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Posts Tagged ‘SAFE Act’

MHGrassroots: A Call to Action

June 17th, 2014 No comments

As I sit comfortably in a 737 at 30000 feet coming back from a thought provoking meeting at the MHI Expo in Las Vegas I don't have to go in great detail on how the world has changed since 2001.

From how we fly, how we communicate, and even how we conduct business, it has all changed in ways none of us truly imagined then.

Every day I read more about how a government I have grown up loving, is making changes that contradict the core beliefs and attributes it was built upon. With that said, let's look at a few issues that have faced, primarily as it relates to the manufactured home market in the past 15 years.

In Texas we were asleep at the wheel in 2001 when House Bill 1869 took effect. I was but one of the many independent dealers who were wondering how this could have happened. I even looked Gov. Rick Perry in the eye and told him point blank that this bill would cost Texans jobs and would reduce home order sales, which in turn would force the closing of several fine manufacturing plants.

Unfortunately I and those around me were right. Even though the TMHA through a lot of hard work was able to have this poor piece of legislature repealed in 2003, the damage was already done.

I won't go into the specifics of the law itself, but I will say it was a killer from day one. If you have any questions about it, just Google it. I have heard the experts’ state that 85% of the independents who were in the market at that time were wiped out by this law and the recession that hit us in 2008. And guess what. Those folks are gone, probably never to return again.

So let's take a look at where the train came off the tracks.

We were too late to stop one train simply because we weren’t aware it was heading for the station.

If we want to be successful in the legislative arena we have to stop the bills before they get that close to the tracks. We, the industry as a whole, must be vigilant in being aware of any laws, in every city, county, state and federal arena that could negatively impact not only us, but the people around us.

This means we have to know, and have a relationship with, the people in charge. Governor Perry signed that bill even after I told him the truth. Why? Simple, he didn't know me from Adam. No relationship equals no traction. We have to build those relationships in order for our voices to not only be heard but to be accredited.

How was it fixed? A grassroots effort. From the ground up. TMHA called upon every member….who in turn called on every state senator and state representative to repeal a bad piece of legislation. And it worked! Why? Because the industry stood up as a whole, and worked together for the common good of all. I call this a victory for the good guys.

Let's look at another victory.

Last year I received a phone call from a landlord who was my ‘competitor’ in Plainview, Texas. I use that word competitor only because we are after the same pool of customers. I call him a friend.

Basically this city was in the process of creating a city ordinance which would require an inspection on every rental inside the city once it was vacated by a tenant. Never mind the fact that this would be in direct contradiction to the HUD code on a manufactured home. Every house, apartment, and mobile home would have to be brought back to current code if this law passed.

This would mean thousands of dollars spent to update every unit.

One unintended consequence of this law would have forced the citizens to pay rent in excess of three times the current rate.

Another would have riddled the city with homes to be demolished due to the repair cost being more then the value of the home.

Yet another would have been a mass exodus of good paying tenants to the surrounding communities which didn't have this law.

So how did we stop this calamity before it was passed like Texas House Bill 1869?

We showed up in droves. There was standing room only at every hearing. Meetings with every city official we could get and we killed it before it could even be heard by city council. How? It took one phone call from each of us who took the time to make that call. And another victory ensued.

So what does all this mean to you, the reader?

It's time. It is time to make a difference and make a call of your own.

I know you are busy, but don't blow this one off.

Dodd Frank and the SAFE Act are not going away. So what are you going to do? I am calling not only those of us in the industry, but all of us.

The government doesn't need us, but this country does. We are this country's answer to affordable housing. But if the people can't get financing for that home what good are we to them?

If you don't know who to call that's ok. Call your state association. If you are not a member, sign up. If you are a member, get active. Make a difference. You can. ##

shawn-fuller-d-r-housing-new-deal-texas-industry-voices-manufactured-housing-mhpronews-com-75x75-Shawn Fuller
D & R Housing, LLC.
New Deal, TX 79350

You Might Be a Redneck!

December 12th, 2013 No comments

You might be a redneck if: It never occurred to you to
be offended by the phrase, 'One nation, under God..'

You might be a redneck if: You've never protested about seeing
the 10 Commandments posted in public places.

You might be a redneck if: You still say ' Christmas'
instead of 'Winter Festival.'

You might be a redneck if: You bow your head when
someone prays.

You might be a redneck if: You stand and place your
hand over your heart when they play the National Anthem

You might be a redneck if: You treat our armed forces
veterans with great respect, and always have.

You might be a redneck if: You've never burned an
American flag, nor intend to.

You might be a redneck if: You know what you believe
and you aren't afraid to say so, no matter who is listening.

You might be a redneck if: You respect your elders and
raised your kids to do the same.

You might be a redneck if: You'd give your last dollar to
a friend.

You might be a redneck if you are tired of government overreach, such as ObamaCare, Dodd-Frank, the SAFE Act, CFPB and an alphabet soup of federal agencies that want to throttle our businesses or run our personal lives.

You might be a redneck if you've read this far, and you've nodded in agreement more than half the time. When I read some of the above from an article that had no author's name, and I added the last ones which impact manufactured housing home owners, professionals and the rest of our country too.

God Bless America! ##
Submitted by Larry Hahn

2012 Election Results and Coming Lame Duck Session

November 9th, 2012 No comments

MHI logo posted in MHProNewsWhile commentators will be picking over the remains of the 2012 elections for weeks to come and discussing what the political landscape will look like over the coming year and what impact the elections will have as Congress prepares to return for a lame-duck session, MHI wanted to provide members with some feedback and analysis of the immediate aftermath and outlook for the coming weeks.

While votes in Florida are still being tabulated, President Barak Obama successfully won 303 electoral votes and secured a second term as President. By winning nearly every key swing state including Colorado, Ohio, Virginia and Wisconsin, Obama was able to successfully hold off Governor Mitt Romney’s challenge. It is expected that once the count is finalized, Obama will also garner Florida’s 29 electoral votes. Given Democratic gains in the House and Senate, it is not widely anticipated that Obama will seek to strike a conciliatory mood with Republicans on fiscal issues, or on issues related to a softening of Dodd-Frank.

An even more dramatic surprise was the performance of Democrats in U.S. Senate races. While defending 33 Senate seats this cycle, Democrats were widely predicted to loose (up to) a total of four seats in that chamber. Instead, Democrats we able to successfully win two additional seats and will expand on their current majority during the 113th Congress to 55:45 (Ds:Rs). Included in these were victories by key manufactured housing industry supporters Sen. Sherrod Brown (D-OH) and current Rep. Joe Donnelly (D-IN). Rep. Donnelly successfully won the Senate seat in Indiana being vacated by Sen. Richard Lugar (R-IN).

Republicans are still firmly in control of the House of Representatives. While a number of House races are still being decided, current tallies peg a net Democratic gain of five seats—far short of the 25 needed by Democrats to regain control of the House.

