Industry Voices

Contact FHFA and Congress Immediately to Request Modification of the Enterprise Duty to Serve Underserved Markets Proposed Rule (Action Needed by July 22, 2010)

On June 7, FHFA released a proposed rule (Enterprise Duty to Serve Underserved Markets; 75 FR 32099) that excludes personal property lending in the GSE duty to serve the manufactured housing market. Click here to view the proposed rule. Specifically, the proposed rule would “consider only manufactured homes titled as real property for purposes of the duty to serve the manufactured housing market…FHFA is proposing that only loans titled as real property be considered towards the Enterprise’s duty to serve.” Click here for more detailed information on this issue.

In the proposed rule, FHFA identifies three key reasons for declining to include personal property lending as part of the GSE duty to serve manufactured housing, including:

A lack of existing business activity in purchasing personal property loans and, in order to develop a business in purchasing or guaranteeing personal property loans would require GSEs to develop operational capacities and risk management processes not currently in place

Extensive consumer protection requirements would have to be developed by the GSEs in order to ensure that personal property lending was done responsibly

Personal property lending is inconsistent with GSE conservatorship and would require too much effort to ensure safe and sound operations in this area

MHI opposes this proposed rule and urges FHFA and Congress to expand GSE activity in this area. Given the prevalence of personal property lending, FHFA’s proposed rule essentially ignores the needs of both the manufactured housing industry and consumer.

FHFA and the GSEs have an obligation to serve manufactured housing and the 18 million Americans currently residing in manufactured homes

GSEs cannot fulfill their “duty to serve” manufactured housing by ignoring 21 percent of the total housing market and manufactured homebuyers who are in desperate need of this source of affordable housing

More than 60 percent of manufactured home owners have relied on a personal property loan in order to finance their home purchase; it is exceptionally difficult to faithfully serve any market if more than half of it is excluded from consideration

The charters of both Fannie Mae and Freddie Mac have always allowed for the purchase of personal property loans and the GSE’s have purchased Asset Backed Securities (ABS) collateralized by manufactured home loans and has purchased loans directly from lenders for their portfolios. Congress and HERA recognized this reality by specifying FHFA consider loans secured by both real and personal property in assuring the GSEs dutifully serve the needs of the manufactured housing market

Estimates indicate that personal property loans account for at least 60 percent of manufactured housing lending. Enhanced liquidity for new homes will help expand and stabilize the existing home market

Industry lenders operate responsible and profitable programs for personal property lending and follow all appropriate laws such as Truth in Lending (TILA), and the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act), as well as all appropriate state laws, however they have been shut out from a secondary market due to GSE policies; industry lenders can provide GSEs and the American taxpayer adequate protection from any loss

Action Needed

MHI members are asked to submit comments to FHFA (Click here for sample comment letter or click here if you have Microsoft Word. Comments must be submitted by July 22, 2010. Click here for talking points and background information.

Submit comments via email to regcomments@fhfa.gov (include “RIN 2590-AA27″ in the subject line of the email) and via mail (see address on sample comment letter). Please forward copies to MHI.

MHI members are also asked to contact their Representatives and Senators, via fax or email, and request (Click here for the sample letter or click here if you have Microsoft Word) that they do the following:

Contact FHFA directly to request the agency modify its proposed rule to require GSE’s consider personal property lending in their duty to serve manufactured housing
Contact leaders of the House Financial Services and Senate Banking Committees and specifically request FHFA amend its proposed rule; Senators and Representatives serving on these committees are especially urged to make this request.

A complete list of Congressional e-mail addresses and fax numbers is available at www.manufacturedhousing.org/government_affairs/find_congress.asp.

For more information, contact MHI Vice President of Government Affairs Jason Boehlert at jboehlert@mfghome.org or 703-558-0660.

Submitted by MHI Vice President of Government Affairs Jason Boehlert

This Industry Voices post is a follow-up to the May 26 MHI Housing Alert.

MHI members have been working hard on issues related to the SAFE Act, both on the national level and the state level for almost two years, and we appreciate all of your efforts leading up to this point. Based upon some questions MHI is receiving about the Housing Alert of May 26 on the SAFE Act and H.R. 5369, I want to emphasize that the proposed legislation does not seek an outright exemption for retailers of manufactured and modular homes. The language in H.R. 5369 is intended to exempt activities which are administrative and clerical in nature that facilitate the sale of a home to a consumer such as assisting customers in completing paperwork by answering questions, etc. Language in the SAFE Act as originally passed by Congress in 2008 should have accomplished this goal, however, as we all know, the model legislation developed for the states canceled out this exemption.

Initially, our strategy was to advocate for an outright exemption, but Members of Congress indicated that this was not an option. They clearly communicated that the intent of the SAFE Act was to regulate the activities of individuals, not specific professions. The introduction of H.R. 5369 is an important step in bringing the influence of Congressional leadership into the process and will serve as a tool to elevate the need for clarification and relief for this industry before both Congress and HUD. The bill, in combination with over 5,000 comment letters submitted on the proposed rule to implement the SAFE Act, will assist MHI members and states in accomplishing the goal of allowing clerical and administrative tasks to be exempt activities under the SAFE Act.

If you have any questions, please contact us.

Thayer

Thayer Long | Manufactured Housing Institute
2111 Wilson Blvd. Suite 100 | Arlington, VA 22201
Phone: (703) 558-0678 | Fax: (703) 558-0401 | Email: tlong@mfghome.org

Editor’s Note: The Capitol Switchboard, (202) 224-3121 or use:http://www.usa.gov/Contact/Elected.shtml

Posted by Danny Ghorbani – MHARR

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