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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.

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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.)

Dueling Factions

September 2nd, 2014 No comments

In this time of industry crisis, many thoughts arise regarding strategy and direction, but there has been seemingly little effective action. A couple of old friends from my days in the industry, plus one new friend, Dr. David Funk, asked me to see if I could help things along by putting matters into historical perspective.

In my early days when the MH industry was breaking sales records every year (I’ve been retired for more than two decades), we were leaderless—in discord. No manufacturer originated more than ten percent of shipments. Those heady times ended with a crash—a major housing crisis.

Faced with ruin in the seventies, manufacturers, suppliers, retailers, community owners and the like pulled together behind a focused plan of action. It was a widely debated strategic decision to enhance industry credibility by accepting HUD supervision of a national building code for our product. There was plenty of dissent, but the plan had broad support. It was nominally led and presented by MHMA (the Mobile Home Manufacturer’s Association, the predecessor of MHI).

Wrong course? Maybe—we cannot know—but it attained consensus; we worked together and made it happen. A bit of a miracle, considering a long history of bickering and lack of leadership.

These days, we face a bigger challenge and yet … where’s today’s consensus? What’s the strategy? Where’s the leadership? You have a strategy, I have a strategy and yonder fellow behind the tree has a strategy, but what emerges is discord.

In my naïveté as I stepped back into this largely consolidated industry, I thought a leader would step forward, rally the troops behind a plan of action, and get on with developing our great potential. Strangely, that has not yet happened. As Rahm Emanuel said, and Tony quotes:

Never let a good crisis go to waste …

We’re wasting this crisis by fussing over “who’s right” instead of debating “what’s right.”

you-never-want-a-serious-crisis-to-go-to-waste-rahm-emanuel-president-obama's-chief-of-staff-image=wikicommons-(c)2014-lifestyle-factory-homes-mhpronews-com (1).png

Editor's Note: this is the MHProNews poster Bob Vasholtz is referencing,

the article and context it was used in is linked here.

“What’s right” is hard to say, but easier than finding broad agreement. No clear consensus seems to emerge from our diminished industry represented by multiple associations. None of them seems to have a handle on “what’s right,” though there seems a general agreement that the others are wrong and one organization (guess which) should lead the charge. It looks like we’ll not be singing Kumbaya real soon, so how about we start by tuning up Jim Krueger’s 1977 lyrics:

There ain’t no good guy, there ain’t no bad guy
There’s only you and me and we just disagree

Nothing wrong with disagreement. There are many viable ways to tackle a problem and finding the best can be a stiff challenge, requiring many inputs—thoughtful discussion among all guys who are betting their companies on this industry’s future.

Underneath the rhetoric there is probably an industry consensus that no one has managed to dig out, articulate, and work into a viable strategy. There seems to be no vehicle for doing so. We’re all on the same side, and yet can’t seem to band together and work toward a mutually acceptable way forward. Wow.

It sorta reminds me of national politics. The Republican party caters to the radical right, Democrats the loosely left and the sensible consensus is leaderless.

Rick Rand has a great idea to pull the factions together, shake ’em in a sack, and see what emerges (my words, not his!). I’m on record in support of Rick’s idea, but suggest the challenge is … difficult. It has been my observation that industry progress tends to be incremental with breakthroughs few and far between. How and where, for example, might our scattered and somewhat contentious flock even gather so discussions can begin? How can we, this industry, get past internal politics and start the ball rolling? We’re a young and feisty bunch competing in a turgid housing market. Where, exactly, do we begin to get a handle on a viable and agreeable strategy?

Tony suggests in these pages, “Perhaps we need a few dozen retired guys—or those so financially comfortable—that they don’t fear speaking out publicly on touchy issues that matter to our industry.”

Well gee, I’m such a veteran, happily retired, having no skin in the game and representing no one. I’d be pleased to join with similar voices and see what we can conjure. Thomas Jefferson said:

Those who hammer their guns into plows will plow for those who do not.

I’m an ol’ Kansas farm boy, have my grandpa’s anvil in the barn and can still swing a hammer. Let’s get on with it!

While Tony’s idea is terrific, I wonder if a gaggle of geezers of good intent can do much beyond early steps in the direction of uniting our industry voice toward a viable strategy? Without unity, the problems of a leaderless industry drag on and strategy does not emerge. Agreeing upon one viable association seems a good place to start such useful discussions while reducing internal conflict. Maybe that should be at the top of the agenda for such a senior-citizen forum?

