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Posts Tagged ‘texas manufactured housing association’

Karl Radde – TMHA, MHI, Southern Comfort Homes – Addressing Bryan City Leaders, Letter on Proposed Manufactured Home Ban

April 9th, 2019 No comments

To All Concerned [Bryan City Officials, Others]:

As the retail location referenced by Mr. Inderman, I would like to take a moment to address the issues of eliminating MU1 zoning.  I have also served as the past Chairman of the Texas Manufactured Housing Association and serve on the board of directors of the Manufactured Housing Institute in Arlington, VA and remain steadfastly involved in promoting and protecting my industry from regulations at all levels of government that would attempt to lessen a person’s ability to obtain quality housing at an affordable price. 

I have stated for quite some time at individual meetings with City officials, testified twice at Planning and Zoning meetings and once at City Council about how I disagree with the direction the City seems to be going against manufactured housing.  I have sat through workshops where I could not testify or speak and had to listen to various City officials and employees give presentations on how manufactured housing is such a bad choice of housing.  I have listened to a radio interview with the mayor of Bryan effectively stating it would be better to live in one’s car than a manufactured home as a source for housing.  All of these comments have been directed at what seems to be two things: 1) general categorization that all manufactured homes depreciate in value, and 2) not wanting a manufactured home being placed [next] to a site built home since it would now also depreciate the value of said site built home.  After that there are generally comments about types of exterior or high loan rates or low tax values.

I think from all my conversations that city officials want to serve in the best interests of the city and I have not met anyone who has been impolite or intentionally insulted me.  My industry is one that is often misunderstood and is ripe with negative stereotypes about manufactured homes.  I live in a 1999 multi-section manufactured home and as a home that is pushing 20 years old, over the years I have had to perform routine homeowner maintenance and make a few repairs, including a new roof which is all the same as I had to do to a site built home I purchased in 2001 that had been built in the early 80’s.  Shingles and paint went on my manufactured home in exactly the same manner they were applied to my site built home.  Essentially, a home is a home.  There are certainly examples of manufactured homes that have served out their use or have unfortunately been neglected and will not get to realize their full potential; however, the same can be said for many site built homes in some of the areas currently listed as MU1.  Once again, a home is a home. 

Manufactured housing is one of, if not the only type of housing, that can be placed on a lot owned by a parent, grandparent, sibling, relative or other that while not willing, or is unable due to title encumbrances, to sell the property the homeowner can still obtain financing.   While some may view this as a less than desirable way to own a home, is it not still allowing someone to do just that, own a home?  This home will be taxed like any other home.  The owner occupied homeowner is still entitled to all tax exemptions they qualify for as any other homeowner.  The investor owned home is taxed no differently than any other investor owned property in the city.  Either situation is providing a resident of the city of Bryan an affordable alternative to renting an apartment where the[y] would have little to no yard to raise a family, and in the case of the owner occupied home is currently the only means of non-government subsidized affordable housing available.

KarlRaddeQuoteSouthernComfortHomesByranTXrePendingPlanBanMobileManufacturedHomes

This message from Karl Radde was sent to City of Bryan, TX about a pending ban on mobile and manufactured homes where they have historically been allowed. To learn more, click here.

 

I would therefore urge the city to reconsider this proposed change and work with citizens and industry representatives to develop a set of guidelines that allow manufactured housing to have parity with site built housing.  After all, if you drop the word “manufactured” you are merely left with a home and that is what all Americans deserve and desire to provide for their family.

Sincerely,

KarlRaddeSouthernComfortHomesIndustryVoicesMHProNewsKarl Radde, GM
Southern Comfort Homes
979-778-8224
979-778-9424 fax

DJ Pendleton Reacts – City Councilman’s Plan, Forcing Manufactured Home Communities to Provide Amenities

October 14th, 2016 No comments

First, I’m all for community owners investing in upgrades and tenant amenities to improve their communities as they see fit.  Improving and upkeep takes financial resources, which are inevitably passed on to the residents.

So there is always a balancing of desired improvements to affordability.  And these decisions should be made individually and in a manner that makes the most sense for a community.

The draft I have seen is lacking logistical details.  Namely:

  • how large does the vegetable garden space have to be?
  • Where can it be located in a community?
  • Who is responsible for the gardening?
  • What happens when like many Austin communities that are 100% occupied without existing space to spare? Meaning is some tenant going to be told their lease will not be renewed, not because they didn’t pay their rent or follow the rules and not because the land owner doesn’t want them to stay, but rather because the city is demanding a vegetable garden be placed where their home currently sits.
  • And even if there is vacant space, for some communities and prospective residents, the better use of available space could be to put another home there and allow another family a place to live rather than a garden.