Looking forward, Congress is tentatively scheduled to return November 14 and work up until the Thanksgiving holiday. The House and Senate would then reconvene in December to complete work in time to adjourn prior to the Holidays. Issues expected to dominate the lame duck session, include:

  • · FY 2013 appropriations
  • · Extension of 2001 and 2003 tax cuts
  • · Sequestration
  • · Increase of debt ceiling

During the lame duck session, MHI will be working to pass legislation (H.R. 3849 and S. 3484) reforming portions of the Dodd-Frank and SAFE Acts. The session could potentially offer opportunities to attach portions of these bills to larger measures moving through each chamber. During this time, MHI members a strongly urged to continue contacting their members of Congress to request they co-sponsor either H.R. 3849 or S. 3484. For more information, access the MHI action alert at www.mfghome.org.

JasonBoehlertManufacturedHousingInstituteSeniorVPLogoMHIlogoQuoteMHProNews

Editor’s Note, this graphic was added on 11.28.2017, by the editor of MHProNews. The content, and the original email that delivered it, are the same as shown.

For your reference, we have attached the following analysis performed by MHI external consultants summarizing the impacts and outcomes of the 2012 election:

  • Porterfield & Lowenthal: overview of the impact the 2012 election will have on banking and financial services issues, including an outlook for the 113th Congress.
  • SNR Denton: Broad and in-depth analysis of the 2012 Presidential election, including overview of House, Senate, Gubernatorial elections and ballot initiatives.

In addition, we have included a win-loss summary of candidates the MHI-PAC contributed to during the 2012 election cycle. In total, the MHI-PAC distributed in excess of $126,000 to support 59 federal candidates. Of those candidates running in 2012 (excluding retiring members and Senators not currently in cycle), the MHI-PAC boasted a win percentage of 93 percent.

jason-boehlert-mhi-VicePresidentManufacturedHousingInstituteMHILogoManufactuired-Housing-pro=news-by Jason Boehlert
Manufactured Housing Institute (MHI)
Vice President of Government Affairs

IMHA-RVIC Executive Director’s Report from MHI’s Annual Meeting

October 10th, 2012 2 comments

mark-bowersox-imha-posted-industry-voices-guest-blog-mhpronews.com-75x75pxl-IMHA Executive Director Mark Bowersox attended the Manufactured Housing Institute's (MHI) Annual Meeting held earlier this week in San Antonio, TX.

More than 100 people attended the event, including representatives from 10 IMHA member companies. While MHI scheduled more than a dozen separate workshops, most discussed the ongoing regulation and legislation that challenges our industry at the national level. The Secure and Fair Mortgage Enforcement (SAFE) Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Anti-Money Laundering regulations continue to be the hot topics in nearly all meetings. In fact, MHI's Legislative and Regulatory Priorities remain the same going into 2013 as they were in 2012.

MHI is taking a two-tiered approach to SAFE and Dodd-Frank. First, they are promoting legislation (HR 3849 and S 3484) that would amend the existing Dodd-Frank legislation to increase the threshold on triggering a "high cost mortgage" as defined in the Dodd-Frank legislation. This same bill would also amend the SAFE Act to legislatively mandate some of the regulatory opinions currently contained in the Consumer Financial Protection Bureau's (CFPB) Proposed Rule on the SAFE Act.

MHI's hope is that this legislation will be passed during the "lame duck" session following the November elections. While several members of Indiana's congressional delegation have agreed to support these initiatives, I encourage all IMHA members to contact your Representative and Senators and urge them to support this legislation.

Secondly, MHI is seeking favorable interpretations of the law from the CFPB, the newly created federal agency responsible for regulating these laws. MHI has retained the services of SNR Denton, a Washington DC law firm specifically to lobby the CFPB on behalf of the manufactured housing industry. The CFPB isn’t expected to release new information before the November election but must distribute final rules by January, 2013. Although the CFPB is expected to review state policies to ensure states are regulating the SAFE Act appropriately, the CFPB has not yet addressed lease-option type contracts. These contracts continue to be a gray area and it’s possible that the CFPB will view these contracts as non-compliant and a way to skirt the law.

MHI staff reported that the CFPB auditors have begun levying fines against lenders, with Capital One and Discover being fined over $200 million each. The CFPB has the authority to regulate non-bank lenders, which includes manufactured housing communities.

Earlier this year we shared information with IMHA members through a variety of sources about the Anti-Money Laundering Regulations that went into effect on August 13 of this year. Many attendees at this week’s meeting had taken advantage of the template MHI created to help retailers develop an anti money laundering policy as part of their overall compliance program. This template was developed by Marc Lifset of McGlinchey-Stafford (MHI's law firm) and can be used at no charge to state association members.

I strongly recommend to anyone selling homes to review the seven questions from the template (see page 9) to see if your business is required to have a written anti-money laundering program, and to take the necessary steps to comply. At this time there is no plan to roll-back, repeal, amend or otherwise exempt manufactured housing from this federal regulation.

Click here to view the Financial Crimes Enforcement Network’s final rule on the Anti-Money Laundering Program and Suspicious Activity Report Filing Requirements for Residential Mortgage Lenders and Originators. Click here to view or download MHI’s AML policy template.

Other notes from the meeting:

The 2013 National Congress and Expo in Las Vegas will be held at the Paris Hotel. The move was made in large part to a much better overnight room rate ($109) at the Paris Hotel.

MHI has retailer resources section on their web site. It includes valuable information on AML, Red Flags, Safe guards and more. I encourage all members to review these resources as a part of your ongoing compliance programs. As you can tell, MHI is working diligently in Washington on behalf of our industry. They have an extremely tough job trying to effect change for our niche industry in the enormous federal government. It is always a privilege to interact with and learn from their staff along with the other state association directors and industry leaders that were at the meeting. ##

mark-bowersox-imha-posted-industry-voices-guest-blog-mhpronews.com-75x75pxl-Mark Bowersox
Executive Director
Indiana Manufactured Housing Association – Recreational Vehicle Indiana Council
http://www.imharvic.org/

As I See it – advancing Manufactured Housing Chattel Lending – So Now What?

July 15th, 2011 No comments

As we come to the 4th of July or Independence day, I decided to carve out some time to add what I hope to be constructive ideas to the manufactured housing industry chattel lending issue.

Being involved in the industry for over 25 years I have rode the shipment roller-coaster (like many of you) more than once.  However, we cannot look to the past as our salvation for the future.  Nor can we look to Washington D.C. for our salvation.  Our “friends” in Washington D.C. can’t even balance a checkbook or a budget.  As my kids learned in college, there’s book smart (passing the tests) and then there is the real business world.  All the studying done in college has had very little to do with their business life experiences (or so they tell me).

So now what?  While presenting my idea for the industry, I’m simultaneously having a Rep. Paul Ryan-Marty Lavin moment.  Put your idea out there and let the attacks begin.  Even so, I still wish to share my thoughts as they may springboard (or whiteboard) the manufactured housing industry to the answer we all seek.