In support of Tony’s and Rick’s ideas, and with incremental progress in mind, here’s another suggestion. Conduct a survey of all segments of the industry, trolling for consensus. Put forth a professionally-written survey, geared toward one question: Which single association or group should speak for our industry in dealing with the important questions we face today—and why (or why not)?

To still protests, the survey must be inclusive, fair and objective. Who can do that? Foremost has long been respected as a provider of solid industry data and could probably do it well. The results, if clear, would be hard to deny, leading toward consolidation. They might sponsor such research in lieu of their next MH survey. The results could be of historic importance.

As with Rick’s conclave and Tony’s summit of the aged, the outcome of such a survey should not be expected to result in a shiny new industry strategy. First we need positive steps for getting back on track—taking what Peter Drucker called results oriented action, toward our industry’s great potential—at minimum, enabling us to speak clearly to confused Washington bureaucrats.

One step at a time along our learning curve. It’s kinda dumb to be racing off in different directions when times are tough and we most need to pull together. ##

bob-vahsholtz-author-dueling-curves-battle-for-housing-posted-industry-voices-guest-blog-mhpronews-com-manufatured-housing-professional-news-75x75-Bob Vahsholtz is the author of DUELING CURVES The Battle for Housing Bob can be reached at kingmidgetswest@gmail.com. Web: www.kingmidgetswest.com.

(Editor's Note: All opinions expressed are those of the writer, and may or may not represent the views of this publication, editor or our sponsors. Other points of view are welcome. OpEds or Letters to the Editor on industry related issues may be sent to latonyk@gmail.com or tony@mhmsm.com, thank you.

As a point of fact, Bob Vahsholtz clearly agrees on some things, disagrees on others, with L. A. “Tony” Kovach's editorial perspectives. Alignment with Masthead view points is not required for publication! :-)

The Value of IMAGE, The Image of VALUE

July 9th, 2014 No comments

There is much talk of the need to “do something” about our industry’s image. Wow, that’s some understatement!

But what? And how? And who will pay for the refurbishment?

It’s a deep problem. It’s hard to refurbish an image that was never really “furbished” in the first place! The MH industry has a lot of growing up to do, and it’s quite a challenge.

Tony Kovach recently published the following graph.

manufactured-housing-mobile-home-shipments-graph-chart-calculatedrisk-posted-masthead-blog-mhpronews-com-

Our eyes jump to the trend of the past decade, which emphasizes the need to “do something.” I invite you to study the other end of that graph. The sixties.

In that decade, as today, the rule of thumb for a stick builder was to dedicate about half of construction cost to materials. That didn’t work for those building homes in factories. They had to build a product sturdy enough to ship a thousand miles on its own wheels, and if material content dropped below 60 percent—lock the factory doors. No reputable dealer would buy. In those days, despite buying all that material factory-direct and very efficient labor, the MH cost was far higher per square foot than a house (excluding land).

By the end of that decade, the rule of thumb—the MH optimum for sales maximization—was 70 percent material, 10 percent labor, 10 percent overhead and 10 percent pretax profit. In good years, that worked and profits rolled in. In bad years, you got hammered.

Sounds like a loser business?

Not if you knew your stuff. If you managed 30-plus inventory turns, collected cash on delivery of the homes, operated in a pole-barn factory and had nominal investment, you could operate on your supplier’s 30-days-same-as cash payment plan. Banks released floor-plan cash upon delivery of the home. 100 percent return on equity was not out of the question. But everything had to work.

Look again at Tony’s graph. Everything did work during that decade for those who managed well. A year of no sales increase was considered a recession.

Manufacturers had to master that formula or get out of the race. Competition was brutal, but everyone understood that no one could do it alone. Manufacturers, suppliers, dealers, developers and banks. All were highly profitable when they got their sums and strategies right.

The quality of manufactured homes soared and the cost of producing them plunged. Such was the magnitude of opportunity in the sleepy housing industry.

It was Skyline, Fleetwood and the like who got the publicity—biggest MH manufacturers, most profitable companies in the stock market and all that. Surely they should have stepped up to the plate and “done something” about the industry’s image?

Well, they did what they could, but their hands were tied. Every nickel of such a manufacturer’s profit would have funded just one percent of industry sales for an image-building program. And what, one might ask, could a manufacturer have done for its image more useful than investing in product improvement? That’s what the critics and customers requested, and rightly so.

The largest manufacturers each held less than 10 percent market share and had plenty of competition snapping at their britches. Which of those “leaders” should have stepped up to the plate and invested significant funds in the industry’s image? Sure the profits were good, but they didn’t stay that way.