I don’t know much about gardening, but from what I understand, it is a labor intensive and an expensive endeavor engaged by those with a passion for it. It is not a means of providing low cost, locally sourced fruit and vegetables.  So what happens if they build it and no one comes?  What if no one wants to garden in the community?  For some communities I can see this turning into a neglected part of the community.

I’m confused by the Council Member Renteria’s quote of, “There’s huge mobile home parks now being built all along the Eastern Crescent, on the border of the city.” “This is a little urgent now because there are so many in the pipeline.”

I know Scott Roberts got a rezoning approval for the construction of a new community, but the quote gives the implication there are tons of parks under development.  I’d of course love it if that were actually the case, but other than Robert’s Resorts, I’m not aware of any.

In fact, the city just turned down a request to allow for a new community to be developed after neighbors showed up to oppose it.

djpendletontmhaexecdirector-manufacturedhousingindustryvoices-anotherexamplegovtoverreachtargetingmanufacturedhomes-mhpronews

Links and headline were added by MHProNews. Graphic credit, MHProNews.

This just seems like yet another city overreach with an idea that has not yet been thoroughly thought out as to its practical impact.  And it is once again, the singling out of manufactured home communities compared to other housing options.

Notice there is no proposal to mandate vegetable gardens in multi-family housing, or even in other single-family neighborhoods in Austin.

And as for the playground or recreation facility requirement this would impose on new construction, I again think these amenities work for some communities – but others for reasons of cost, maintenance, and liability – it doesn’t.

I might add that the City of Austin has closed in the past some city parks and pools because they city did not want to spend the money to maintain them. But somehow the idea of forcing this onto a community with the idea that they can mandate such things and they will be magically provided for free is either an attempt at political pandering or a lack of understanding of logistics and costs. ##

dj-pendleton-mhpronews-com-executive-director-texas-manufactured-housing-association-DJ Pendleton
Texas Manufactured Housing Association (TMHA)

(Editor’s Note – Pendleton’s reaction to another zoning/MHC case, is linked here.)

Proposed Austin Area Manufactured Home Community Blocked – TMHA’s DJ Pendlenton’s Reaction

July 22nd, 2016 No comments

This is an unfortunate outcome.  Here was a situation that seems to be a perfect fit for a new manufactured home community development.  The 10 acres in question residing in the city are attached to 50 more acres in the county – where it is anticipated that the property owner will create a new community anyway – at least according to one of the commissioners. 

The Cactus Rose community in Austin has grabbed headlines and sparked all manner of reactions from the media and politicians, including efforts to now include manufactured home tenants in a Tenant Relocation Project the city is working on. 

Here is an owner that would accept the displaced residents, which up until now there are no other options for them and a clear unwillingness by the city to lift zoning prohibitions elsewhere or create a new community with city land. 

However, this solution was rejected by advocates of Cactus Rose due to lack of public transportation, presumably hoping to hold out and continue to leverage their situation to get a bigger buyout or dedicated land from the city they deem acceptable.

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Graphic collage credits, top image/headline – Austin Monitor. Bottom photo/text – MHProNews.com.  See related story, linked here.

The blatant pre-textual reasons provided by those who testified against and voiced by some of the commissioners, while frustrating and illogically, are sadly nothing new. 

Citing concerns over flooding because the engineer told a nearby homeowner they would be “re-grading” the land, increased traffic congestion, and taxing a nearby school that is already at capacity, can seem reasonable out of context. 

Trouble is many of these same opposing views were fine with single family (housing), or as one commissioner mentioned, multifamily projects for the exact same 10 acres. 

Any of the alternatives that are deemed acceptable would have the same impact on land topography changes, and increased traffic and school congestion.  If these are in fact the concerns, then logically the only thing they should have been advocating for or acceptable with is no development ever of any kind. 

As pointed out in the article, it can appear traffic, schools and flooding were the issues presented, but what was really driving those in opposition were not those issues.  They were opposed to the people they stereotyped in a public meeting that they thought they could expect to move near them, because they viewed those people as bringing increased crime and vandalism. 