1st – Washington D.C. – This is the land of unintended consequences.  Where to start?  Safe Act, Dodd-Frank, CFPB or TARP pick any of the alphabet soups, did they do anything for us?  As an industry what did we do to them?  Sure we can relive what the Green’s did to the bondholders on Wall Street.  But they were bondholders who took on a risk for a return.  Whether it was a straight deal or not is why people charge for due diligence reporting.  Did we cause the mortgage backed security world to implode?  No, for that, I say look to D.C.  Fannie, Freddie, FHA, VA and Ginny Mae all were smarter than the rest of us. They wanted homeowners, so they put programs in place to get what they wanted.  Forget underwriting, down payments, proof of income, job verification and speculators, they wanted loans.  Did mortgage brokers take advantage of the system?  Yes!  Did they write the rules? No!  Those that are guilty of fraud should be punished to the full extent of the law.  Our industry was and still is collateral damage.  I guess that’s what happens when you are to close too the bomb blast.

2nd – Banking Institutions – Coming originally from a bank and credit union background I understand where depositories are coming from with regard to the decisions they make for our industry. Over the years we have presented opportunities to a myriad of institutional sources of capital and over 250 said, “No thanks”. The irony was, most of them actually liked the opportunity and the plan behind it. Some of the ones that said no, even said it was an outstanding opportunity and program. The ones that signed on, had some of the best results they had ever experienced with installment loans. But a funny thing happened along they way.  The keys to the vault were hijacked from the decision makers and placed into the hands of auditors and regulators.  Many lenders cannot make loans due to the ever-changing capitalization requirements.  If you really want to get your banker excited, ask them what has happened to the premiums for deposit insurance from FDIC & NCUA.  With the new lending regulation and bookkeeping (ratios) requirement ball always on the move, my lenders became deposit acquisition specialists. The TARP (Trouble Asset Relief Program) program did not live up to it’s name and became a vehicle for the big banks to get bigger.  If you are not familiar with the PNC – National City merger that alone should give anyone reason to pause.  I know that lenders want to make loans; it’s how they derive their income.  Not every bank can go to the Fed window and play the daily swap game between Fed funds and Treasuries (Citi).  So we are left with an under capitalized banking system (in the regulators view) that has put a lid on lending.  Based on current economic trends, the housing market inventory (both real & shadow), the troubled alphabet soups mortgage operations and D.C. politics, I unfortunately do not see lenders running to us with bags of money for a long time.

3rd – Ourselves – While we have been in a steady ten plus year shipment decline we cannot excuse ourselves.  Our market has remained basically the same since I started all those years ago, newly wed and nearly dead.  While parts of the industry have tried to morph into “traditional housing” e.g. bigger is better, we still had rampant documentation fraud, blown up invoices, backbreaking advances, excessive loan terms, lot rents increasing into un-affordability and our own “trick” lending programs (ersatz  ARM’s & 30 year paper).  We are now being treated like the child we presented ourselves as to the world.  While everyone points the finger at everyone else as the culprit we all forgot the golden rule.  The guy with the gold makes the rules and they decided to go home.

Over my years in this business, I have observed several areas where the industry system consistently fails. In order for homes to hold their value, there needs to be a healthy system for resale of homes owned by homeowners, just as there is in site built housing. Unfortunately, no such system exists in manufactured housing. MLS does not support our re-sale market in most states.  We’ve talked about our own MLS for my whole career and while there have been some great attempts (for example mhvillage) we are still a second class citizens compared to the real estate market.  By not having a re-sale market program we only hurt ourselves as our current residents cannot sell their home and, as a consequence, get mad, depressed and finally jingle mail the keys to the lender or community and leave.

Industry lending philosophies contribute to that problem by charging higher interest rates on pre-owned homes. Even after all my years in the business, it still stuns me to this day that we charge interest rates based on the age of the home. This does not happen in site built housing, thus giving site built an advantage, and manufactured housing a disadvantage, when it comes to the performance of the collateral from a lender perspective and investment performance of the home to everyone else. It also depresses any attempts to create a healthy system for reselling existing homes.

Another problem is the method in which repossessed inventory is handled. While the lenders should have a better plan than most do, many parts of the industry conspire to keep them trapped in a guaranteed to fail program. Almost every independent retailer, and many community operators treat outside finance companies like victims to be slaughtered rather than as important partners at the table. When a home is repossessed, many hands, motivated by self-centered greed are demanding money from the lender. Retailers want full profit fees to move homes onto their sales centers where they sit unsold until the lender gives up and allows the retailer to “steal” the home so that the retailer can then sell the home and “hit a home run” on the lender’s loss. The retailer is both short sighted and greedy in this transaction, and the lender lacks the fortitude they should have to shut the retailer off from future financing.

While the environment is somewhat better on the community side, it varies greatly from community to community. When Ken Rishel was a community owner, he correctly viewed outside lenders as important stakeholders. As a consequence, he saw the value of shared risks and never charged lenders lot rent, maintenance fees nor commissions for selling their repos if his people couldn’t get a sale price higher than the deficiency balance on the loan. When he began to focus on outside lending, he persuaded other community owners to the same view. When I started Precision Financial with Diane years ago, we asked community owners to agree to much of the same terms and many agreed.

Unfortunately, those community owners are not in the majority. Most expect lenders who own homes in the community to pay tenant’s back lot rent, the rent going forward until the home is sold, a commission for selling the home, and, learning from retailers, the lender’s home often goes unsold, with the hope of “stealing it” so, they to, can hit a home run on profits when the home is sold.

Until everyone involved possesses either the moral integrity, or sees the business wisdom to treat all the stakeholders fairly, the system is broken. It may limp along as it has been doing, but the problems that hold manufactured housing back will remain.

Appraisals have also become a problem in part because of the lower prices of repossessed homes. We have loans we cannot do because they will not appraise either through comps or through NADA, or even our own proprietary system of appraisal. We are now reaping the field we sowed.  All the wholesale homes have lowered everyone’s collateral value.  Not only have home values been depressed, but also what is happening to the community value if all the home values are 30% to 50% less and occupancy is going south?

Industry Image

To go RV’ing or not to go?  There have been many ideas floated within the industry as to what is needed to change the public, regulator and banker’s perception.  This issue is above my pay grade.  However, Einstein defined insanity as “doing the same thing over and over but expecting different results.”  All I know is that we have let others define us.  It is time we define ourselves.

So now what?

I think there are 4 plausible solutions for everyone to ponder.

1. Everyone can subscribe to partnering with Clayton Homes.  Who wants to fight Mr. Buffet?  I have been an admirer of his for years and even own Berkshire Hathaway stock.

2. Captive Finance – while D.C. is not making it easy, it is a stable and reliable plan for those who have the expertise, or are willing to hire the expertise they need. That it creates new challenges is undisputed because, done correctly, it requires a whole new set of business skills that few community owners or retailer possess. Done incorrectly, it is a disaster waiting to happen. It is not a short-term solution, but rather a long-term one that almost demands affiliations with outside experts to succeed.

3. Current lenders – Be sure to take care of the ones left.  They have been with us through the darkest of times.  Take care of them today and they will be here tomorrow to take care of us.

