked here.

As with all OpEds, the views expressed may or may not represent those of MHProNews or our sponsors. We welcome other perspectives on this or other topics of interest to industry professionals. Please send your letter to the editor or OpEd – with Industry Voices in the subject line – to this link, thank you.)

MHI, MHARR, MHIndustry Associations and the Manufactured Housing Leadership Issue

October 21st, 2014 1 comment

Tony,

1. These are legitimate questions.  I think MHI does excellent work and has exceptional personnel, but seem to have a tendency to react slowly.

2. I don’t want MHI to offer more than they are now. They cant take on 10 different missions and be successful. Everyone wants MHI tomhpronews-mharr-mhi-associations-graphic-manufactured-home-marketing-sales-management be the magic bullet. They can’t, they aren’t and they never will be.

3. MHI's role should be limited to Continuing Education, Image/Marketing and Legislative/Lobbying. The industry should turn Regulatory over to MHARR and get them under the same umbrella but keep responsibilities separated. Lots of differences between Legislative and Regulatory. Two different worlds.  MHARR’s strength is Regulatory and MHI’s strength is Legislative/Lobbying and Information/Supply.   Until the two are joined they will both struggle to zero in on a particular mission. Both of them bounce around from point A to point Z with no defined scope. With MHARR constantly trying to eliminate the significance and importance of MHI.

4. We have one main problem in our industry and it is a lack of Retail and Wholesale Finance. This limits our sales volume and because of this low volume we lack Political Financial Capital or $$$$$ which in turn creates a lack relevance for you at the nation’s Capital. Industry Dollar Volume cures a multitude of “Sins.”

5.  Our manufacturers spent all of their profits and reserves on trying to control their distribution networks by entering the retail business in the late 1990’s. Instead of competing with their customers and utilizing those reserves and profits to invest in a Retail Finance Foundation they made the age old mistake of trying to compete with their distributors. Clayton was investing all of their profits in retail financial products. Because Clayton had opened the retail division of their company first they had the freedom to do this. They are the only Manufacturer in the Industry to ever get away (from) competing with their customers. They got away with it because they treated their independent distributors identical to how they treated their company owned stores. The other manufacturers never copied this one small concept. The Clayton Family was smart enough to know they needed all three. Manufacturing, Independent Distributors and Company Owned Stores. The other Manufacturers spent all their time and money trying to create an advantage for their company owned stores over their independent distribution network and bypassed the need for the all-important foundation of Retail Finance. Clayton had a better vision for the future. No one likes to admit any of this though.

6. It’s extremely easy to be an armchair quarterback when you have the luxury of looking at past history like we do. I do hope as an industry we have learned a lesson for our future. Regardless of an industries distribution, capacity and retail demand…………………….IF YOU CANT CONTROL YOUR PRODUCT FINANCING ,  YOU LOOSE. ##

 

(Editor's notes: A) The author of the above requested in writing the following. I would not mind you publishing these as an opinion from one state executive director but I don't need my name attached because our members are split on this...”

The same courtesy has been extended to others on sensitive topics, when we know the writer is real and not a phantom.

B) this is in response to this linked Masthead  OpEd, which is the hottest trending article in MHville, and at the current pace, will be the top new article for the month.

C) The writer references one of the many take-aways from the Jim Clayton interviews (point 5).

D) The associations graphic was added, and was not provided or requested by the writer, and the headline is ours and not that of the writer.

    E) Other perspectives on this topic or others of industry interest are welcome.

    More – Atta Boys! – for 5th Anniversary Celebration

    October 19th, 2014 No comments

    (Editor's note: we continue to get comments like the one below or those shared on the home featured article from a wide variety of industry leaders regarding the 5th Anniversary celebration of the launch of MHProNews.com. What follows is one of several, we'll plan to share more in the days ahead. Yours comments and suggestions – private or for publication – are welcome too. As always, guest columns on other topics relevant to the factory- built home industry, are welcome. )

    If the MH industry and its suppliers are to survive, grow or even prosper in the future – it needs a clear, honest, unbiased and reality based opportunity to have real-time information and ideas to stay relevant.

    Five years ago, Tony Kovach created his online business' e-trade journal with the primary objective of contributing to the success of this industry. With over 200 clients that I have worked with in this industry since 1990, I have learned that many of the resources these organizations have available to them have been politically or self-interest motivated.