Like for so many diversified housing development decisions that fall short politically, not from logic or sound argument, but rather those who would tell you they are for affordable housing options, just Not-In-My-Back-Yard (NIMBY-ism). ##

dj-pendleton-mhpronews-com-executive-director-texas-manufactured-housing-association-DJ Pendleton
Executive Director
Texas Manufactured Housing Association (TMHA)

DJ Quixote’s Adventures In La Manufactured Housing

November 10th, 2014 No comments

This is my third attempt at writing this article. I had to trash my two previous efforts.

After a bit of time, a bit of reflection, and a bit of perspective I’m giving it another shot. This third attempt was born from my previous efforts to understand why I was having such a difficult time penning a response to the CFPB white paper as more discarded paper accumulated around my desk.

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The only reason I can determine is that like the self-proclaimed knight, Don Quixote, turned crazy by an obsession of returning to a world of chivalry, I have at this point been driven…nuts.

The experiences I have had over these last few years reading federal laws, proposed regulations, final regulations, interpretations of regulations, readiness guides, flowcharts, and watching hearings, have finally infected my brain in a way that has put me on a course, for this article at least, into a world of perception distortion and fantasy.

Similar to Don Quixote’s obsession that he was a knight out on a noble quest, my incessant reading of CFPB publications has cast me down a path that is no less fantastical. Rather than fight against this effect, I’m choosing to steer into the mental skid.

There are many industry responses on the recently published CFPB white paper on manufactured housing. Those lamenting the inadequate attention the Bureau gave to realties in our market and glancing over things like cost of funds, interest rate risk, borrower risk, lack of secondary market, and portfolio based lending are all well founded. For more on this I’d suggest Dick Ernst article Deconstructing the High Cost Mortgage Loan. In my two earlier drafts I did this too. And for follow up articles after I come back from my journey today atop my skinny stead, Rocinante, I might publish them as well.

But not today.

Today I’m asking that you travel with me and my trusty sidekick, Sancho, off into a distorted reality of a world of my creation. So indulge me for a little while, even if some of the suggestions are as preposterous as fighting windmills I believe to be giants. For this is my Don Quixote journey compelled by my most recent reading of the CFPB white paper on manufactured housing.

BACKGROUND

Before jumping into my La Mancha, a quick bit of context could be helpful for those not as familiar with recent CFPB happenings.

On September 30, the CFPB published a white paper on manufactured housing. If one were inclined to give the CFPB the benefit of the doubt, you could conclude they tried their best to present an objective analysis of our industry without injecting any intentional or unintentional biases. Of course, there are those that will assert they did not achieve this, and others still that claim this was never their intention. My goal will be to stay more positive than the cholericly tempered literary counterpart in my feeble attempt at analogy, but forgive my moments of weakness when certain angers are irrepressible (Note: I’m trying to up my level of analogy by turning to classic literature, but worry not as I’m sure Star Wars and Lord of the Rings themed articles will dominate my future efforts).

The white paper identifies the following seven “key findings:”

  1. Manufactured housing is disproportionately located in non-metropolitan areas.
  2. Compared with residents of site-built homes, manufactured-housing residents are somewhat more likely to be older and tend to have lower incomes or net worth.
  3. Manufactured homes typically cost less than site-built homes.
  4. About three-fifths of manufactured-housing residents who own their home also own the land it is sited on.
  5. An estimated 65 percent of borrowers who own their land and who took out a loan to buy a manufactured home between 2001 and 2010 financed the purchase with a chattel loan.
  6. Manufactured-home owners typically pay higher interest rates for their loans than site-built borrowers.
  7. The current state of manufactured housing production, retail, and financing reflects in part a rapid growth during the 1990s and subsequent sharp contraction.

If you would like to see the press release from the CFPB you can find it here:

If you want to read the 54 page white paper you can find it here:

http://www.mhpronews.com/home/industry-news/industry-in-focus/8460-cfpb-report-alleges-manufactured-housing-lending-is-expensive-sparks-controversial-comments-from-cfed-mhi-and-other-mh-industry-professionals (Editor's note: See download at the link above.)

I’m not going to address in detail or systematically attack the CFPB assertions. Quite the opposite.

I’m going to assume the basis for the examination of our industry and the subsequent white paper was intended to drive future policy based decisions and discussions. Where I might differ with the regulators is where I think the facts they have compiled should direct us, and the questions it brings to light that should be the focus of their future efforts.

However, I have a feeling my policy proposals will only come to be in fantasy and not in reality. But come on Sancho; I’m sure this will only hurt a little.