4. Lastly, a new idea. While not a new idea, as it served its purpose in the past for another industry and may well serve a purpose for us.  I’m talking about a manufacturer based captive lending program.  While it carries risk, it also carries a stick.  If you’ve never been involved in an auto dealership that had a sizeable portfolio with GMAC, Ford or Chrysler you do not understand the size of the stick the manufacturer captive lender holds.  If you loaded them up with poor-bad paper and cause high losses, it could cost you your dealership franchise.  No one wants to risk that decision.  In the beginning, before the automobile captives became market share driven, they would only finance their own products and were the most profitable arm of the entire company.  Our company has been researching this concept for a number of years, and we are in a position to help make this happen if a group of manufacturers would actually sit down in the same room and band together to make it happen. To this point, there have been no takers. Their dislike and mistrust of each other seems to color their survival instinct.

In the end, from my point of view, lending is about the 4 C’s:

Capacity – Can they afford the purchase without strain? Will that income continue?
Character – Would their word and their handshake be enough to make the loan?
Collateral – Are the ATF & LTV viable for the terms and conditions of the loan
Credit – Have they proven they have the self-control to manage their money and do they feel responsible for paying their bills on time?

The federal government controls none of these traits.

If you have made it this far, thank you.  Will any of these ideas help?  I hope so.  If anything, at least a conversation may start. Years ago when people asked me what I thought, I told a few and they thought I’d lost my mind. When I investigated the current D.C. promulgations, people again thought I’d lost my mind.  After awhile you begin not to speak up.  I was hoping the whole time that I was wrong.  Oh, I wanted to be so, so, wrong.  To Marty Lavin, I want to wish you well and treasure all the things I learned from you. They painted you, Gubb Mix, Ken Rishel and I with the same brush; only they have been far harder on you than the rest of us.

I asked my dad one time to try and fix my golf swing.  His advice after watching me was that there are 1,000 things going on in my swing and where would I like to start.  Our industry has many things it can improve on.  We need to start.  We still have and always will have the best affordable housing option story to tell people. # #

By Pat Curran, President
Precision Capital Funding

The Train To Oblivion

May 16th, 2011 17 comments

The MH train comes off the tracks.

It took me a while in the early 2000s to recognize a sea change had occurred in MH chattel lending.  Always chattel lending had been a loser for virtually every lender involved in it.  But it had powered the MH industry to 20% of all new housing starts, being responsible for up to 80% of all purchase money MH loans up to about 2000.

What always put new lenders coming into the industry to sleep is that with a growing loan portfolio size, the first 3-4 years of loan growth mask the true loan performance of the portfolio for the entering chattel lender.  But once the portfolio size stabilizes, one can gauge the true portfolio performance going forward. It will show very poor performance.  The lender will usually panic, not knowing what to do.  The smart ones, not too many of those, will shut down the program right then and take their losses.  Most others will muddle on as the employees try to keep their jobs by assuring their bosses that they can handle it.  They never can.  The program will ultimately collapse as things get even worse.  “Take your losses now or take bigger ones later.”  Some choice.

Before year 2000, the process went through repeated cycles of this start-hold-collapse for chattel lending by innumerable lenders, starting in the ’50’s.  Always new lenders came lured by the “high rates” available in chattel lending.  Few seemed to recognize how difficult it was too succeed in MH chattel lending.  None wanted to recognize that it didn’t matter how high interest rates were, only how much of them you kept in the end.  All believed they were smarter than the previous failed lenders, and would do a better job than those before them who had failed.  Few did.  (Boy, did I tire of hearing that crapiola!)

But in the early 1990’s  Wall Street money came to chattel lending.  Those were happy days!  Money grew on every Tree, especially Green ones.  A bevy of retail lenders came from 1991 on, all of whom were going to out-GreenTree GreenTree, the industry giant.  All these lenders got easy access to “Wall Street” money, at least for a awhile.  The infamous Asset Backed Securities provided liquidity for loans as seldom before seen in chattel lending.  Since nothing had changed from the underlying difficulty of surviving chattel lending, few, if any, survived this bout as the industry peaked at 372,800 new home shipments in 1998, and started a descent which has yet to end.

It took me awhile to recognize this sea change in chattel lending.  Few of us foresaw the true depth of the problem.  But by 2001-02 I could see that this time it was different.  Always in the past new lenders had come to subsidize the industry with the losses they took with unsurvivable chattel lending.  In the past 50 years these horrific lender losses had allowed HUDCode factories to flourish, retailers to become millionaires and land lease community owners to keep parks full, even as many shamelessly raised rents.  Again, this was all subsidized by terminally flawed chattel lending.  It went unrecognized.

But worse, the Wall Street boys do not like taking losses up the butt and started to dissect the reality of MH chattel loan performance.  What they found was chilling.  Losses for the best paper in LLCs were in the 30-35% lifetime range.  In the scratch-and-dent category, losses sometimes exceeded 100%. But worse, now that they knew, they blabbed the information to the world.  Several Wall Street firms tracked MH chattel loan portfolios closely and put out monthly reports of the carnage.  This differed from the past, when lenders, mostly banks, S&Ls and credit companies took their losses and seemed too embarrassed to tell the whole world of their travails.  After all, just a year before they were widely touting how great the chattel MH portfolio was performing and the great contribution they were making to “affordable housing”.  That would change soon enough.  Little did they know then how great their “contribution” was to be.

Here is an interesting sidelight:  I’ve identified above the recipients of the lender’s losses.  Note I did not include the borrower.  Yes, they got into a home they should not been able to buy, but they hardly ever got to keep the home.  Either they couldn’t afford it, or when they tried to resell it, they were unable to, for a variety of reasons.  This brought divorces, loss of home, children changing schools and all the other personal tragedy the loss of a home brings.  Few apologies here by the industry.  “We gave them a chance at home ownership was the industry refrain.”  Swell.

By the time GreenTree/Conseco collapsed around 2001-2003, the MH chattel world had changed.  Forever.  Most did not recognized it.  It was said to be just a periodic pullback.  The industry would return, they said, it always had.  Lenders had lost their nerve.  We could get the GSEs to bail us out.  We could get “Duty to Serve.”  If they won’t do it, then Title I will.  To this day we have Pollyanna’s carping this drivel.  “Its simply a matter of better sales training.  Now subprime is done, it will allow MH to return.  (Forget MH chattel lending is the King of Subprime.)  We are the only provider of non-subsidized affordable housing.  Its simply a matter to fix HUD Subpart I.”  In the face of a 90% reduction in volume, can it be that these thoughts still drive an industry?  It seems unimaginable.  (New to MH and the Subchapter I quest?  It is a part of The Manufactured Housing Improvement Act of 2000 dealing with recalls, home installation and handling consumer complaints on MH.  Like Don Quixote, the industry DC operatives, live to believe that only these DC quests are important.)