    Tony’s business model for MHProNews and the new MHLivingNews are unique – he has had one objective for five years – to contribute to the success of every organization that serves this industry.

    Timely and relevant news, tips and commentary from a wide variety of sources makes that goal possible.

    Keep up the great work Tony with your team of writers and associates – we all need your creativity, integrity and effort. ##

    tim connorTim Connor, CSP

    Global sales and management speaker and trainer

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    Click here to read more 5th Anniversary comments from MH Industry leaders and players.

    Manufactured Housing Institute Responds to Doug Ryan-CFED commentary on CFPB report on Manufactured Housing Finance

    October 6th, 2014 No comments

    Tony,
    As the national association serving as the voice of the manufactured housing industry, Tim (Williams) asked that MHI respond to your inquiry. Our official response is provided below.

    Doug Ryan and CFED have been consistent supporters of manufactured housing and continue to recognize manufactured housing as an important source of affordable housing for low- and moderate income families, particularly in rural and underserved communities.

    Unfortunately, they fail to recognize the valuable role retailers and sales representatives have historically played in helping consumers identify financing alternatives. Ryan's message insinuates the industry is somehow preventing consumers from selecting less expensive real estate-secured mortgage loans. He says, "many borrowers of chattel products could have qualified for traditional, less expensive mortgages but did not get the chance simply because they were not offered or made aware of the options.”

    mhi-logoAs the regulations are currently written—this is what MHI is attempting to fix in HR 1779/S 1828—the retailer cannot help the customer find a mortgage lender or inform the consumer of alternatives. The consumer needs the retailer’s help to become informed of the financing alternatives.

    Today, a consumer might contact a dozen conventional mortgage lenders without locating a lender willing to assist them with a low balance mortgage. Prior to the CFPB Loan Originator compensation rule (CFPB defines sales commission from the sale of a home as meeting the compensation definition under the Loan Originator rule), a retailer representative could discuss financing alternatives with consumers including conventional mortgage lenders who offer low balance conventional mortgage loans.

    Since the Loan Originator rules became effective, it has become nearly impossible for a retailer to assist consumers without inadvertently becoming considered a Loan Originator and becoming a covered person under Bureau regulations. CFED wants consumers to be informed of financing alternatives, but the people who have the best opportunity to inform them are effectively barred from having those conversations.

    Ryan adds, “Indeed, one clear way to address this issue would be for industry to support titling reform that would give families the option to title their homes as real estate and the opportunity to access real estate loans."The manufactured housing industrysupports legislation in all states to provide the alternative of titling manufactured homes as real estate where the home is sited upon land owned by the consumer and when financing is needed, the consumer pledges a first lien position in the land.

    jason-boehlert-manufactured-housing-institute-(c)mhpronews-com-75x75-.gifJason Boehlert
    Manufactured Housing Institute (MHI)
    Senior Vice President of Government Affairs
    1655 North Fort Meyer Drive
    Suite 104
    Arlington, VA 22209

    Related Links:

    1) – MHI's Response to CFPB's Report (Editor's Note, the MHI link includes the full CFPB report as a free download)

    2) – MHARR's Response to RV legislation and CFPB's Report on Manufactured Housing

    3) – CFED's Doug Ryan sounds off on Consumer Financial Protection Bureau (CFPB) Report on Manufactured Housing and MH Financing

    4) – CFPB Report on Manufactured Housing Signals Areas of Future Concern

      (Editor's Note: The views expressed by Jason Boehlert are his own and/or those of the MHI, and should not be construed to be the views of MHProNews or our sponsors.Other viewpoints on this or other industry topics are encouraged.

      MHProNews plans anIndustry in Focus Reportusing extensive comments from a range of industry professionals on this topic. Watch for it mid-week at the news/reports module link above.)

      CFPB Report on Manufactured Housing Signals Areas of Future Concern

      October 6th, 2014 No comments

      On Tuesday, the Consumer Financial Protection Bureau (“CFPB”) released a white paper summarizing their research on the manufactured housing industry. The Bureau relied upon information compiled by various surveys, data available pursuant to the Home Mortgage Disclosure Act (“HMDA”), and voluntary submissions of information by institutions in the manufactured housing industry. Although the CFPB acknowledges that they are still seeking additional information on the industry, the report, among other things, provides a detailed description of the manufactured housing market, the demographics of consumers who reside in manufactured homes, and the impact of the current regulatory climate on the industry.