Here is my list:

  1. Why is manufactured housing disproportionately located in non-metropolitan areas? Shouldn't the policy be of inclusion and consumer choice rather than exclusion and limits?
  2. Wouldn’t it be nice if the housing playing field were level, markets not artificially influenced by selective polices, and either the removal of subsidies or, alternatively, bring the subsidization to manufactured housing to compete, rather than stacking the deck against us?
  3. Why was there no attention given to existing state laws, regulations, consumer complaint levels and consumer notices? And why does the white paper read as though there is a critical and immediate need for more regulations and notices?

WHY ARE CITIES STILL ALLOWED TO HATE US?

The white paper does list factors as to why manufactured housing is more of a rural housing option and not in more populated metropolitan areas. They mention zoning prohibitions as a contributing factor. Those of us in the industry know this is the factor limiting manufactured housings’ presence in urban settings. The question this should spawn is whether or not it is good policy to allow cities this type of prohibition. With new, modern, efficient, heavily regulated manufactured homes, what is the public policy that benefits a city from prohibiting manufactured homes and what are the benefits to removing these restrictions?

My case for the latter is simple – in city zoning restrictions modern manufactured housing should be treated exactly the same as all site-built residential construction. Equality. This would create a world where any type of discriminatory treatment directed exclusively towards manufactured housing placement is void.

Now some regulators and city officials might scoff in stern disagreement, but why?

Whatever the city restrictions are for site-built housing placement have those apply equally to manufactured housing. The preemptive federal construction code and state installation requirements modeled from the national standard satisfy any safety and soundness concerns.

Allow these standards that insure the homes are not substandard to serve the purposes they are intended. And if a city decides to impose some sort of home aesthetic mandates, energy efficiency standards, or any other requirements (so long as they don’t interfere with the federal construction or installation codes), simply require the standard to apply to all housing equally. This would allow manufactured housing to compete on the same playing field and increase consumer choice.

Another reason this is good policy is to consider the benefits the economy and labor force receive through a manufactured setting.

We are talking about factories with skilled, well paid, middle class, labor jobs. They draw paychecks, pay taxes and receive benefits. Not to mention worker protections and oversight from internal safety and quality control, to regulatory oversight and redress like worker’s compensation protection and OSHA. They are also U.S. jobs that are not outsourced.

In manufacturing you have greater efficiency in construction, less waste, organized and predictable supplier networks benefiting those producers down the line. How is it that this reality isn’t championed like other manufacturing industries?

How much more do you think your car would cost if instead of being produced in a factory all the parts were shipped to your driveway where contract workers showed up and built it on site. How long do you think it would take to build it? What about your television? How about your cell phone? If the market is allowed to work without manipulation efficiencies in production lower costs allowing some consumers the opportunity to pay less for an equivalent product. The white paper addresses the fact that on a square foot basis manufactured homes cost less than half as much as the estimated $94 per square foot site-built home.

Some consumers would like to have this choice when it comes to housing. And for others it would open up the chance for them to be homeowners who otherwise would not because they were priced out of the site-built market.

And yet, I’m not even advocating for a wild swing in the pendulum away from site-built to manufactured housing. I’m simply saying remove the non-level playing field, and allow us to compete equally.

Could the CFPB impact this? Sure.

With its broad authority and charges for greater equality, fair housing, transparency and consumer choice there are measures the Bureau could take to level the field.

One quick suggestion, when dealing with a new manufactured home in a metropolitan area that conforms to the federally mandated code and equivalent site-built restrictions for a given area, in order for a local government to pass a housing restriction on only manufactured housing and not any other residential housing, they must demonstrate an overwhelmingly compelling reason as to why they believe such a restriction is superior policy. In their required justification they would have to defend why their selective exclusion would not have an adverse or disparate impact on housing choice and any protected classes such as families who would like to live in something larger than a one-bedroom apartment or elderly retirees on fixed income who need a lower cost home choice. Failing to meet a much higher burden in ordinance creation would result in the ordinances being deemed void as either against public policy or a violation of fair housing ideals.

I know, such things are crazy talk from a guy wondering around in the sun in an old suite of armor. Completely irrational, right?

Well, I got the outfit on, and I’m on the damn horse so I might as well go for it, so here it goes.

The CFPB is big on consumer notice and consumer choice, so why not add a consumer notice for any site-built home being financed that says, WAIT. Before you sign, did you know you might be able to buy an equivalent house for less than half the cost per square foot of this one?” The same notice mandate could be applied to Fair Housing regulations requiring disclosures prior to a home purchase or a residential rental that a manufactured housing option would be hundreds of dollars less per month in all-in housing costs.