Around 2005-2006 the industry still had enough muscle to have faced that we were operating from a Failed Industry Model.  The Roper Survey told us that.  All of the reasoning above would not save us.  Only an acceptance that drastic measures were needed could have changed it for us.  Since we refused to act, “The Market” did it for us.  It punished tone-deaf MH business behavior with ruthless abandoned, and is still doing it.  The industry still doesn’t listen, though one wanders whether trying to really do something about it would have any impact at this point.  Frankly, I doubt it.  The high home value depreciation and high loan losses at increased loan volume seem impenetrable.  We have failed to move against this, even if it is possible to do so, which is daunting at best.

With Dodd-Frank and SAFE in place, and other regulatory devices sure to come, the impediments to an easy, even a difficult industry response are many.  n the face of this we are still worried about Subpart I?  Were we to get everything we wanted there, how many more homes would we sell? Heaven help us that this is the response of a terminal ill industry by its leaders.

As with all struggling businesses, the industry has scurried to try to make up for the existing industry model deficiencies.  Don’t have Greenseco-type chattel lending available?  Heck, start some buy here-pay here and create your own.  Want to keep rents coming in?  Buy homes and rent them out.  Many came to MH to escape the apartment business, but are now doing a version of apartments far worse than real apartments.  Overlook the regulatory constraints, the illiquidity of self-lending loans, roll up your selves and go to WORK, boys and girls.  Hey, it worked in the past going back to the 1950s.  Oh, really, and how did they handle Dodd-Frank then, did you say?  Or SAFE?  Oh..

Its a changed world and having lost our own lending business here we’ve transacted since 1972, we are impacted as are most others.  We are not and will not be alone, as the industry gets closer to 40,000 shipments than to 50,000.  At those numbers, I can only assume a whole new tier of businesses are endangered, as most of us scramble to avoid facing the prime business dictum:  Get out of a dead business.  This is bolstered by my own Prime Dictum:  “Never mind what people are saying, watch what is happening”.  And what is happening is an open book.  All can, or should be able to read it.

I suppose those folks who went to those long-ago industry speeches I gave, rolled their eyes then as I correctly prophesied the point where we now are, can point to their own acumen.  Come on Marty, it can’t get that bad they said!  Sitting there now with 50% LLC vacancies and unsalable self-financed loan portfolios as their response, they can take solace in their prescient course of action.  Of course.  Frankly, I would much prefer to have been wrong, very wrong.

So what does this all mean?  I hate to say it because I’ve tried to remain in the same industry as you have, but my industry left me.  Has it left you?  What is the next stop on this train to oblivion?  # #

MARTIN V. (MARTY) LAVIN
attorney, consultant, expert witness
practice only in factory built housing
350 Main Street Suite 100
Burlington, Vermont 05401-3413
802-660-9911, 802-238-7777 cell
web site: www.martylavin.com
email mhlmvl@aol.com

Editor’s Note:  We have honored the author’s request to post his article “as is.”  As with all our Industry Voices Guest articles, we invite reader response and dialogue, either public (by posting a Discus response below) or private (phone or email).  Thanks for reading and getting involved!

The SAFE Act…and other attempts by Washington to help “The People”

February 9th, 2011 No comments

“The nine most terrifying words in the English language are: ‘I’m from the government and I’m here to help.'” That observation was made famous by President Ronald Reagan, even if not originated by him. The recent passage of the SAFE Act and the subsequent developments at the state levels in reaction to it certainly brings to mind that quotation. Congress passed the SAFE Act as a reaction to the bursting of the housing bubble, which had been expanding for more than a decade. The SAFE Act has specific language that requires parties to comply with new licensing requirements if a particular party in the transaction performs two separate functions and uses the word “and” to connect the functions.

When a national organization developed “model” language to assist states in developing their laws in compliance with the SAFE Act, the word “and” was replaced with the word “or.” While the SAFE Act’s language permits individual states to adopt language that exceeds the mandates within the act, the net impact of the creation of the “model language” was that many states took the path of least resistance and used the suggested language from the “model.” The adoption of the “model language” by a significant number of states has raised the bar for compliance with the SAFE Act in those affected states. This extreme application using the model language raises the cost of doing business in the affected states and does not reflect the intent of Congress when the act was passed.

A partial list of the consequences of the SAFE Act:

  • Exit of lenders at the state level rather than go through the ratcheted-up licensing level
  • Increased costs for those lenders who did not exit
  • Increased costs for lenders with a national presence, for they have to comply with multiple states’ licensing requirements
  • Exit of lenders that had a multi-state presence, but could not handle the attendant compliance

The net result to the consumer is fewer lenders to compete for his/her business. Those lenders that are available have to charge higher interest rates to cover the increased costs that occurred from compliance activities.

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Douglas Gorman, Home-Mart, Inc.
doug@homemart.us

Indiana Manufactured Housing Association meets the SAFE Act

January 9th, 2011 3 comments

By new contributor Matthew J. Silver

Matthew Silver photoThe SAFE Act (Secure and Fair Enforcement for Mortgage Licensing Act) did not seem fair at all to the forty-plus attendees at the Indiana Manufactured Housing Association’s panel discussion on December 16, 2010 in Indianapolis, IN. Nor did it make them feel more safe or secure. Au contraire, many no doubt left feeling they were being singled out by a federal government regulation enacted in response to the mortgage lending crisis. The SAFE Act has created new challenges for the manufactured housing industry.

A significant SAFE Act requirement is for Mortgage Loan Originators (MLO’s) to take training and continuing education. MLOs also must undergo extensive background checks to become certified, register with the Secretary of State and with the Nationwide Mortgage Licensing System and Registry. These costs of the licensure process and related requirements present a financial hindrance, particularly for independent retailers and communities, but it certainly increases costs for compliance to everyone involved in lending and related activities.

The SAFE Act was part of the Housing and Economic Recovery Act (HERA) of 2008, and the law went into effect July, 2010. The states were given the responsibility to enact laws and enforce the regulations. But as Mark Bowersox, Executive Director of Indiana Manufactured Housing Association (IMHA), said, “The government has not issued a clear and definitive ruling on the intent of the regulation, but the bottom line is that only licensed Mortgage Loan Originators can discuss terms of a credit sale.”

Mark Bowersox, Executive Director of the Indiana Manufactured Housing Association opens the discussion by laying the background of the SAFE Act in Indiana.
Mark Bowersox, Executive Director of the Indiana Manufactured Housing Association opens the discussion by laying the background of the SAFE Act in Indiana.

Bowersox introduced the panel, which included Mark Tarpey, supervisor with the Indiana Department of Financial Institutions, charged with overseeing the enforcement of the SAFE ACT in Indiana; Carl Becker, Indiana Manufactured Housing Association’s (IMHA) lead attorney; and Ken Rishel, principal of Precision Capital, a manufactured housing lender and member of the Manufactured Housing Institute’s (MHI) Finance Committee, experienced working with federal regulations affecting the industry.

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Left to right:  Ken Rishel, Carl Becker, and Mark Tarpey. Tarpey said the DFI can look at hypothetical contracts, and based on current information, can say yay or nay as to the need for an MLO.

