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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

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!)

“A Home Is a Home” Conversation Starter

August 5th, 2014 No comments

From time to time, it is healthy to have a conversation about the best way we can move forward in a changing world, and in doing so, think through some potential long term goals and aspirations. If we do not at least have those conversations and think these sorts of ideas through, then we are guaranteed that nothing changes.

What follows are simply conversation starters based on my personal observations, no more and no less. They represent no more than my own thoughts.

To quote the American political philosopher, Robert Nozick, “My thoughts do not aim for your assent – just place them alongside your own reflections for a while.” In that spirit, I would offer the following ideas for our industry in Virginia:

Elimination of titles for manufactured homes — While we have been quite successful in cleaning up titling in Virginia, we should have a conversation about the continued long-term need for titles for manufactured homes. We sell homes, not cars, and as such, we should think about how to find a way to convey ownership and perfect personal property security interests in a way that reflects that fact, and in doing so, simplify the process for manufactured homes that are sold as real property. To be sure, doing this would require a viable alternative method of securing personal property interests in manufactured homes. Without such an alternative, elimination of vehicle titles for manufactured homes cannot happen.

Elimination of zoning discrimination against manufactured housing — We need to think about ways to eliminate zoning discrimination against manufactured housing in Virginia. A home is a home.

Being clear about what makes us who we are — We need to be clear that we are simply a mode of construction, just like our site-built friends and our colleagues in the apartment industry. Things beyond that distinction do not define us, and we should not let them. We are not a niche or boutique industry. We are no different than our site-built friends. We are not better, nor are we worse. We build homes, many times in a more efficient manner than many of our competitors. We sell those homes. We lease those homes and the land they are on. That is no more and no less than anyone else in the housing industry.

Embracing our diversity — We should embrace the diversity that characterizes various forms of factory built housing, and in doing so, make sure that we do not allow regulators and others to play us all off against one another. We all should support equity in zoning (a home is a home); all of our homes are well-built. We should, however, also be open about the various styles of construction and what distinguishes them.

Positioning ourselves for a changing development patterns — We should have a conversation about how we position ourselves in a nation that is becoming more urban and suburban and less rural with each passing day. For example, one trend in redevelopment is the use of mixed -use, mixed-income planned unit developments. Our homes (both manufactured and modular) offer the perfect solution for a number of the residential components of these types of neighborhoods at a cost per-square-foot and at a level of quality that allows us to compete favorably with our site-built competitors. But we need to make sure we have the right regulatory and marketing framework in place.

Again, these are just conversation starters. Nothing more. Nothing less. As always, I welcome your thoughts. ##

tyler-craddock-executive-director-virginia-manufactured-and-modular-housing-associationBy Tyler Craddock, Executive Director, VAMMA.

(Editor's note: while this first appeared in VAMMA's publication, the suggestion was made that this has value well beyond their borders. Conversations are needed in the industry, this has some important topics to consider! Published here with Tyler's expressed permission.)  

Community Owners! MHC Lessons Learned

January 8th, 2014 No comments

Join your peers in the MHC world for an exciting hour to learn real life proven methods of how to improve your land lease communities Bottom Line Performance! Get tips from seasoned professionals who have profited in large, medium and small Manufactured Home Community (MHC) operations.

This is a program you will not want to miss.

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The panel discussion will be moderated by Ross Kinzler, Executive Director of the Wisconsin Housing Alliance. Ross has over 25 years of experience in the Manufactured Housing Industry. He has been active at both the national and state levels. He is a founding member and past Chairman of the Manufactured Housing Educational Institute. Ross currently serves on the Executive Committee and Board of the RV/MH Hall of Fame. In addition, Ross has taken on many leadership roles industry wide and has served on numerous boards and committees dealing with issues facing MH communities.

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Among those in our three person panel is Tammy Fonk, an Associate with the CBRE MH/RV National Group. Tammy was born and raised in the MH industry with two family owned communities. She operated the family owned company's sales and marketing business as well as having an active role in day to day community operations and resident relations. As a member of the MHRV Team, Tammy now works closely with public and private investors on building business relations and opportunities to enhance the Manufactured Housing Industry as well as the RV Resort and Marina properties in North America. Tammy works with owners and buyers of small, medium and larger communities in addition to representing large portfolio owners.

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The panel also includes Don Westphal President of Don C. Westphal & Associates. Don has over 40 years of experience of working in; community conceptual planning, master site design and landscape architectural design for land lease communities. Don has represented developers and owners of communities from concept plan approval all the way through final construction. He also works with owners on Community Imaging and on Marketing Plans for communities. The communities have ranged in size from a small number of home sites to those with over 500 sites. Don was featured in this interview, A Cup of Coffee with…Don Westphal.