      The CFPB also developed seven “key findings” from this research, many of which likely will come as no surprise to those actively involved in the manufactured housing industry. For example, the Bureau explains that manufactured homes are more likely to be located in non-metropolitan areas than site-built homes, and that manufactured homes typically cost less than site-built homes. These types of findings lead the Bureau to conclude that the industry is “an important source of affordable housing, in particular for rural and low-income consumers.” On the other hand, however, they believe that “these same groups include consumers that may be considered more financially vulnerable and, thus, may particularly stand to benefit from strong consumer protections.”

      With respect to the specific protections that may be necessary, the CFPB declines to make any conclusions and, in fact, leaves certain questions open for further research. For example, the white paper describes how consumers in the manufactured housing industry can either utilize real-property financing or chattel financing, and explains some of the short-term and long-term trade-offs that exist between the two options. However, it appears that the Bureau is concerned with, and wants more information on, “[t]he extent to which consumers are aware of these trade-offs and how consumers weigh them.” This information indicates that the CFPB will pay particular attention to whether or not borrowers are adequately informed about the trade-offs associated with pursuing chattel financing instead of real-property financing.

      The report does acknowledge that some of the title XIV Dodd-Frank Act amendments, including those made to the Home Ownership and Equity Protection Act (“HOEPA”) and the Truth in Lending Act (“TILA”), expand protections for consumers in the manufactured housing market. They also briefly describe the actual and theoretical impacts of these laws and the underlying regulations. For example, they admit the possibility that additional disclosure requirements and other burdens could increase the cost of extending credit to consumers seeking financing for a manufactured home. Prior to the rules being finalized, the CFPB received comments expressing concern that the proposed HOEPA high-cost thresholds would disproportionately impact small-balance loans that are often used to purchase manufactured housing. Many in the industry believe that these standards, which have been in effect since January 2014, are in fact reducing the availability of credit in the manufactured housing market because these loans are now classified as high-cost.

      Similarly, the new Loan Originator Compensation (“LO Comp”) rules in TILA may also be increasing the consumer’s cost of obtaining credit for a manufactured home. Unlike realtors, manufactured housing retailers are not exempt from the LO Comp rules. In order to avoid being considered a loan originator, and to avoid having to go through an expensive licensing process, manufactured housing retailers are often not referring potential borrowers to specific creditors that they know are willing to extend financing for a manufactured home. This has resulted in consumers being left unaware of which creditors are willing to extend credit and the requirements each creditor has for approving a loan. Consumers, therefore, are submitting more applications and, because of the lack of important information, are more frequently being needlessly denied.

      Despite acknowledging that the manufactured housing industry still has concerns about the impact of the CFPB’s new rules, the Bureau declines to accept that the rules have adversely impacted the market. Instead, they “will continue to monitor the effect of [their] rules on the manufactured housing industry and on consumers who purchase or seek to purchase manufactured homes.” In the meantime, the Preserving Access to Manufactured Housing Act, which would address at least some of these concerns, remains in Congress.

      If nothing else, this white paper should serve as a warning that the CFPB has taken an interest in the manufactured housing industry. The Bureau is continuing to monitor the impacts of the new mortgage rules on the manufactured housing market, which could signal that the Bureau may be open to making adjustments to the rules that would reduce burdens on creditors and lower the cost of credit for consumers. However, they have also tipped their hand to at least one area of ongoing concern. Creditors originating chattel mortgages should pay particular attention to the amount, and types, of information that is being provided to borrowers and should ensure that they are fully informed of their financing options and the costs and benefits associated with each.

      ##

      Republished with permission. This article first appeared in Financial Services Litigation & Regulatory Compliance Alert, a publication of Bradley Arant Boult Cummings LLP.

      About the Authors:

      Jonathan_R_Kolodziej-jd-bradley-arant-boult-cummings-llp-posted-industry-in-focus-mhpronews-com-75x75-Jonathan R. Kolodziej, JD, is an associate in the Birmingham office where he is a member of the firm’s Financial Services Litigation and Compliance Team. His regulatory compliance practice involves assisting some of the nation’s largest financial institutions and mortgage companies as they implement, and demonstrate compliance with, various obligations imposed on them by the Consumer Financial Protection Bureau (CFPB) and state banking regulators.

      bill-matchneer-jd-formerly-hud-cfpb-now=bradley-arant-boult-cummings-llp-posted-industry-in-focus-mhpronews-com-75x75-

      William “Bill” W. Matchneer, JD, recently joined the Washington DC office as senior counsel. He retired from the CFPB in February, where he had been one of the team leads for the regulations implementing the Dodd-Frank mortgage requirements. He previously spent ten years at HUD as manager of the Office of Regulatory Affairs and Manufactured Housing and Senior Counsel for Regulatory Enforcement.