Reading between the lines of the white paper it sounds like more notices and warning mandates are coming down the pike for the manufactured housing industry, so I’ll ask another crazy question. Why don’t we ever get notices showing our clear advantages for consumers?

WHERE ARE YOU SUPPOSED TO LIVE IF YOU MAKE $26,000 YEAR?

The demand of affordable housing is undeniable. As incomes stagnate and living costs increase the demand for affordable housing will continue to grow. The manufactured housing story in this equation is one of “haves-and-have-nots.” But in our story the multi-billion dollar issue is subsidization. And we are in the “have-not” camp.

Any way you slice any of the myriad of “affordable housing” incentives or programs, at their core is government subsidization. I know there are the Libertarian minded readers out there disgusted at the idea of government subsidy. And similar to the city ordinance restriction argument I previously made, all things being equal and all subsidy removed, I know manufactured homes would compete for a much higher market share of housing.

However, while I’m admittedly crazy in this current effort, I’m not crazy enough to ever think all subsidization in all forms could practically be removed. I might think I’m a knight on a horse, but I’m not so nuts to think I’m the back-end of a horse (though some may beg to differ).

Instead, this Don Quixote is on a different quest of insane ideas. If you are going to subsidize programs to foster home affordability, why don’t you provide subsidy and incentive to clearly the most affordable housing option of manufactured homes?

Manufactured housing is, at times, somewhat eligible for some types of current programs. But in practice the government policies and attentions applying affordable housing subsidy in large scale to manufactured housing are more of a unicorn than an everyday work horse.

The subsidy is pervasive starting at the federal level, but also at state and city levels. Site-built and multi-family developers are granted incentives, tax breaks, and many other subsidies if they are building affordable homes or units. Most of the time the requirement to get the subsidy is that only a small portion of the total development provide affordable options. This is most common in apartment construction, but site-built and condo development also share in these subsidy treasures.

I know I’m the crazy one on the horse here, but let me see if the sane world has clearly figured this out.

The government will provide incentives, tax breaks and subsidy to build affordable housing that only serves a small percentage of the total development, then additional government subsidy is layered on to the buyer or renter in down payment assistance, reduced principal programs, subsidized lower interest rates, forgivable loans or rental housing vouchers to get people into “affordable housing.” I’m sure this makes perfect sense to everyone else, but in my clearly delirious mind it begs the question, “Why not just focus on housing that costs the least?”

Granted, there is a lot of dangerous substandard housing. The Colonia problem in Texas to name just one. But for safe, efficient, and easily replicable affordable housing, how is it that manufactured housing is either ignored or purposefully overlooked?

The white paper provides the facts on the superior affordability of manufactured housing in Table 5 when they compared manufactured housing in both metro and non-metro areas to both site-built and renters. Manufactured housing was less expensive ranging by more than half the monthly costs (metro site built $1,505 to metro manufactured housing $686) to about $100 less per month (non-metro rental $654 to non-metro manufactured housing $551). This means we win in all categories in all locations on affordability.

Table 5 Source, CFPB Report.

If manufactured housing is the least expensive compared to any other safe, regulated, quality living accommodation, then imagine the benefit of subsidization directed at manufactured housing. Wouldn’t such a crazy idea better serve the goal of providing affordable housing to more people?

Coming out of the recent housing crash, the idea of people choosing a home they could afford and living within their means seemed to penetrate the psyche of most of America. However, there seems to be some terrible stigma in maintaining this simple idea, even in the context of affordable housing, if the result is a conversation about homes that cost less than $100,000, less than $70,000, less than $50,000 and especially homes below $30,000.

Why?

If the home is regulated to ensure consumer safety, efficiently produced, and in nearly all cases larger than any other option at a similar price point, why then is the idea so ludicrous that this might be the best choice some buyers or renters could make?

I can’t get an answer out of my horse or Sancho on this, so I guess I’ll have to accept the idea that the saner approach for a person who can only afford a $45,000 house is to live in a $165,000 house with $120,000 worth of combined developer and individual subsidy attached to it.

It sure seems to make sense that subsidy dollars could go further and help more people if applied to the type of housing clearly superior in affordability. But then again, I’ve lost my marbles.

By the way, just under $40 billion was budgeted to be spent by HUD for all of its subsidized affordable housing programs in 2012, and this does not include any of the loan guarantee dollars and authority to incentivize securitization of mortgage loans that drastically underutilize manufactured housing.