Look again at Tony’s graph, and what happened when things stopped going well for the industry in the early seventies. That’s why there was so much resistance to the HUD standard, and still is. That’s why it has always been hard to get those “big manufacturers” to spend “just a little bit more” on the want-of-the-week. If the competition doesn’t do the same, you’re toast. Real competition is not for the faint of heart, but it works wonders for customers.

Competitive product improvement, step by step. Learning curve. That’s how the MH industry cut the cost of building homes in half. Focused, efficient, production in a housing market where nobody was in charge, regulation was rampant and good times were rolling. Don’t hold your breath waiting for a repeat of that kind of housing opportunity.

My enthusiasm for today’s outlook is based on the fact that the leaders have survived and now have commanding market share, while retaining—improving—their production cost advantage over the stick guys. I don’t know what the Big Three’s margins are, but they’re profitable. We’re in a new and potentially better ball game.

The outlook is marred by the yo yo of housing demand, fluctuating with the whims of the economy and regulators. That’s why, when asked to write a book on the potential of manufactured housing, I said, “You’ve got to be kidding!”

It didn’t take much research to change my mind. The survivors seem to have learned to cope with such market volatility and stifling regulation. The production cost advantage is still increasing and the competition continues to doze. Well managed surviving MH producers remain profitable in a scenario that would have crushed any normal manufacturing industry long ago … but woe to the manufacturer who single-handedly takes on the cost of a major industry image upgrade.

It needs to be done, but has to be a team effort, with participation by most members of the industry at large. And there has to be strong leadership so we all head the same direction.

Given the squabbling we all see and regret, is there any hope?

Of course there is! The MH industry has always been a teamwork affair, where even bitter enemies worked together to keep the system functioning, because we all had a vested interest in keeping this marvelous housing system pumping, cranking out houses and profits. That has not changed.

Sure HUD, Dodd-Frank and their ilk are a royal pain in the butt, but they strangle the other guys, too. Despite best efforts of bureaucrats to rule by regulation, economics will win in the end, and we’ve figured out an inherently better way to build houses.

Yes, for a time we fouled our nest. Young industries do that. Yes, the public disdains “trailers.” Tell me what sort of low cost housing they like? Nobody wants low cost housing except those having a nose for value or low income. Those are huge markets that no other product can satisfy that need as well as manufactured housing.

What we lack in image, we more than make up in value.

Let’s build on that. ##

bob-vahsholtz-author-dueling-curves-battle-for-housing-posted-industry-voices-guest-blog-mhpronews-com-manufatured-housing-professional-news-75x75-Bob Vasholtz is the author of Dueling Curves. Bob Vahsholtz is the author of DUELING CURVES The Battle for Housing. Bob can be reached at kingmidgetswest@gmail.com. Web: www.kingmidgetswest.com

A prior guest column from Bob – Who's in Charge Here – is linked.

 

(Editor's Note: The chart show above is courtesy of CalculatedRisk and was used in the following article, Manufactured Housing's Declaration of Independence. As with all letters to th editor, articles and guest column, the views represented are those of the writer. Other perspectives are welcome, email latonyk@gmail.com with Letters to the Editor or OpEd in the subject line.)

What More Can We Accomplish After This Year’s Manufactured Housing Institute (MHI) Congress and Expo?

May 13th, 2014 No comments

Like many others, I attended the 2014 National Congress & Expo two weeks ago in Las Vegas. I also chose to attend the National Communities Council Spring Forum held all day Tuesday prior to the opening reception. There were some exceptional programs! The attendance was very high according to reports from MHI. While there was an eye brow-raiser (or two…) on the agenda, off-agenda items that were pretty interesting and overall the Spring NCC Forum and MHI's Congress and Expo featured seminars with speakers focused on current industry topics and issues. Numerous vendors on hand shared their services, displayed their products and provided opportunities for deal making.

What should not come as a surprise was the number of new individuals who attended the Congress.

Many professionals from all facets of the housing, finance and investment sectors were on hand to listen and learn about the manufactured housing industry. This is another great indication on the positive future for the industry.

Today, there is something in the neighborhood of Two (2) Billion Dollars chasing the manufactured housing industry! That's Billion with a capital B!

Those dollars may or may not be invested in our sector; only time will tell. What we need to realize is that there is capital willing to invest and grow in manufactured housing. With new capital much can change, improve and set the stage for a brighter future of the industry.

Yet, even with the large amount of new capital looking to invest in the industry, manufactured housing will still be a very small piece of the roughly One (1) Trillion Dollar annual U.S. housing market.