       

      Related Links:

      1) – MHI's Response to CFPB's Report  (Editor's Note, the MHI link includes the full CFPB report as a free download)

      2) – MHARR's Response to RV legislation and CFPB's Report on Manufactured Housing

      3) – CFED's Doug Ryan sounds off on Consumer Financial Protection Bureau (CFPB) Report on Manufactured Housing and MH Financing

      4) – Manufactured Housing Institute Responds to Doug Ryan-CFED commentary on CFPB report on Manufactured Housing Finance

      (Editor's Note:  The views expressed by Messrs. Kolodziej and Matchneer are their own and/or those of the organization they work for, and should not be construed to be the views of MHProNews or our sponsors. Other viewpoints on this or other industry topics are encouraged.

      MHProNews plans an Industry in Focus Report using extensive comments from a range of industry professionals on this topic. Watch for it mid-week at the news/reports module link above.)

      CFED’s Doug Ryan Sounds off on Consumer Financial Protection Bureau (CFPB) Report on Manufactured Housing and MH Financing

      October 4th, 2014 No comments

      cfed-logo-posted-industry-voices-guest-blog-mhpronews-com-.gifThe CFPB report supports what CFED and other nonprofit organizations have said in recent years:  Manufactured Home loan borrowers are vulnerable to expensive products and are often not well-served by the current financing market due to the lack of competition, lack of liquidity and the costs of the loans.

      I have no doubt, as the Bureau reported, that many borrowers of chattel products could have qualified for traditional, less expensive mortgages but did not get the chance simply because they were not offered or made aware of the options. Indeed, one clear way to address this issue would be for industry to support titling reform that would give families the option to title their homes as real estate and the opportunity to access real estate loans.

      The report supports, quite explicitly, the need for the Bureau’s current rules to remain in place and enforced. As the Bureau wrote, “the manufactured housing borrowers being charged interest rates or upfront fees above the HOEPA thresholds are the very populations that HOEPA is designed to protect."

      I also believe that this report, and related efforts by industry and CFED and its nonprofit partners, offers an opportunity to develop new loan products, expand the pool of lenders and, ultimately, lower the costs of borrowing.

      CFED absolutely believes manufactured housing must be part of the affordable housing solution in communities across the US. Far too many advocates and policy makers are unaware of the quality and aesthetic appeal of manufactured homes. There is no doubt industry has made great strides to modernize the energy efficiency, the design and the value of the homes. Quite simply, the CFPB’s report underscores the need for the financing to be modernized, as well. ##

      doug-ryan-cfed-posted-manufactured-home-living-news-industry-voices-guest-blog-mhpronews-

      Doug Ryan
      CFED
      dryan@cfed.org

       

       

      Related Links:

      1) – MHI's Response to CFPB's Report (Note, the MHI link includes the full CFPB report as a free download)

      2) – MHARR's Response to RV legislation and CFPB's Report on Manufactured Housing

      3) – CFPB Report on Manufactured Housing Signals Areas of Future Concern

      4) – Manufactured Housing Institute Responds to Doug Ryan-CFED commentary on CFPB report on Manufactured Housing Finance

      (Image credit: Corporation for Enterprise Development (CFED logo.)

      (Editor's Note: As with any opinion column, the views expressed by Mr. Ryan are his own and/or those of the organization he works for, and should not be construed to be the views of MHProNews or our sponsors. Other viewpoints on this or other industry topics are encouraged.

      MHProNews plans an Industry in Focus Report using extensive comments from a range of industry professionals on this topic. Watch for it mid-week at the news/reports module link above!)

      Kudos for Ron D’Ambra’s thoughtful article on the HUD Code and Manufactured Housing Affordability

      September 5th, 2014 No comments

      As a former manager of the HUD Manufactured Housing Program, I was gratified to read Ron D'Ambra’s recent piece titled “Are HUD Practices Making Manufactured Homes Less Affordable?”   While there are always some costs associated with any form of government regulation, Ron clearly appreciates the long term benefits that HUD has brought to an industry that was previously known for building low quality firetraps. 

