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

Attached, for you information, review and use, are MHARR’s comments in response to the proposed Duty to Serve Underserved Markets (DTS) rule published by the Federal Housing Finance Agency (FHFA) – the regulatory agency for Fannie Mae and Freddie Mac — on June 7, 2010.

As promised earlier, MHARR has prepared and filed these comments — detailing the gross weaknesses and inadequacies of the proposed rule — as early in the comment period as possible, so that they can be shared and used as a model, basis, or support, as needed, for individual comments filed by industry members. Given the unparalleled importance of restoring and expanding the availability of private purchase-money financing for manufactured housing — to both the industry and its consumers — MHARR urges all industry members to file comments on this extremely important proposal. Comments are due no later than July 22, 2010. The Federal Register notice, available on the FHFA website (www.fhfa.gov), contains specific instructions for both electronic and mail/hand-delivery filing of comments.

In particular, comments are critically needed from retailers, community owners and finance companies that have first-hand experience with the current unavailability of consumer financing for the industry’s homes and the devastating impact this has had for the industry and consumers of affordable housing. FHFA needs to hear from community owners with vacant land-lease spaces they need to fill with homes that are primarily financed as chattel — but are excluded from DTS by the proposed rule. FHFA needs to hear from struggling retailers with willing, qualified buyers who cannot buy because there is no private financing. FHFA needs to hear from finance companies that want to enter the manufactured housing market, but effectively have been barred.

The proposed rule is as bad as it is — essentially tracking the demands, complaints and historical prejudices of Fannie Mae, Freddie Mac and anti-industry special interest groups — because not enough industry grass-roots members commented last year in response to FHFA’s original Advance Notice of Proposed Rulemaking (ANPR), allowing that proceeding to be swamped and dominated by detractors of manufactured housing. The industry simply cannot afford for this failure to be repeated.

The importance of the Duty to Serve, as a mechanism for expanding the availability of private financing for manufactured housing, is only underscored by the industry’s continuing and inexplicable inability to secure the full implementation of a workable FHA Title I public financing program. Notwithstanding a pledge by Ginnie Mae to lift its moratorium in the wake of the issuance of FHA June 1, 2010 Title I Mortgagee Letter, its June 10, 2010 announcement limiting future securitization of manufactured housing loans to those originated by lenders with a minimum adjusted net worth of $10 million plus 10% of outstanding manufactured home mortgage backed securities (MBS), will severely restrict its reach to only a very few companies. This means that the entry of new lenders into the manufactured housing market will be artificially and unnecessarily restricted, leaving consumers, retailers and others with the few limited choices that they have now, with little, if any, expansion of the current availability of FHA Title I loans.

The continuing inability of the industry to advance the implementation of both DTS and FHA Title I in Washington, D.C. (not to mention the Manufactured Housing Improvement Act of 2000) is preventing the industry and its consumers from participating in what should be a robust revival of the affordable housing. With many industry members in the nation’s capital during the week of July 11, 2010, the continuing unavailability of manufactured home financing — and specifically the inadequate implementation of DTS and FHA Title I and the roadblocks being placed in the path of both programs — should be the main focus of industry contacts with both Congress and the Administration.

Congress passed both DTS and FHA reform in the Housing and Economic Recovery Act of 2008 (HERA) to help the industry and its consumers. It is essential that the industry do its utmost to advance the full and timely implementation of these laws in Washington, D.C. in the weeks ahead.

Please let us know if MHARR can be of any further assistance to you on this very important matter.

Danny D. Ghorbani, President
Manufactured Housing Association for Regulatory Reform
1331 Pennsylvania Ave N.W., Suite 508
Washington, D.C. 20004
Phone: 202/783-4087
Fax: 202/783-4075
Email: mharrdg@aol.com

The following press release from the Federal Housing Finance Agency was forwarded to us by MHARR.

FHFA Proposes Rule on Fannie Mae and Freddie Mac Requirements for Underserved Markets

Washington, DC – The Federal Housing Finance Agency (FHFA) has sent to the Federal Register a proposed rule implementing provisions of the Housing and Economic Recovery Act of 2008 (HERA) that establish a duty for Fannie Mae and Freddie Mac (the Enterprises) to serve very low-, low- and moderate-income families in three specified underserved markets — manufactured housing, affordable housing preservation, and rural markets. The proposed rule, implementing HERA’s pre-conservatorship provisions, would require the Enterprises to take actions to increase the liquidity of mortgage investments and improve the distribution of investment capital available for mortgage financing for underserved markets while adhering to the requirements of conservatorship.

As described in the proposed rule, while the Enterprises remain in conservatorship, they are expected to continue to fulfill their core statutory purposes, which include their support for affordable housing. FHFA’s approach to implementing the duty to serve provisions of HERA, consistent with the requirements of conservatorship, is to limit the proposed rule to existing core business activities at the Enterprises and to require that they not engage in new lines of business as a result of the duty to serve proposed rule.

The proposed rule would also establish a method for evaluating and rating Enterprise performance in each underserved market for 2010 and subsequent years and describes the transactions and activities that would be considered for compliance. The Enterprises would be evaluated on four statutory assessment factors: 1) the development of loan products, more flexible underwriting guidelines, and other innovative approaches to providing financing; 2) the extent of outreach to qualified loan sellers and other market participants; 3) the volume of loans purchased relative to the market opportunities available, subject to the statutory condition that FHFA not establish specific quantitative targets; and 4) the amount of investments and grants in projects that assist in meeting the needs of the underserved markets.

Under the proposed rule, each Enterprise would be required to provide an underserved markets plan against which the Enterprise would be evaluated and rated “satisfactory” or “unsatisfactory” for assessment factors in each underserved market on an annual basis. FHFA would then rate the Enterprise’s overall duty to serve performance for each underserved market as “in compliance” or “noncompliance.” Enforcement provisions for the duty to serve requirement would be similar to the enforcement provisions applicable to the Enterprises’ housing goals.

Comments are due 45 days from the date of publication in the Federal Register.

Link to Proposed Rule

The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks. These government-sponsored enterprises provide more than $6.3 trillion in funding for the U.S. mortgage markets and financial institutions.

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

PRESENTATION OF THE MANUFACTURED HOUSING ASSOCIATION FOR REGULATORY REFORM
TO
THE MANUFACTURED HOUSING ROUNDTABLE

JUNE 2,2010
ELKHART, INDIANA

MANUFACTURED HOUSING PUBLIC AND PRIVATE CONSUMER FINANCING

Click Here to Download This Document

Prepared By:
The Manufactured Housing Association for Regulatory Reform
1331 Pennsylvania Avenue, N.W. Suite 508
Washington, D.C. 20004
Tel. (202) 783-4087
Fax: (202) 783-4075
Email: MHARRDG@AOL.COM

For more information on this important issue:

FHFA Proposes Rule on Fannie Mae and Freddie Mac Requirements for Underserved Markets

Summit Meeting Addresses Industry Finance Issues

Stage Set for Action on Title I Moratorium

Long-Awaited “Duty to Serve” Proposal Unveiled

Ken Rishel report on the Manufactured Housing Roundtable