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.

Given the continuing decline of the manufactured housing industry and the related loss of affordable housing opportunities for moderate and lower-income American families, the attached February 23, 2010 MHARR WASHINGTON UPDATE — REPORT AND ANALYSIS, addressing the following issues, is a must-read in order to be fully up-to-date regarding these important matters:

• MHARR And FHFA Officials Meet On Private Financing
• MHARR Members Brief Congress On Pressing Issues
• No Time For More Costly Regulation
• Energy Regulation Catching Up With Industry
• MHARR Refutes HUD Position On Administrator

Click here to read the entire articles

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

Senior HUD officials, at a December 2, 2009 hearing of the House Financial Services Committee, were asked why the non-career Administrator position for the HUD manufactured housing program — authorized by Congress as part of the Manufactured Housing Improvement Act of 2000 — is vacant and has been vacant for most of the past ten years. When they answered that such “Schedule C” appointees were more urgently needed elsewhere and that manufactured housing did not merit a Schedule C appointee, a Committee member asked whether Congress had been “wrong” or “stupid” to provide for a non-career program Administrator. While HUD had no response, the industry itself had better have a firm grip on why Congress wanted a non-career official to head the HUD program if it is to have any hope of securing such an appointment and the significant benefits that Congress intended to result.

For ten years, the tendency has been to focus on the non-career Administrator as a regulatory position. Thus, Congress — in response to program deficiencies that had been exposed over a nearly 25-year period — authorized a non-career Administrator to ensure a transparent and accountable manufactured housing regulatory program that is responsive to its stakeholders, senior HUD management and the public at large. And while this view is accurate – as far as it goes — it is much too narrow and misses many of the key reasons why Congress concluded that the HUD program must have an appointed non-career Administrator.

In addition to being a regulatory position, the non-career Administrator is, even more importantly, a policy position with critical policy functions that parallel the main goals of the 2000 law — (1) ensuring the fundamental reform of the HUD program; and (2) ensuring the full recognition and treatment of manufactured homes as housing, rather than “trailers,” both within and beyond HUD.

First, Congress correctly anticipated that key reforms of the 2000 law would be resisted by career regulators at HUD. It thus provided for a non-career appointee to head the program and act as a guardian for every other program reform included in the law, in order to ensure their full, proper and timely implementation. Consequently, it is no surprise that, in the absence of a non-career Administrator, the implementation of multiple reform aspects of the 2000 law has been — and continues to be — obstructed, minimized, ignored, undermined, altered, delayed or rolled back. Indeed, the track record of the last ten years shows — as Congress is now beginning to understand — that without a non-career Administrator, the fundamental character and culture of the HUD program will not change and the program reform and modernization envisioned by Congress will simply not occur.

Second, and even worse, the absence of a non-career Administrator leaves the industry and its consumers without a seat at the policy-making table in Washington, D.C. The 2000 reform law established the non-career program Administrator to act as the lead advocate for “the acceptance of the quality, durability, safety and affordability of manufactured housing” under section 620 of that law. This advocacy role extends well beyond the HUD regulatory program — to issues including parity in financing, placement, utilization and acceptance, among others – and was designed to ensure, at a minimum, that manufactured housing and consumers of manufactured homes would have a full and equal place in all policy decisions at HUD and in all HUD housing programs, during every Administration.

Without a non-career Administrator to interface with each presidential administration at a policy level, however, both manufactured housing and the HUD manufactured housing program have effectively been segregated from the senior political leadership and decision-makers at HUD, and frozen out of the mainstream of that agency. As a result, manufactured housing has remained under the control of career regulators and an entrenched enforcement contractor who are not interested in change and are more concerned with the nuts and bolts of regulation rather than effective policies that promote the availability, utilization and financing of affordable manufactured housing. Manufactured housing, therefore, does not show-up, either literally or figuratively, on HUD’s policy radar screen and remains today — as shown at the December 2, 2009 congressional hearing — a second-class “step-child” at HUD.

A small but telling example of this disconnect is HUD’s internet website. The initial page has direct links to a multitude of housing programs, but no reference whatsoever to manufactured housing, no indication that either HUD or the Federal Housing Administration (FHA) even have programs for manufactured housing, and no direct link to either program. Thus, the nation’s leading source of affordable, nonsubsidized housing is not even acknowledged by the primary public information resource of the federal government’s housing agency. And while this might seem minor, in itself, it is a symptom of the broader exclusion of manufactured housing from the mainstream at HUD and illustrates why the HUD manufactured housing program and the HUD Code manufactured housing industry are both in a state of severe decline.