I’m not saying manufactured housing programs should receive all or even the bulk of the subsidies. I’m merely suggesting that when doling out billions of dollars some focus and some programs specific to manufactured housing should be adopted. Such programs would better achieve the goals of providing safe, affordable housing while preserving the dignity and self-worth of recipients who receive the benefits.

NOTICE, TRANSPARENCY AND CONSUMER PROTECTION

The white paper has been read by more than just this crazy rider as a volley of shots across the bow and foreshadowing of possible new regulations for manufactured housing.

Here are just a few excerpts:

“At the same time, these same groups include consumers that may be considered more financially vulnerable and, thus, may particularly stand to benefit from strong consumer protection. “

“Thus, manufactured-home owners who can choose either chattel or mortgage financing (generally, those who own the land to which the manufactured home is being permanently affixed) may face a tradeoff between lower costs at origination and a quicker closing with less collateral, on the one hand, and lower total costs over the life of the loan along with greater consumer protections on the other.”

“The extent to which consumers are aware of theses tradeoffs and how consumers weigh them remains an open question. It is not clear to what degree upfront costs and convenience, lack of availability for mortgage financing, or lack of relevant information about financing options drive consumers to chattel financing.”

“Chattel loans may close more quickly than or have lower upfront costs than loans secured by real property, but chattel loans tend to have higher interest rates and provide borrowers with lesser consumer protections than mortgages secured by real property.”

“The relative scarcity of data on manufactured housing compared with data available on site-built housing and mortgage finance in general remains a challenge for research related to manufactured housing. This gap in data availability may begin to narrow, however, in the coming years.”

“The classification of some manufactured-housing retailer activities as loan originator activities provides consumer protection for homebuyers in what may be a high-pressure sales environment.”

However, nowhere in the white paper, in particular when addressing consumer protection and apparent perceived abuse by the industry, does the paper mention state law or state regulation. Manufactured housing is arguably the most regulated form of housing stemming from both the federal level and state level.

At least in Texas there are numerous consumer disclosures and cooling off requirements prior to buying to address the often mentioned “high pressure sales.” Texas also has a three day right of rescission for all consumer funds. In fact, in Texas the consumer is so protected that an equivalent contract agreement that exists in the site-built world were a buyer may end up losing earnest money is not allowed in Texas for a manufactured home purchased from a licensed retailer.

The CFPB fails to acknowledge that state regulators and auditors are enforcing consumer protection laws and regulations. These state level “cops on the beat” audit consumer files to ensure disclosures are provided, and the goals of consumer choice and transparency are achieved.

In Texas, there is also a specific chattel manufactured housing lending regulator, the Office of Consumer Credit Commission. With existing state laws and regulations this additional regulator is there to protect consumers who obtain chattel manufactured home loans. Texas state law requires any chattel loan contract contain the name and contact information of the OCCC notifying all Texas chattel manufactured home borrowers who the consumer protection regulator is and how to get in touch with them to file a complaint.

The white paper implies there are great injustices and consumer harm befalling those extremely vulnerable who are forced, as a last result, to purchase manufactured housing. The CFPB’s perception of consumer harm prompts them to allude to future CFPB regulation. But before we run to put out some blazing inferno, maybe we should ask if there is even a fire burning.

Let’s look at Texas’ manufactured home chattel financing. In 2013 HMDA data shows there were 7,094 manufactured homes sold with financing in Texas. The titling data at TDHCA actually has the number of chattel financed manufactured homes sold in 2013 at 9,759. As many institutions are currently exempt from HMDA reporting, and by the CFPB’s own admission the HMDA data is lacking when it comes to manufactured homes, we are going to use the Texas titling data. However, in order to align with the fiscal year used in the reporting of the OCCC, the apples-to-apples time frame we need is August 2012 through September 2013.

In Texas we had 9,509 manufactured homes sold with chattel financing between August 2012 and September 2013. In this same time frame the total number of consumer complaints processed at the Texas OCCC for manufactured housing lenders of chattel loans was 15. This means the percent of complaints compared to chattel manufactured home loans is .157 percent. I hope I’m not being too crazy to think that any industry would love to have less than 1/5th of a percent as their ratio of consumer complaints to sales.

I know the skeptics and supporters of increasing regulation might take issue with my facts. In order to cover all my bases I also looked at the CFPB’s own consumer complaint database. According to the CFPB their complaint database for mortgages dates back to December 1, 2011. The complaint data does not distinguish manufactured home from site-built, nor does their mortgage category separate chattel from real property mortgage loans. But you can filter to just mortgage complaints in Texas where the consumer disputed the company’s (lender or servicer) response.