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The third panel member is Richard (Rick) Rand, President of Great Value Homes, Inc. Rick has over 33 years of experience in the manufactured housing industry. GVH is an acquisition, development and property management firm specializing in multiple aspects of the Manufactured Housing Industry. The Company currently operates 6 Manufactured Housing Communities and is also a distributor of Manufactured Homes sold in the communities.

In addition, GVH acts as a broker for the resale of existing manufactured homes for residents who reside in the land lease communities the Company manages. Richard also acts as a consultant to institutional investment and private firms on various aspects of the Manufactured Home Industry.

Rick was founder and President of Asset Development Group, Inc. and its affiliate, Home Source One, LLC. From 1984 time until his departure in 2004, he grew the company to the 25th largest owner of manufactured housing communities in the country. During his tenure at Asset Development Group, Inc. Rick managed all aspects of the enterprise. He was responsible for all of the Company's property acquisitions and requisite financing. From the Company's inception, he oversaw the staffing and training of the ADG/HSO employees and management team. In addition, Rick was responsible for the planning and development of over 2,500 new manufactured homes sites that were both additions to existing communities and new green field development.

Rick is featured in this exclusive interview, A Cup of Coffee with…Rick Rand.

The Louisville Seminars are one of the most popular draws for attendees to the show.

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Come Join us at the 2014 Louisville Manufactured Housing Show! The Show was the best attended event in all of Manufactured Housing in 2013. Most industry members can attend free, learn more at the link above, and learn more about the other valuable seminars available for industry members at this link. ##

rick-rand-great-value-homes-manufactured-home-pro-news-industry-voices-guest-blog-.pngRichard 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

Congratulations to All Who Made it Happen

September 28th, 2013 No comments

Tony,

Congratulations on the celebration of MHMSM’s 4th year anniversary! What a tremendous contribution you have all made in such a sort amount of time to the image and promotion of manufacturing housing. 

My involvement with the Louisville Show has allowed me to appreciate the invaluable promotional and marketing assistance MHMSM/MHProNews.com has provided in the successful resurgence of the Show.

Now as the premiere media outlet for our industry, I greatly anticipate promotional and marketing efforts in the next 4 years for you and your team beyond any of our expectations.

And, on a personal note, it is a pleasure to work and talk with one of the finest and most personable leaders in our industry.

tim-williams-ohio-manufactured-home-associatio-mhpronewsTim Williams
Executive Director
Ohio Manufactured Homes Association (OMHA)
5640 Frantz RoadDublin, Ohio 43017

Lisa Tyler – at Walden University – Request for Correction Addressed to Princeton’s WordNet

April 12th, 2013 No comments

Dear Esteemed Princeton Wordnet representative-

 Princeton University is one of the leading educational systems in the country.  The school's reputation reflects the highest levels of academic excellence, prestige, accuracy, and leadership.  Articles written by Princeton educated authors are viewed as the ultimate authority on a variety of topics. In light of the level of confidence placed in Princeton affiliated publications, there is a growing concern in the manufactured housing industry on the Wordnet definition of “manufactured home.”

According to the Google search engine result that cites wordnetweb.princeton.edu/perl/webwn as the defining source, a manufactured home is “mobile home: a large house trailer that can be connected to utilities and can be parked in one place and used as permanent housing..

Obvious problems exist with this very outdated definition.

It may seem like a cultural vernacular that impacts a small percentage of the population. However, approximately 23 million Americans live in manufactured housing (Wilson, 2012). According to the 2007 American Housing Survey, approximately 8.7 million (6.8%) of the 128 million housing units were manufactured homes (Zhou, 2009). The 2011 American Housing Survey reflects the increase to approximately 9.05 million manufactured housing units.

Comprising the second largest percentage of all housing units in the United States (McCarty, 2010), manufactured housing has been a vital source of affordable housing (Wilson, 2012) and are typical of rural areas (Aman & Yarnal, 2010; Tighe, 2013). Housing experts recognize manufactured housing as the predominant source of unsubsidized, affordable housing for rural homeowners and tenants (Tighe, 2013). Not only does the misnomer influence inaccurate perceptions of the product, it can contribute to the marginalization of a significant population.