Rishel said unintended consequences often occur whenever laws are passed in a hurried knee-jerk fashion. This law originally was not thought to have much of an effect on the manufactured housing industry. It was supposed to get rid of the guys making phony applications and liar’s loans, not $20,000 loans on manufactured housing. But, Rishel said, “Nationally, it’s a mess. Each state has different regulations, making it especially difficult for owners doing business in more than one state.”

Citing the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), passed this year, Rishel said you do not see much reference to mortgage lending. “What you see is primary residence loans and primary residence lending. It blurs the distinction between chattel lending and mortgage lending. It also “…raises the cost of loan origination beyond the 6% we’re allowed to charge…. We figure it’s going to run around $4000 for a chattel loan. If a customer is borrowing $10,000, how can you add $4000 to this loan and expect the customer to pay? That’s crazy! Also, there are new requirements for appraisals that make it almost impossible to reach the standard they want for chattel loans.”

The soon-to-be established Bureau of Consumer Financial Protection, an agency inside the Federal Reserve System, with a surprising first year $500 million budget, is charged with protecting consumers from abusive financial products. It is assuming responsibilities from several other agencies, like the FTC and HUD, as well as the Dodd-Frank Act, and will eventually administer the SAFE Act. Said Rishel:  “Who are they part of, who do they report to? The Federal Reserve. Who runs the Federal Reserve? Ex bankers.”

The banks are going to take some hits on their credit and debit cards, he noted, but the fundamental issues of the banking business will remain, especially with the bankers in charge. As the new Golden Rule says, ‘Them that have the gold, rule.’

This new agency will be pro-active, not complaint driven. They will have agents looking for violators,” Rishel stated. “Who will they go after? It’s us, guys, we are the low hanging fruit. We have a lot of people engaged in this business who have been around for years, some are not legal, some are not compliant. If there’s five to ten billion in our loans out there across the country we’re going to be picked first. We are the low hanging fruit. There are others they will go after, but we’re easy, they may try to make their bones on our back. The car guys were nailed by this ten years ago.”

Elizabeth Warren is an Assistant to the President and a Special Advisor in the Treasury Department who is overseeing the development of the CFPB, and the possible new director. Rishel called Warren extremely anti-business. Indeed, some banking groups say Warren could hurt the availability of credit, especially to low income people.

As with much legislation enacted by Congress, the implementation and enforcement is delegated to others. Bowersox said this new agency is scheduled to be up and running by July, 2011. But there are many grey areas that need to be clarified, such as relating to pulling credit reports. The government asked for industry input on a proposed rule, but then did not consider our input for the final regulation, noted Bowersox. He said, “That final regulation has not yet happened, although here in Indiana our law went into effect July 1, 2010, to begin enforcing that final regulation that has not happened.”  The audience chuckled. The MLO regulation is being enforced, but other areas remain in limbo.

Several scenarios were raised by audience members, who were perhaps seeking ways to get around the new licensure statute. Attorney Becker replied: “You would have to appear in court, the judge would ask why you structured the document the way you did, and you would undoubtedly lose. Even if I represented you,” Becker stated, smiling. The attorney said if you have so much as a sheet of paper that displays possible credit rates on your counter that the customer can see, you may be in violation. You utter one word about financing or loan terms, you could be subject to substantial fines, as much as $25,000 per incident. For a company that processes multiple contracts a month, those sums can add up quickly.

Indiana and several other states were successful in exempting retailers who are only handing credit applications to customers. They will not be affected as long as they do not receive compensation for the referral to an outside lender.

Attorney Becker distributed an outline of very specific steps to take, according to Indiana law and the SAFE Act, if you want to structure a lease correctly. (footnote 1) However, this law has not been tested, and could very well be struck down by a future court ruling. Rishel said, “Based on Dodd-Frank, it is fairly certain the federal government is not going to allow RTOs and LO and LTPs to get out from under licensing when they implement their new rules.”

“As long as it is…a loan secured by a dwelling,” Mark Tarpey said, “it would fall under the SAFE Act jurisdiction and that would require an MLO. That’s the trigger, and until we hear otherwise from HUD, that is how we are interpreting this regulation.” He added: “In the past, if you sold goods or services on a retail installment sales contract, and you had more than 25 transactions a year, you were required to register with DFI. That will be gone. The only way you can get an MLO license with DFI or with the Secretary of State is to be tied to an entity, and that entity has to be licensed.” The entity can be an LLC (limited liability corporation) with only one employee, and that person can be the MLO.

Tarpey agreed it is unprecedented to give this new agency so much money and power, and suggested, “Congress may have to revisit this issue.” Meanwhile, “DFI began licensing mortgage lenders who were the named creditor and funder of first lien mortgage loans in January of 2009,” he stated. “Mortgage brokers who find loans for customers and MLOs who work for them are licensed by the Secretary of State. Table-funded loans are considered brokered loans (footnote 2) and are also regulated by the Secretary of State.”

When Tarpey was asked if anyone is under scrutiny or if any fines have been levied, he said no. “We have been trying to educate retailers and community operators since the law went into effect in July of this year about the SAFE Act. People have been compliant so far, and we hope that continues. We haven’t found any violations,” he stated. Mark Bowersox agreed:  “DFI has visited dozens of communities throughout Indiana but to my knowledge no penalties have been given.”

A couple in the back of the room said they have a ten unit manufactured home community, and they charge a flat 10% interest rate on the sale of a home on their lot. Rishel said the new agency will eventually find them and demand to see their books.

A member of the audience is asking the panel for specifics about becoming an LLC so they can provide loans according to the new regulations.
A member of the audience is asking the panel for specifics about becoming an LLC so they can provide loans according to the new regulations.

Rishel wrote in an email: “The first goal of the MHI Dodd-Frank Task Force, and my personal goal, is to get chattel lending treated differently than real property lending because it is different. Chattel lending on manufactured homes should have never been included in the SAFE Act, and does not belong as part of the SAFE Act, as the burden of licensure is too odious and too costly for the dollar amounts involved, and for those who make up the majority of those lending in this manner. Exclusion of chattel lending from both the SAFE Act, and other laws aimed at real property lending, should be the first and primary goal of the Task Force. Any other action should be secondary or a fall back action.”

To this end, Rishel strongly implored the members of IMHA to stay in touch with their association. He and other members of MHI (Manufactured Housing Institute) paid attorneys out of their own pockets to research the new laws. “We will be coming up with a plan, probably in January, contacting the state associations for support in trying to sway Congress to make amendments to these regulations before this new Consumer Financial Protection Bureau gets going. You will be asked to contact your senators and members of Congress,” he told those assembled. When the changes are made at the national level, you will need to weigh in on your state representatives to change state law accordingly, he added.

Rishel sounded a dire prediction: “We should have seen this coming. This is critical. If we walk away from Dodd-Frank, three years from now we will not have a lender in the industry. This is life or death for the whole industry. We need to pull together and get the exemptions we need.”

