Industry Voices

Below is a must-read communication between the Oregon IPIA/SAA and the career manager of the HUD manufactured housing program. This communication is yet more compelling evidence that the HUD manufactured housing program, lacking the leadership and policy direction of an appointed non-career Administrator, is being mismanaged in ways that are damaging to the industry and its consumers, and that continue to blunt the industry’s economic recovery.

Nominally a response to an inquiry from the program regarding the qualifications of IPIA inspectors, the communication, from the retiring head of a state program that has a national reputation of providing effective consumer protection while being fair to the industry, states that in-plant production — and production quality — is not a problem for the industry and is not a cause of the current long-standing industry downturn. This is consistent with MHARR’s constant message to HUD officials and program regulators that the industry is currently building its best homes and that efforts underway by HUD to promote a costly de facto expansion of in-plant inspection procedures are completely unwarranted and a waste of program resources that are badly needed elsewhere. More importantly, it directly contradicts the assumption within HUD, stated in a January 11, 2010 letter to Rep. Travis Childers from HUD’s General Counsel (and elsewhere), that costly, enhanced production oversight “will assist the industry by attracting lenders back to manufactured housing.”

The communication emphases, instead, that most consumer issues relate to “how the home is sold, how it is set, and how it is serviced.” Two of these three — installation and dispute resolution — have already been addressed by Congress in the Manufactured Housing Improvement Act of 2000. But an operational federal installation program, along with a dozen or so other major reform provisions of the 2000 law, still have not been fully and properly by HUD, some ten years after enactment of the 2000 reform law. This has contributed significantly to the decline of the industry by negatively impacting the production, financing, placement and acceptance of manufactured homes. And while HUD officials claim that such delays are attributable to budgetary constraints, they do not explain how “budgetary” constraints have failed to slow the imposition of HUD’s costly and unnecessary expanded in-plant procedures, involving significant expenditures of time by its entrenched monitoring contractor.

To make matters worse, when the federal installation program is fully implemented, it will still not be as Congress intended, because it will not be preemptive based on HUD’s re-codification of the federal installation standards (and dispute resolution). It is little wonder, then, that as this communication states, zoning and planning restrictions have contributed to the industry’s decline and continue to blunt its economic recovery, while part of the industry in Washington, D.C. maintains that going along with HUD benefits the industry.

In this regard, it is worth noting that the needless expansion of in-plant inspection procedures that has been HUD’s single-minded focus for the past two years, to the detriment of full and proper implementation of the federal installation program and other 2000 Act reforms is, according to the HUD Assistant Secretary for Housing-Federal Housing Commissioner, endorsed by part of the industry in Washington, D.C., which, he says, has been “very supportive” of HUD’s efforts. This same group, according to Department, continues to “collaborate” with HUD on various issues, instead of holding it accountable to fully and properly implement existing finance and production laws, even as industry production has fallen to historic lows.

This effort to impose a de facto expansion of the enforcement regulations is one of the main topics that will be addressed in greater detail at the MHARR Board of Directors meeting in Tunica.

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

It is now nearing the two year mark since Congress enacted major FHA Title I manufactured housing program improvements and the “duty to serve underserved markets” (DTS) mandate as part of the Housing and Economic Recovery Act of 2008 (HERA). And while FHA and the Federal Housing Finance Agency (FHFA) have both taken steps toward implementing these badly needed initiatives to revive and expand the availability of public and private financing for manufactured home purchases, the fact remains that neither is yet in place. As a result, consumer purchase money financing for manufactured homes continues to be virtually unobtainable.

As industry members, consumers and, to a growing degree, Congress, are already aware, the near absence of consumer financing for HUD-regulated manufactured homes has had a devastating impact on both the industry and the lower and moderate-income American families that rely on manufactured housing as a key source of affordable, nonsubsidized home ownership. Since the enactment of HERA, this decline has only accelerated, bringing industry production in 2009 to an historic low, below 50,000 homes. This represents significant hardship for lower and moderate-income consumers and has resulted in the widespread closing of industry businesses and related job losses. In particular, this has impacted the industry’s smaller and medium-sized businesses that have traditionally relied on independent sources (i.e., non-captive or related corporate entity) of capital to finance consumer purchases. All the while, retailers report that they have customers who are willing and anxious to buy manufactured homes, but cannot obtain either private or publicly-supported FHA purchase loans.

In light of these unprecedented hardships, it is essential that real and substantive progress in expanding the availability of both public and private consumer financing, as mandated by Congress, be an urgent priority for HUD, FHA, FHFA, the GSEs and every other relevant arm of the federal government — to be achieved as quickly as possible. Accordingly, while FHA has issued Mortgagee Letters regarding the HERA manufactured housing program improvements, it needs to publish a final Title I rule so that the Ginnie Mae moratorium on the securitization of new manufactured housing loan can finally be lifted.