When you filter the data to those categories there are 1,419 consumer disputed, mortgage complaints in Texas. Again, we can’t narrow down the complaints to chattel manufactured housing, but the companies’ names are listed. Based on the names of the common lenders who make or service manufactured chattel loans, the total count I have for companies who possibly have chattel mortgage complaints lodged against them with the CFPB is 64. Obviously, all 64 of the complaints are not manufactured chattel loans, but there is no way for me to tell with the data presented. It is easy to assume, especially with manufactured housing accounting for only 7.6 percent of the Texas housing stock that if one were able to dissect the 64 only a small percentage might be manufactured housing chattel based complaints.

But let’s err on the side of very conservative assumptions. Let’s take all 64 as if all of them were the result of consumers complaining about chattel mortgages on manufactured housing in Texas. Since December 1, 2011 when the CFPB database begin populating complaints on mortgages through July 31, 2014 there were 23,292 manufactured homes sold with chattel loans in Texas. Again, knowing the real number is lower, most likely much lower, than 64, but using that for a conservative estimate the ratio of complaints to sales with chattel loans is .274 percent.

In the face of this data, I’m forced to take off my helmet to scratch my head in confusion. Where is the extreme injustice? Where are consumers being harmed at such startling degrees that require significant federal regulatory reaction?

Let’s assume it is impossible to eliminate in any market all consumer complaints. If everyone can agree zero consumer complaints is not possible, then there must be some threshold goal. Ideally this goal is very low. In my delirious state I might suggest that less than half of one percent is very low. Everyone should further be able to agree that any additional regulation comes with additional costs that must be absorbed, almost assuredly in the form of pass through costs to all consumers. There is also the reality of diminishing returns triggered when each additional costs only produces fractional changes. The question then is, how much consideration and cost benefit analysis is being done when additional regulatory burdens are contemplated? If the reporting by consumers of all alleged harm is incredibly low, but the cost of additional regulations with the goal of reducing consumer harm further are felt by 100 percent of the consumers, is the additional regulation really in the best interest of the consumers?

I’ll put this another way. I’ll put it in the form of a consumer disclosure and consumer choice.

Consumer Notice: This industry historically experiences less than half of one percent in consumer complaints. Knowing this would you choose to pay an additional $175 to lower that amount by an additional .002 percent?

OBVIOUSLY RAMBLINGS OF A CRAZY OLD COOT

Clearly many of the points in this article are being made with hyperbolic language, rhetorical questions, sarcastic tone, and wild assertions. This was done with the purpose of trying to shock the system so that for some maybe these extremes make them see things or think of things differently.

For those that took the time to indulge my efforts in this article and leave with the same impression you started that I’m off tilting at windmills, well, then I’m sorry to have wasted your time. However, my hope is for most there were at least some things and some ideas that provoked more questions or ideas.

And finally, for the others who found themselves agreeing with me, nodding your head while you read, and pumping your fist thinking, “man, he is right,” (ok, that last one I know was a stretch), well I have news for you too…I hope you have lots of metal polish around to shine up your suite of armor because you are clearly just as crazy as me. ##

dj_pendleton__credit__mhpronewsDJ Pendleton

Executive Director

Texas Manufactured Housing Association

What Manufactured Housing Competes Against

August 7th, 2012 5 comments

l;ance-inderman-mhpronewsI think we need to take a serious look at what our industry is competing with in the housing marketplace and the regulation that each of our housing competitors are facing.

We worry way to much about what one of the 3-C's of manufactured home building are doing than we should. As a percentage of new homes sold, we just keep loosing ground.

The site builders are pushing us further and further into the rural abyss. I have a partner that builds homes with me in Lubbock and we are able to build a brick home with porches and 6/12 roof pitches for around $40 a square foot including material and 100% subcontract labor.

I have another friend that builds about 125 new homes a year with annual sales of about $35,000,000 and a little over 10% net bottom line. He does this with 9 employees, no multi-million dollar building, total work in process and finished goods of about $1,500,000. He has no licensing requirements. His company and his salespeople have no continuing education requirements. He does not offer paid vacations to his employees or laborers. He is not faced with massive unemployment taxes if he does not have a house to build tomorrow. Government mandated health insurance does not affect him. Basically he has almost no regulation and very little overhead. He builds a quality product and is very successful.

I drove down the beach between Beaumont and Galveston and pass one RV park after the other with all types of RV's up to buses that cost over a million dollars.