There are many peer reviewed works that include definitions available that could be used in place of Wordnet’s outdated version. Following are some examples that you may find useful:

  • Manufactured home: Housing structures produced in factories, then transported to site, and installed on designated lands (Zhou, 2009). Manufactured homes must be constructed to the standards of a uniform nationwide building code known as the HUD code (Dawkins & Koebel, 2010).
  • Mobile home: Slang word for manufactured home. Derived from the original classification of mobile homes as vehicles requiring registration with the Department of Motor Vehicles (Kusenbach, 2009). Prevailing term changed to “manufactured home” in 1981 (Wilson, 2012)

Manufactured homes construction occurs in a factory setting, transported to a dealership in another location to be sold, and eventually placed on site at a third location (Dawkins & Koebel, 2010). The manufactured housing construction process uses similar techniques, materials, and equipment as traditional site homebuilding (Nahmens & Ikuma, 2009). The main differences in the construction processes are location of construction and resources used. Manufactured housing construction takes place on an assembly line in a controlled environment (Nahmens & Ikuma, 2009) while exposure to natural elements determines site built home construction processes. Industrialized construction uses construction crews dedicated to specific processes on the assembly line (Nahmens & Ikuma, 2009), whereas independent contractors complete site built home construction processes at different times.

I hope that enough peer reviewed information has been provided to justify changing Wordnet’s definition of manufactured home. Princeton University and its affiliates greatly influence consumer perceptions of products. The recent economic crisis has resulted in housing changes for many Americans. The need for high quality and affordable housing is a pressing issue that must be resolved. The term “trailer house” was replaced with “mobile home” in the 1950’s (Burkhart, 2010; Wilson, 2012). The 1981 HUD code revision included the adoption of “manufactured home” as the prevailing term (Wilson, 2012). Thirty two years later, Wordnet is still referring to the product using terms such as “trailer house” and “mobile home.”

I respectfully request that the definition be updated to reflect the government and industry recognized term that properly represents the product. In the event that you need further proof to justify requested changes, I have provided a reference list of peer reviewed sources used in this letter.

Lisa TylerSincerely,
Lisa Tyler, DBA (ABD), MBA

References

Aman, D., & Yarnal, B. (2010). Home sweet mobile home? Benefits and challenges of mobile home ownership in rural Pennsylvania.Applied Geography30(1), 84–95. doi:10.10.1016/j.apgeog.2009.09.001

Burkhart, A. (2010, February 5). Bringing manufactured housing into the real estate finance system. Pepperdine Law Review, Forthcoming; Minnesota Legal Studies Research Paper No. 10-06. Retrieved from http://ssrn.com/abstract=1548441

Dawkins, C., & Koebel, C. (2010). Overcoming barriers to placing manufactured housing in metropolitan communities. Journal of the American Planning Association76(1), 73–89. doi:10.1080/01944360903401052

Kusenbach, M. (2009). Salvaging decency: Mobile home residents’ strategies of managing the stigma of “trailer” living. Qualitative Sociology32(4), 399–428. doi:10.1007/s11133-009-9139-z

McCarty, W. (2010). Trailers and trouble? An examination of crime in mobile home communities. Cityscape: A Journal of Policy Development and Research12(2), 127. Retrieved from https://atoz-ebsco-com.ezp.waldenulibrary.org/Customization/Tab/12486?tabId=5371

Nahmens, I., & Ikuma, L. (2009). An empirical examination of the relationship between lean construction and safety in the industrialized housing industry. Lean Construction Journal, 1–12. Retrieved from www.leanconstructionjournal.org

Tighe, J. R. (2013). Responding to the foreclosure crisis in Appalachia: A policy review and survey of housing counselors. Housing Policy Debate23(1), 111–143. doi:10.1080/10511482.2012.751931

Wilson, B. (2012). An examination of electricity consumption patterns in manufactured housing units. Housing Policy Debate22(3), 175–199. doi:10.1080/10511482.2011.648204

Zhou, Y. (2009). Two essays on American housing markets: The determinants of housing value volatility and the ownership decision for manufactured housing (Ph.D dissertation). Ohio State University, Ohio, United States. Retrieved from http://etd.ohiolink.edu/view.cgi/Zhou%20Yu.pdf?osu1243886980

Another letter to Princeton’s WordNet Team about their Flawed Definition of a “Manufactured Home“

April 11th, 2013 No comments

(Editor's Note: As with the Jody Anderson letter, linked here, this letter from a MH Community Manager is reprinted with permission, and was sent in response to this blog post.)

Princeton WordNet Team.

To whom it may concern,
Far be it from me to take issue with a definition published by such an esteemed institution as yours, I still must.

A recent industry article informed me that your definition of "Manufactured Home" is as follows:

"Mobile home: a large house trailer that can be connected to utilities and can be parked in one place and used as permanent housing."

I am sorry, but referring to modern manufactured homes as a "trailer" or "mobile home" is akin to calling a 2013 Lexus sedan a "horseless carriage" or Princeton as a "school."

It is a disservice to our proud industry who serves as housing for 8% of Americans including the poor, lower-middle class, and even millionaires (at least one in my community).  

The definition belies how far our industry has come in the areas of quality and craftsmanship and subjugates us to the level of redneck/hillbilly shacks.

Thank you for your consideration on this matter.