Similarly, while FHFA deserves credit for taking initial steps toward rulemaking to implement DTS, time remains of the essence for the industry and its consumers. With a steadily growing number of business failures and bankruptcies among manufacturers, retailers, communities and others — stemming largely from the unavailability of private consumer financing – the more favorable financing climate that DTS would promote and provide is urgently needed to ensure the survival of the industry and the supply of decent, affordable, non-subsidized housing for Americans at all income levels. And let there be no mistake, continuing and even intensified industry pressure will be needed to advance DTS in a form that would actually benefit the industry and the consumers it serves, as both GSEs made it quite clear in their DTS comments that they will seek to water down DTS as much as possible and delay its full implementation for as long as possible.

Beyond the HERA based Title I improvements and DTS, however, there are other avenues — that have been suggested by MHARR and its finance advisors — through which relevant federal agencies and the GSEs could quickly assist the industry and the consumers of affordable housing that it serves, without going through a long and tortuous process.

First, as MHARR suggested and explained in its September 1, 2009 DTS comments, the GSEs should — on an expedited basis – be authorized to securitize FHA Title I manufactured housing loans. At present, the GSEs securitize only FHA Title I1 manufactured housing loans. FHA Title I loans have historically been securitized by Ginnie Mae, but that agency, in the absence of a final rule to implement Title I program changes mandated by HERA, has imposed a moratorium on the securitization of Title I loans. An extension of the GSEs’ securitization authority to FHA Title I loans would help to alleviate the unnecessary constraints that have been placed on the manufactured housing finance market – even after the Ginnie Mae moratorium is ultimately lifted — and would be consistent with Congress’ strong support for strengthened and expanded manufactured home lending, as illustrated both by the duty to serve and by HEM’S increased FHA manufactured housing loan limits.

Second, because affordable manufactured housing serves a market comprised largely of lower and moderate-income Americans, most purchasers do not have — and in today’s economic conditions, cannot obtain – the cash necessary for a 20% down payment. This effectively excludes them from the manufactured housing market due to the unavailability of private mortgage insurance (PMI) in the wake of the recession. Fannie Mae, however, has given some indication that it believes it has the authority and ability, under its Charter, to self-insure manufactured housing transactions with a greater than 80- 20 loan-to-value ratio, thus obviating the need for PMI. MHARR has supported and encouraged such an initiative, and is continuing to explore this further while urging the federal government to expeditiously take the steps necessary to authorize both GSEs to self-insure such obligations.

Obviously, in addition to these steps, all relevant federal agencies and related organizations, such as the GSEs, should immediately consider – and should be encouraged and pressed by the industry to consider – other and further means, either temporary or permanent, to restore and expand the availability of private financing for manufactured housing consumers.

In MHARR’s view, with the access to virtually all types of financing — both public and private – now effectively controlled by federal entities, the industry in Washington, D.C. (in addition to reform of the federal program) should be concentrating on pressing those entities to comply with the financing improvements legislated by Congress in HERA, as quickly as possible, rather than side-tracking limited industry resources and political capital to other less critical matters.

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

In a reply to correspondence with President Barack Obama by our www.MHMSM.com editor, here is the message that came in from the White House…

Dear Friend:

Thank you for writing. The images from Haiti of
collapsed hospitals, crumbled homes, and men and women
carrying their injured neighbors through the streets are truly
heart-wrenching. As we learn more about the extent of the
devastation, our thoughts and prayers are with the people of
Haiti.

I have directed my Administration to respond with a
swift, coordinated, and aggressive effort to save lives. The
people of Haiti will have the full support of the United
States Government in the recovery and rebuilding effort,
including the humanitarian relief–the food, water, and
medicine–that Haitians will need in the coming days.

This is also a time when we are reminded of the
common humanity we all share, and Americans have
always responded to these situations with generosity of
spirit. If you would like to support the urgent humanitarian
effort in Haiti, I encourage you to visit our website where
you can learn more about how to contribute:

http://www.WhiteHouse.gov/HaitiEarthquake

Americans trying to locate family members in Haiti
are encouraged to contact the State Department at (888)
407-4747.

We will continue to stand with the people of Haiti
and keep them in our thoughts and prayers.

Sincerely,

Barack Obama

This response came in prior to the President’s State of the Union Address, where he often spoke about jobs. His reply does not specifically address the pressing issue of using America’s factory-built housing industry as part of a concerted response that would house Haitians and create American jobs building strong, modest homes and installing those homes under American leadership. The http://www.mhmarketingsalesmanagement.com/blogs/tonykovach/a-call-to-action/ still makes sense, and we as Industry members should continue to press for a specific response from the President and from your Senators and Congressman.##

Posted by Danny Ghorbani – MHARR

Sprinkler Mish-Mash Designed to Mislead Industry
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Sprinkler Mish-Mash Designed to Mislead Industry

Grassroots industry concern over the erosion of federal preemption is wellfounded, as a combination of HUD regulators, industry enablers and research consultants continue to press yet another backroom “deal” — this time on fire sprinklers. This is another example of the type of ill-advised industry “compromise” on key issues – while most grassroots industry members are kept in the dark or provided misleading information – that has devastated the industry in Washington, D.C.

Read more…