      Though a small clan within the industry reflexively condemns just about everything HUD has done over the years, I’d recommend Ron’s review of HUD’s history and various functions to anyone who wants to understand the enormous strides in quality and safety the industry has made since HUD first set up its program shop back in 1976.

      Rather than repeat Ron’s points, let me add one of my own.

      When the Act was passed in 1974, its title referred to the products as “Mobile Homes” and the language of the Act often referred to the products as “vehicles”. It has always seemed to me that Congress was thinking of the industry’s products as more like automobiles than houses for regulatory purposes.Thus the “Notification and correction of defects by manufacturer” requirements in 42 U.S.C. 5414 which are implemented in Subpart I of HUD’s regulations.

      Compliance with these requirements represents most of the real HUD compliance burden, which requires remedies much like automobile recalls for the life of the home.

      Given that the quality and safety of manufactured homes now equals or exceeds that of site built homes in most respects, perhaps the time has come to ask Congress to reconsider replacing the current requirements of 42 U.S.C. 5414 with some sort of warranty.For all I know, this idea has already been discussed, but I left HUD in 2010 and may have missed it.

      Anyway, on behalf of the hundreds of people who have staffed the HUD program, served as HUD IPIAs and DAPIAs, as HUD contractors and Consensus Committee Members, thanks very much Ron for your thoughtful piece.##

      bill-matchneer-formerly-with-hud-and-cfpb-posted-industry-voices-mhpronews-com-aBill Matchneer, JD, recently retired from 23 years of federal government service. Most recently he supervised the Dodd-Frank appraisal rules at CFPB, but is better known to our readers for his ten years as manager of the manufactured housing construction and safety standards program at HUD. Bill can be reached at (703) 973-4366 and at bill.matchneer@comcast.net

      (Editor's Notes: A recent interview with Bill Matchneer is found linked here.

      As a matter of MHProNews policy, we routinely encourage a variety of viewpoints, which may or may not reflect those of the publisher or our sponsors. You can submit a Letter to the Editor or OpEd to: latonyk@gmail.com or tony@mhmsm.com).

      Here comes the Senior Tsunami!

      September 4th, 2014 No comments

      Yesterday, the Joint Center for Housing Studies of Harvard University and AARP released a major study on the growth of 50+ households. For those in the MH industry, the study is worth a close read.

      Of note, in the next 20 years, the population aged 50+ is projected to increase from 109 million to more than 132 million. We knew this was coming.

      Shocking to me was that homeownership is more prevalent for those in their 70s, with more than 80 percent of them owning homes, compared to only 70 percent of those in their 50s. Are those in their 50s likely to become homeowners later in life? Will they buy a home in our communities? Perhaps they will.

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      Given the income levels and retirement plans for most, I’d say this study gives us confidence there are a lot of future customers nearing our doorsteps.

      Take note, though. The MH that’s currently in place and with which I’m familiar is not exactly what’s needed. The reports states, “Much of the nation’s housing inventory also lacks basic accessibility features (such as no-step entries, extra-wide doorways, and lever-style door and faucet handles), preventing older persons with disabilities from living safely and comfortably in their homes.”

      We know manufacturers can do all of these things. Is that what you’re ordering?

      MH is well positioned in terms of entry price. Again, the report says, “High housing costs currently force a third of adults 50 and over — including 37 percent of those 80 and over — to pay more than 30 percent of their income for homes that may or may not fit their needs, forcing them to cut back on food, health care, and, for those 50-64, retirement savings.”

      But, many 55+ communities don’t really operate with the level of support and services that the report says will be needed.

      The report notes support services of the sort that some MHCs do deliver are too rare. We see informal support services — ride shares, home repairs, checking in, snow removal — in many of the 55+ plus resident-owned communities with which we work. We can do a better job of linking our members to services that are generally available to low-income seniors. I’m guessing most community owners could do better. It will matter more and more; one in eight people will be over 75 in 2040!

      The report is long and in depth, but definitely worth reading and sharing. Enjoy! ##

      Paul Bradley is the founding president of ROC USA, LLC, which has helped 67 resident groups inpaul-bradley75x75-roc-usa-president-posted-industry-voices-manufactured-housing-mhpronews- 14 states purchase their MHCs from willing sellers since 2008. Contact him at pbradley@rocusa.org.

       

       

      (Editor's Note: A video interview with Paul Bradley is found here, and you can find A Cup of Coffee with… Paul Bradley, linked here.)

      (Infographic credit: AARP Foundation)