Certainly, while Mr. Rishel’s points were compelling, the thrust of MHI and the various state associations is precisely to prevent that from happening. This is one reason why Rishel and others strongly encourage actively engaged association membership. It is strength in numbers that can get and keep the manufactured housing industry moving out of such irksome challenges s Dodd-Frank and the SAFE Act. What is obvious from a meeting such as this one, is that without good legal counsel, which is far more expensive than association membership, the risks faced by an independent retailer or community operator are now too great to ignore.

(1) Indiana manufactured Housing Association members can see the attached file, Basics on Lease to Own, or contact Carl Becker for more information. (317) 598 4529

(2) A lending method employed when a loan originator does not have access to the money necessary to make loans and then hold them until it has enough to sell on the secondary market. As a result, the originator forms a relationship with a lender who provides the funds for closing and immediately takes an assignment of the loan. This is called table funding. Under regulations of the Department of Housing and Urban Development, table-funded loans must disclose service release premiums–profit received by the originator–on the loan closing settlement statement. Loans sold on the secondary market do not have to make those disclosures.

Photos by Matthew J. Silver, free lance writer

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MHI 2010 Scorecard

December 12th, 2010 No comments

MHI logoAt the end of every year, MHI evaluates its legislative and regulatory accomplishments and identifies unresolved issues for the coming year. In government, large, sweeping, decisive achievements are very rare. Change comes in increments, and in 2010, MHI steadily achieved important victories for the industry and our customers.

√ Full Implementation of FHA Title I Loan Program
In 2010 the implementation of changes to the Federal Housing Administration (FHA) loan program for personal property manufactured homes (or Title I), which began back in 2008, was completed. In June 2010 the FHA finalized changes to the program, and also in June 2010 Ginnie Mae lifted its 15-year moratorium and announced it was accepting applications for new Ginnie Mae lenders. In November 2010, Ginnie Mae released its pooling guidelines for loans insured under the new FHA Title I program. The issuance of these guidelines provides Ginnie Mae the ability to securitize manufactured home FHA Title I loans. The securitization of these loans allows lenders to obtain new capital, which can then be used to fund new loans for our customers. Without MHI’s encouragement and assistance, implementation of this important program would most certainly not have happened.

√ Favorably Amending Formaldehyde Legislation
In 2010 Congress enacted a law which requires all composite wood products nationwide to meet new formaldehyde standards. MHI achieved a huge victory for the industry by amending the bill to make the effective date for manufactured and modular homes to comply with the new standard tied to a “manufactured by” provision instead of a “sell through” provision. This is vitally important because the original proposal would have made thousands of new manufactured and modular homes in inventory unsellable once the law became effective. Without MHI’s lobbying, it would have cost the industry and our customers thousands of dollars to bring every home in inventory up to a new standard.

√ Extending the New Home Buyer Tax Credit
MHI joined with other industry groups and successfully extended the new home buyer tax credit for manufactured and modular homes. The extension provided up to an $8000 tax credit to first-time homebuyers who meet certain income tests and sign a sales contact to purchase a principle residence by April 30, 2010. When the extension passed, it required homebuyers to provide a settlement statement as proof of purchase. In manufactured housing “home only” transactions, sales contracts are used as opposed to settlement statements. With the assistance of key Senators, MHI was able to convince the IRS to accept sales contracts in the case of manufactured home purchases.

√ HUD Regulatory Action
The manufactured housing industry is regulated by the US Department of Housing and Urban Development (HUD). As such, HUD has responsibility to issue proposed rules and building standard updates received from the Manufactured Housing Consensus Committee (MHCC) in a timely manner. This year HUD released three proposed changes for the public to comment on. These changes include roof truss testing protocol, rules governing the on-site completion of homes, and updates to the HUD-Code. These changes, which have been sitting around for over five years, are now in the process of being finalized thanks to continued pressure from MHI. An updated HUD-Code is vitally important for the industry and our customers.

In addition, MHI was instrumental in protecting the industry in 2010 from remedial action by regulators regarding materials supplied for the installation of air combustion inlets and venting ductwork through crawlspaces. MHI’s continued dialogue with industry regulators to address these types of issues is a huge part of MHI’s mission.

√ Protection from the Bureau of Consumer Financial Protection
A major issue in 2010 was Congress creating a brand new federal agency to regulate the financial services industry and protect consumers. MHI was successful in exempting manufactured and modular housing industry salespersons and retailers from the scope of the new agency if they are: 1) acting as an agent or broker for a buyer or seller of a manufactured home or a modular home, or; 2) facilitating the purchase by a consumer of a manufactured home or modular home, by negotiating the purchase price or terms of the sales contract. MHI’s lobbying obtained this exemption, and we were one of just a few industries that were successful in getting this done.

√ Relief from the SAFE Act
The Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act passed by Congress in 2008 was intended to set up a nationwide licensing system for mortgage loan originators or individuals involved in the negotiation of a home loan. It was not intended to require the licensure of individuals, like manufactured and modular home salespersons or realtors, who are simply engaged in the business of selling homes. During the implementation of the SAFE Act, however, many state regulators have expanded the scope of the SAFE Act in order to regulate as many as possible, including retailers conducting purely administrative or clerical tasks in relation to a home loan. In 2010 MHI introduced a bill in Congress which clarifies the licensing requirements of the SAFE Act. MHI’s bill prompted Congressional leadership to send a letter to HUD, telling HUD that the SAFE Act was not intended to apply to retail sellers in our industry. MHI believes these actions will positively influence the outcome of pending regulations both at HUD and the state level.

√ Protecting Consumer Choice in Weather Radios
For the past four years, our customer has been threatened by legislation introduced in Congress unfairly targeting our homes. The legislation would have required every manufactured home sold to have a weather radio, ignoring the consumer’s ability to choose. Weather radios are quickly becoming antiquated, and MHI advocated for the enactment of a new system which already addresses the issue of notifying all individuals in an area of impending natural or man-made disasters. Even though the weather radio bill passed the House of Representatives, it has never been considered in the Senate due to lobbying efforts by MHI. MHI does not expect this issue to be raised in Congress again next year, however, if it reemerges, we will be ready.

√ MHI-PAC Support of Pro-Industry Candidates
MHI has a political action committee (PAC) which contributes to campaigns of pro-manufactured housing Members of Congress. In a difficult election year where over 70 existing members of Congress either retired or were voted out of office, 84 percent of the candidates MHI supported were re-elected. This is a stellar record, and MHI looks forward to working with the new members of Congress next year in advancing the MHI agenda.

The past two years have seen an unprecedented amount of new regulations that have had a widespread impact on every industry. This new focus on regulation has been driven by the belief that the events leading up to the economic crisis might have been prevented had there been more laws in place. Considering this environment, MHI has had much success in preventing many more burdens from being placed on our industry and our customers.