Respectfully Yours:

james-cook-mhc-manager-ma-posted-industry-voices-mhpronews.comJames Cook,
MHC Property Manager.
Ph (401) 402-0373
Fax (815) 572-5255

(Editor's Note: this is how Princeton's WordNet “definition” appears online in Google:

The email address for the WordNet team is: wordnet@princeton.edu 

Please take a few moments and send them a message of your own, or use a variation on the one MH Retailer Jody Anderson sent, or like the fine one above from MHC manager James Cook, both of which we deem better than the one Tony Kovach sent, linked again here.)

Other messages besides these have been sent to WordNet, but we need more from You and Your MH Circle until Princeton U 'gets the message' and changes their terribly erroneous, so-called definition of a manufactured home. So take a moment now and please send a message to wordnet@princeton.edu. CC latonyk@gmail.com in your message to Wordnet, Thank you! )

Irresponsible Weather reporting by Media and National Weather Service

April 11th, 2013 No comments

Tony,
It's that time of year again for bad weather, and of course, the local news weather reporters, The Weather Channel & the National Weather Service are busy scaring the hell out of Manufactured Home owners and residents with ridiculous 'info' about 'trailers' during storms.

Recently, a new 'weatherman' at a Dallas/Fort Worth station told his audience to just get out of "mobile homes" & other poorly built structures.  He didn't say to go to a shelter, or underground, basically just for people to go outside of their "mobile home."

We need a national campaign to educate media 'Weather' reporters, the National Weather Service, and the like in the mainstream media about two things:

  • Manufactured/mobile homes are not trailers. TRAILERS are travel trailers & aren't tied down.

2. Manufactured homes are anchored & the walls are built to withstand direct force sustained winds of high mph minimum standards set by HUD, meaning its federally regulated.

As you know, the average Manufactured Home goes through a dozen earthquakes and 2 hurricanes just getting from he factory to a dealer's lot!

Can you use your vantage point to forward this message to State & National MH groups to get an organized campaign going to stop all this negative & incorrect publicity?

Thank you.
Frank Woody, Owner
Republic Homes
Weatherford & Early, Texas

p.s. I'll follow up on Jody's letter to the Princeton WordNet team, as well.

The 2013 Tunica Manufactured Housing Show was Fantastic!

March 31st, 2013 No comments

What a fantastic turnout for the Tunica Manufactured Housing Show! The optimism of lenders, manufacturers, suppliers, community managers, retailers and association leaders was evident. There was much “buzz” over new innovations in the homes AND the participation of a couple of new retail and wholesale lenders.

I was very impressed by the attendance at the seminars. I overheard a couple of gentlemen discussing how they had been to all of the seminars and gained valuable and useful information that would benefit their respective businesses.

It also seems that manufactured home community management involvement has increased since last year’s show – wonderful news!!!

As the economy continues to slowly recover, consumers will become more aware of the affordable housing options. This shift will help every facet of the industry. More importantly – it will increase consumer awareness and (hopefully) education about the product.

I had the privilege of discussing my dissertation topic with a few fellow Tunica Show attendees. The commonality between the conversations was the need to improve the perception of manufactured housing to accurately reflect the high quality and extreme value the product offers.

Everyone seemed to agree that the biggest challenge was changing the way the general public viewed manufactured homes. While there is no magic cure that will solve issues, having conversations about benefits and challenges can lead to grassroots efforts that spur change. Movement of any kind in the right direction will have a positive impact. After all, our current President achieved his first election through grassroots movements and social media. If seemingly small changes can result in a sea-change of that magnitude, imagine what similar grass roots forward momentum in the manufactured housing industry can do…

One thing I like about the Tunica Show is that you never know who you will run into! I was able to meet “Uncle” Si Robertson from the hit show Duck Dynasty as he was touring the CMH displays. Later that evening (thanks to the awesome folks at CMH), I was able to meet Phil and Miss Kay Robertson AND listen to Phil’s testimony at the CMH Award Banquet & Celebration.

Phil shared that he had toured a manufacturing facility and witnessed outstanding work ethic. Not only did he recognize the value of the product, he appreciated the hard work of every person in the industry.

Talk about a great opportunity to change the consumer perception of manufactured housing! The stars of the most popular television show recognize, understand, and appreciate the product – how about THAT for validation and perception change!

There are lots of positive things happening in the manufactured housing industry. Whether in the developmental phases or getting ready for implementation, there are abundant opportunities for involvement and participation. ##

Lisa Tyler
Walden University
(Editor's Note: Lisa Tyler is a veteran of manufactured housing retail and is currently doing her dissertation en route to her PhD on a topic focused on Manufactured Housing)

(Photo credit: Lisa Tyler (right) with Uncle Si Robertson – left – from Duck Dynasty)