Some may contend that a non-career appointee is heading the program, because HUD’s manufactured housing office falls under the jurisdiction of the Assistant Secretary for Housing. And while, again, this is true as far as it goes, the reality — as confirmed by repeated experience over the course of 35 years – is that these officials, with extremely broad responsibilities, cannot, do not, and do not want to get involved with the unique complexities and intricacies of the manufactured housing program, on a policy or any other level. As a result, the Assistant Secretaries, historically, have simply gone along with the decisions and recommendations of career program regulators and program attorneys within the Office of General Counsel. This is a far cry from the independent, non-career appointee envisioned by Congress, who would be immersed in manufactured housing 24-7, have direct contact with each Administration, and the latitude, freedom and will to alter the status quo as necessary — instead of being part of that status quo.

Similarly, many within the industry a about the importance of a non-career Administrator for the HUD program and the need to fill that position as quickly as possible. Unfortunately, though, except for MHARR – representing the industry’s smaller businesses that are the most directly and negatively impacted by the program’s decline – no one has done any heavy lifting on this issue and others, in fact, are helping to preserve the status quo. And while MHARR will continue to leave no stone unturned in its effort to have a non-career Administrator appointed, others who thus far have paid only lip service to this matter need to recognize the far-reaching negative implications of not having a non-career appointee in charge of this important housing program.

In MHARR’s view, every possible effort must be made to secure a non-career Administrator for the HUD manufactured housing program and bring the HUD Code industry to the policy table in Washington, D.C.

Read MHARR’s latest news release on this subject »

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

Posted by Danny Ghorbani – MHARR

Sprinkler Mish-Mash Designed to Mislead Industry
HUD Takes Shot at Industry, Consumers and Defies Congress
Unexplained Delays Continue on Financing – Suspicion Grows

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…

Posted by Danny Ghorbani, MHARR

As has previously been reported, a steadily expanding number of members of Congress have been making inquiries to senior officials at HUD regarding the declining state of the HUD Code manufactured housing industry, the continuing inability of consumers to access public and private financing to acquire affordable, non-subsidized manufactured homes, as well as the Department’s management of — and plans for — the unique HUD (Title VI) manufactured housing program and FHA manufactured home financing. Throughout 2009, these congressional inquiries became more urgent, more specific and more pointed, as industry production and sales fell below 50,000 homes (its lowest output since 1950), and members of Congress became more concerned about closures of manufactured housing businesses (particularly smaller concerns) and related job losses, as well as the unavailability of manufactured home consumer financing in their districts and states.

Although HUD officials responded to these inquiries anecdotally and in a fragmented manner at various meetings and as part of congressional hearings, an extraordinarily articulate and well-focused December 2, 2009 inquiry from Rep. Travis W. Childers (D-MS), has now elicited a January 11, 2010 written response from HUD that provides a bleak and shocking window into HUD’s views concerning — and plans for — the federal manufactured housing program, consumers financing, the HUD Code industry and consumers of manufactured housing that have not previously been exposed in such frank detail. The revelations in this response — both stated and implied — are remarkable and should spur all program stakeholders to take stock now and address their implications for an industry and consumers already facing unprecedented challenges and obstacles.

Enclosed with this communication are copies of Congressman Childers’ December 2, 2009 inquiry letter and HUD’s January 11, 2010 response, together with a complete paragraph-by-paragraph analysis of HUD’s response. This packet is a must-read for all those with an interest in manufactured housing, including industry members, consumers and elected officials.

Based on the information exposed by these documents, the following priorities need to be pursued and implemented:

Regarding the HUD manufactured housing program and public financing –

• The appointment of a non-career Administrator for the HUD manufactured housing program as provided by Congress in the Manufactured Housing Improvement Act of 2000 (2000 reform law). Based on the track record compiled while this position has been vacant for the past five years, without such an appointed Administrator, nothing else about the program will change.
• Issuance of final rules implementing improvements to the FHA manufactured housing program approved by Congress in the Housing and Economic Recovery Act of 2008 (HERA) and the removal of the existing Ginnie Mae moratorium on the securitization of FHA Title I loans.
• Full and proper implementation of all manufactured housing program reforms contained in the 2000 reform law.

And regarding private consumer financing, on a parallel track, with the Federal Housing Finance Agency (FHFA) –

• Full and expeditious implementation of the HERA-based “duty to serve underserved markets” mandate for the two Government Sponsored Enterprises (GSEs).

Each of these priorities is critical to the recovery of the manufactured housing industry and to the availability of affordable non-subsidized housing to millions of Americans and particularly lower and moderate-income families. Accordingly, their implementation should be vigorously pursued by all stakeholders in the HUD manufactured housing program, by Congress and by the Administration.

Click to download Analysis of HUD’s Response to Congress