However, much more work lies ahead in 2011. Federal regulators continue to ignore laws passed by Congress requiring Fannie Mae and Freddie Mac to support personal property lending on manufactured homes. This hurts our customers’ ability to buy and sell their home. The financial reform legislation which passed in 2010 is a 2,000 page bill with widespread impact on all lending and finance activities, including manufactured and modular housing. We need to push for changes to the law and careful implementation of the regulations. There are important tax credits which the industry relies on which have yet to be extended, creating uncertainty for businesses and hampering their ability to adequately plan for the future and pass these benefits onto our customers.

As a membership organization, MHI relies on your membership and support. If your company is not a direct dues paying member of MHI, call us today at (703) 558-0668 to learn more about how to join.

And, now that you’ve seen our scorecard, how do you think we are doing? Please email or call me at (703) 558-0678, or tlong@mfghome.org. All comments and suggestions are appreciated.

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Thayer Long is Executive Vice President of MHI, the preeminent national trade association for manufactured and modular housing industries, representing all segments of the industries before Congress and the Federal government. Call (703) 558-0678 or visit www.manufacturedhousing.org

MHI Outlines Priorities for 2011 Industry Unity Critical For Success

November 9th, 2010 No comments

by Thayer Long

MHI 75th Anniversary logoEarlier this year, MHI outlined three broad areas where resources must be focused to protect and promote the industry. These three areas also encapsulate over two dozen separate legislative and regulatory initiatives MHI works on a regular basis. The three areas were 1) improved climate for financing, 2) updating the HUD-Code, and 3) protecting preemption.

At the time of this writing, the 2010 mid-term elections [were] just a few weeks away. And while the political landscape [was then] uncertain, the issues we are facing are not. In late September at the MHI Annual Meeting, MHI members and Board of Directors outlined priorities for the industry and the association in preparation for 2011 and the incoming 112th Congress. The priorities represent the collective input of manufacturers, lenders, community owners, manufactured housing state associations, retailers and suppliers—the entire MHI membership. A strong unified voice from all industry segments gives us a much greater likelihood for success. MHI is prepared to put forth every effort it can muster on these priority issues.

Of utmost importance will be implementation of the financial reform bill. The Dodd-Frank Wall Street Reform and Consumer Protection Act (H.R. 4173; P.L. 111-517) was enacted into law on July 21, 2010. The law is considered the most significant rewrite in decades of rules governing banking and financial services and will impact every financial institution and credit instrument in the nation.

One of the most visible and significant creations of the law is the establishment of a new independent and autonomous Consumer Financial Protection Bureau (CFPB), housed within the Federal Reserve, that will regulate all consumer financial products and participants, including mortgages, credit cards, banks, payday loans and other financial products.

Initial estimates conservatively indicate the act will require more than 240 new rulemakings, nearly 70 new one-time reports/studies, and more than 22 new on-going studies. This does not include the administration of existing regulations and laws that will be transferred to the new CFPB—there are nearly 20 existing consumer/housing finance-related laws that will now fall under the new bureau’s jurisdiction—or existing rulemakings that were in progress at the time of the bureau’s inception.

Since this legislation addresses all financial products, it stands to reason that provisions in this bill contain significant issues for manufactured home lending. Addressing these issues, and correcting them, must be the primary focus in 2011.

There still is work to be done at both the national and state level regarding SAFE Act implementation. The Dodd-Frank Bill transfers jurisdiction and oversight of a number of mortgage-related laws from the Department of Housing and Urban Development (HUD) to the CFPB. Included in the regulatory transfer is the shift of enforcement over the SAFE Act from HUD to the CFPB. HUD maintains jurisdiction over the SAFE Act until the designated transfer date of July 21, 2011. It is unclear if HUD will issue a final rule on the SAFE Act. However, regulatory oversight of the statute will eventually shift to the CFPB.

The SAFE Act, and uncertainty around its application to many industries, including manufactured housing, remains a key issue to be resolved in 2011. Achieving clarity in application and making the SAFE Act more relevant to the manufactured housing industry will be a high priority in 2011.

In the past three months MHI has been invited to White House sponsored events on the future of government in housing. All expectations are that the GSE reform will begin to move seriously in 2011. The U.S. Treasury Department is required to submit a report to Congress, no later than January 31, 2011, on ending the conservatorship of Fannie Mae and Freddie Mac and reforming the housing finance system. For more than a decade, GSE and federal support of manufactured home lending and finance has been limited, even with strong Congressional guidance in the Housing and Economic Recovery Act of 2008 (HERA).

Since manufactured housing is “housing” plain and simple, MHI will need to be actively engaged with committee members, administration officials and external stakeholder groups at the national and grassroots level to ensure manufactured housing is on a level playing field in any new housing finance system.

Tax extensions and tax reform have made the news headlines lately. Section 45L of the tax code provides a credit of $1,000 to manufacturers of Energy Star HUD Code manufactured homes and $2,000 for modular homes. The credit was originally enacted as part of the Energy Policy Act of 2005 and for the past several years has been extended on an annual/temporary basis. The credit officially expired December 31, 2009.

Regardless of whether tax extenders legislation is enacted during the 111th Congress “lame duck” session which is getting underway, the need to pass an extension will again arise early in 2011. The ability to rely on the long-term availability of the new energy efficient home tax credit is of critical importance. In addition, with energy efficiency standards potentially becoming more stringent the cost to build such homes will also increase.

In 2011, MHI will work to pursue a strategy that: 1) increases the amount of the tax credit; 2) provides for a long-term/permanent enactment of the tax credit; and 3) potentially monetizes the tax credit. MHI will also examine other options to provide maximum benefit to the industry.

A severe threat to affordability and the HUD-Code is underway because of the Energy Independence and Security Act of 2007 (EISA; P.L. 110-140) which contains provisions requiring the Department of Energy (DOE) to establish and implement energy efficiency standards for manufactured housing (Sec. 413).

The bill specifically tasks DOE, not the Department of Housing and Urban Development (HUD) to come up with new energy standards for manufactured homes.  MHI has developed a legislative proposal that would place responsibility for implementing energy efficiency standards developed by DOE within HUD and ensure that new standards strike a balance between energy efficiency and maximizing housing affordability for very low- and low-income families. The 112th Congress may yield opportunities to make targeted revisions to EISA.

If 2010 has been a pivotal year for MHI and the industry, 2011 will be a critical year for the industry. The market appears to have stabilized, however significant economic headwinds, a fragile housing market, and an active legislative and regulatory environment still threaten the industry.

We are all in this together. In particular, state association members, homeowners and residents represent the lifeblood of the industry, and MHI will be giving special attention to its grassroots mobilization efforts in 2011. MHI will be gearing up on effectively engaging these constituency groups and stressing the importance of direct member and industry involvement in the government relations process.

MHI is here to serve. We always welcome suggestions and feedback. If you are not involved, I encourage you to become active at the national level. The industry needs your voice.

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Thayer Long is Executive Vice President of MHI, the preeminent national trade association for manufactured and modular housing industries, representing all segments of the industries before Congress and the Federal government. He can be contacted directly at (703) 558-0678. For more information on MHI, visit www.manufacturedhousing.org.