The questions I continue to ponder are;

  • what can we do to grow the manufactured housing industry’s share of the overall housing industry?

  • How do we get to the root of the obstacles that continue to impede the MH Industry’s growth?

Flying home after Congress and Expo, those nagging questions bugged me. Below is a thought that came to mind that may provide a profitable starting point.

Why not host an – August 2014? – organizational networking/deal making opportunity event that is Trans-Associational?

Why not consider a location near a fine newer MHC property that breaks the stereotypes – such as Saddlebrook Farms in Grayslake, IL – where the potential for new development could better be understood by those who only know the 1 or 2 star MH properties? Would love to hear suggestions on other possible sites that fill the bill.

That property would also feature great looking, residential style product that is ground set, so this would shatter the 'mobile home' image for potential investors who only know the entry level product.

As you can see, I am not suggesting replacing any current event, such as the upcoming MHI annual meeting, NCC Fall Leadership Forum or other association or industry functions.

Rather I am suggesting something totally fresh and different.

Let’s bring the stakeholders and potential investors to the table at the same time with professional facilitation and the opportunity to participate.

The focus of the meeting would be how to get those multi-billions moving ahead, as well as advance the MH Industry as a larger and viable part of the overall housing market.

What makes this concept different than other current programs is that interested parties are invited regardless of current relationship issues or biases. Bringing goal and solution oriented individuals from differing backgrounds, all committed to growing the manufactured housing industry could be groundbreaking.

Please do not misunderstand; while I'd like to be involved, I am not volunteering to take the lead in this event due to my current business obligations. I am putting the idea out in this public forum for discussion.

The way this gets done is for

  • commercial real estate brokers and appraisers,
  • commercial RE lenders and brokers,
  • MH finance companies (personal property and Mortgage lenders),
  • Any – or all – HUD Code manufactured housing and modular builders,
  • developers
  • Suppliers and other service vendors

to pay for the costs of the meeting, mixers and main meals.

Pick a place that is nice clean convention location, and keep the entry fee really low.

Let's put an asterisks next to this one. What if we make it easy for the hundreds (or thousands?) of owners of MHCs who are looking to exit due to age, health or other reasons to come at a pre-event day to discuss their properties face to face with those who may want to buy them?

Might this be a good way to facilitate the capture of more of that circling capital which would also facilitate the improvement of languishing communities and the sales of more homes in them?

There also ought to be an ability for the event organizers to bar this or that person or group at will, so that the Ishbel Dickens/NMHOA or Industry naysayers don't get in. That keeps this focused on business and solutions.

Just think about the number of organizations who would want to take part in an event of this nature. Here are a few who I believe would join the effort.

rick-rand-industry-voices-mhpronews-com

There probably are others who should be included on this list. These are the organizations that came to my mind while thinking about who the stakeholders are in the future of the MH Industry.

One more critical point. Let's tackle the creation of a vibrant, efficient resale market for manufactured homes. This is absolutely critical for the future of our industry, the benefit of our residents and lenders as well as our homes' broader acceptance.

By being trans-associational, this could also prove to be fertile ground for meeting with and recruiting new members.

As to a target date, based on the interest being shown about the industry, sometime in the near term would be better than delaying. By doing it in the summer, a successful meeting could position the 2015 trade shows for dovetailing with this concept.

The location must be close to a major airport so that there is easy access to the event. As noted, having some newer and older MH communities nearby would be beneficial so that participants can take a charter actually view the new homes and better understand the true breadth of the MH product and variety of community lifestyles.

I believe that an event like this will assist in not only promoting the Manufactured Housing Industry but also could be a catalyst for additional new capital investment and future financing opportunities.

We must not lose sight of a key goal of the meeting; how to advance the MH Industry as a larger and viable part of the overall housing market.

Please feel free to comment below or email me with your thoughts. The future of the MH Industry is ours to create. ##

rRck RandRick Rand is the president of Great Value Homes, and has been involved in small and large scale MHC operations. You can contact him at:
Richard J. Rand, President, Great Value Homes, Inc.. 9458 N. Fairway Drive, Milwaukee, WI 53217-1321,

414-352-3855
414-352-3631(fax)
414-870-9000(cell),
RickRand@gvhinc.net

Hearing Explores Government Role in Multifamily and Health Care Facilities

May 22nd, 2013 No comments

Even though this hearing and the Chairman’s quoted comments arise within the specific context of multifamily housing, they nevertheless are relevant to manufactured home financing as they reflect broader thinking in Congress regarding federal involvement in the housing market

Most particularly, the comments in paragraphs 3 and 4 once again confirms what MHARR has been saying all along with respect the failure of the FHA (via GNMA) and GSEs to provide adequate securitization and secondary market support for manufactured home loans and especially personal property (chattel loans) –i.e., that FHA and the GSEs have fundamentally departed from their original statutory mission of providing access to credit for lower-income borrowers and first-time homebuyers. That departure has harmed the very consumers that these entities were formed to serve, as well as the manufactured housing industry as a provider of affordable homeownership, with both FHA and the GSEs refusing to provide high-volume securitization for manufactured home loans – citing “risk” and “perceptions” without any hard data on the performance of current-day manufactured home loans – when it was the ventures of FHA and the GSEs in the “exotic” and subprime site-built mortgage market that led to the insolvency of the GSEs and now the near-insolvency of FHA.

Consequently, even though the availability of high-volume securitization for manufactured home loans – and especially chattel loans – has the capacity to turn the industry around virtually overnight and provide access to truly affordable homeownership for the lower-income borrowers and first-time homebuyers that these entities were created to serve, they nevertheless cling to discriminatory policies that have severely restricted such lending through the FHA Title I program and effectively excluded such loans from GSE support, notwithstanding the statutory “Duty to Serve” mandate. These baseless policies, moreover, have enabled the domination of the chattel finance market by a handful of companies with either pre-existing access to that restricted securitization or independent financial backing, further harming both consumers and the industry.

As this demonstrates, expanding the availability of chattel loan securitization and support to high volume levels must be a top priority for the industry in Washington, D.C.

Given the focus of the current Administration on providing fairness and increased access to home financing for the lower-income borrowers that FHA and the GSEs were created to serve, the industryhas a window of opportunity in the coming months to take concrete steps to correct these flawed policies and expand the availability of manufactured home financing. ##

MHARR-logo-posted-on-MhProNews-com

 

 

 

 

Manufactured Housing Association for Regulatory Reform (MHARR)

1331 Pennsylvania Ave N.W., Suite 512
Washington, D.C. 20004
Phone: 202/783-4087
Fax: 202/783-4075
Email: MHARRDG@AOL.COM

 

 

 

committee-financial-services-logo-posted-mhpronews-

 

 

 

Press Release

 

For Immediate Release
May 16, 2013

 

Hearing Explores Government Role in Multifamily and Health Care Facilities Mortgage Insurance and Reverse Mortgages

 

WASHINGTON –The Financial Services Housing and Insurance Subcommittee continued its examination of the troubled Federal Housing Administration (FHA) today with a hearing that focused on several of the agency’s programs that operate outside its mission.

This was the subcommittee’s third hearing this year examining FHA and the need to reform the agency.

“FHA runs its operations contrary to the most basic principles of insurance and is nearing insolvency, putting taxpayers at risk of another government bailout,” said Subcommittee Chairman Randy Neugebauer (R-TX). “Members on both sides of the aisle strongly support FHA’s core mission of providing access to credit for lower-income borrowers and first-time homebuyers. There still is a general consensus in favor of strengthening and improving FHA, without risking further taxpayer exposure.”

Today’s hearing examined the mortgage insurance programs the FHA operates for multifamily housing, health care facilities and reverse mortgages – all of which are activities that reach far beyond the agency’s original mission. The FHA’s original mission is to provide mortgage financing opportunities for low-income and first-time homebuyers.

Given that the FHA was designated a “high risk” agency by the Government Accountability Office earlier this year, many wonder whether the FHA can viably carry out its original mission, much less these other programs that are not related to its mission.

In addition to insuring single-family mortgages, the FHA also insures other kinds of mortgages—such as those for multifamily rental housing and health care facilities—through a separate insurance fund called the General Insurance and Special Risk Insurance Fund. While this fund is not projected to incur losses in the near term, many are concerned about the role the FHA plays in the multifamily market and that its policies subject taxpayers to undue risk.

Due to a lack of transparency in the GI/SRI Fund, Congress cannot fully assess the fiscal state of the FHA’s multifamily insurance program.

The FHA also operates an insurance fund for reverse mortgages that enables those aged 62 or older to obtain additional income by borrowing against the equity in their homes. To make these mortgages possible, the reverse mortgage insurance provided by FHA protects lenders from losses due to non-payment.

In recent years, as home prices have fallen, many experts have become concerned about losses in the FHA’s reverse mortgage portfolio. An independent actuarial review released last November estimated that the economic value of the FHA’s reverse mortgage insurance program was negative $2.8 billion.

 

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