I saw manufactured homes that were at least 12 feet in the air to protect a $40K double wide from flooding. The construction cost to complete these jobs has to be close to exceeding the cost of the home itself. This does not appear to be a very efficient way to supply housing to me. It looks to me that the RV industry is getting a big piece of our pie and the site builders are getting an ever increasing bite as well.

We have to become more efficient at what we do from the factory to the finished product.

I think the factories do a fabulous job building 16×76's, its the most efficient 3 bed 2 bath housing I have ever seen. But by the time we: 

  • market that 16×76 to our customer at retail,
  • deal with all the regulatory requirements to install and complete the home,
  • deal with private finance against government subsidized financing on site built's,
  • escrow over priced insurance and taxes and
  • then deal with the cost of servicing a home in the middle of nowhere,

our monthly payments are as much or more than most people can buy a new starter home including land in a tract home subdivision.

We must do everything in our power to control these costs, including, but not limited to:

  • getting our finance on a level playing field,
  • getting higher deductible lower cost insurance in our market,
  • factories working with the retailers/installers to do everything possible to lower the cost of installs and
  • last but not least keeping the regulators at bay.

I think our industry has a remarkable product that we can build and a great story to tell but all you hear and see is "I don't want a trailer in my back yard."   Most of those yards now include a brick home with an RV in the driveway.

I've said it a 1000 times that if we did not have FHA, FNMA and Freddie Mac that our industry would be producing the most affordable quality housing option on the market. What gives?

Lance Inderman

l;ance-inderman-mhpronews(Editor's note: Lance Inderman is arguably one of the most successful independent retailers of manufactured homes in the country. Champion Homebuilders recently purchased Athens Park Homes, a HUD Code, modular and park model builder that Lance and his associates operated. He was the Chairman for the Texas Manufactured Housing Association in 2010-2011 and remains an active player there. Lance plans to attend the TMHA annual event.)  

Greeting the Wolf with Shotgun in Hand

August 3rd, 2012 4 comments

I was talking to a member on the phone recently and he asked, “DJ, when is your ‘interim’ going to actually be an interim?” I simply had to laugh and politely remind him the association is and will always be full time. The most we can hope for during interim years is for something less than the 90-hour work weeks the Texas legislative session brings every other year. I had to laugh again at this ludicrous thought when I recently landed in Austin at 12:45 a.m. back from a quick trip to Washington, DC.

But there are no complaints here. When I ask members how business is and they give the positive response: “busy,” I always respond, “Busy is good.” The same is true for our association.

Our industry is also busy right now. Over the past several months we have seen an ever-so-slight improvement over previous years, but improvement is improvement. After three years we welcome a return to “busy.”

This year Texas’ national market share in shipments has been approximately 20 percent. In 2012 one out of every five manufactured homes sold was sold in Texas.

It goes without saying, but I’ll say it anyway – God Bless Texas.

Of course, everything is not bright rays of summer sunshine. This is depicted by the imagery of our front cover and the efforts underway that demand so much time and so many additional resources.

To read the article referenced in the image above, click the image or click here.

Before I go into the details and describe the issues and threats on our horizon, I want to acknowledge it is not my intent to scare the ever-living-life out of you. Our membership is diverse and we have differing levels of risk aversion. From a credibility standpoint TMHA does not want to be a “boy who cried wolf.” However, we also refuse to be oblivious.

There are ominous clouds on our horizon, and we don’t know how these potential storms will play out. New laws and regulations take years to become a business reality and still years more to be challenged and legally tested. The trouble is these new laws and regulations resulted from a pendulum swing caused by the subprime meltdown. With this significant slant, the penalties are far from toothless. I suggest one’s attitude toward future risk should be determined, in part, by the level of volume and personal money at stake in these regulated markets.

Mindful of the axiom, “Las Vegas is not built on winners,” we must remember the purpose of the Consumer Finance Protection Bureau. It is not their goal to allow lenient or flexible regulatory enforcement. Case in point: the CFPB already has a consumer complaint hotline and has dedicated a portion of its website for consumer complaints. The question I have is, “How does one know if the person being complained about broke any rules if the rules are not written?” And yet, this seemingly obvious logic did not get in the way of the CFPB from establishing a hotline first thing out of the gate.

So, whether you are hoping for the most defensible, fortified position in light of the new regulatory developments or you are betting true enforcement will never actually materialize, the reality is there are federal threats heading our direction. In this edition, we explore this and other key issues relevant to TMHA and your business.

The issues and dangers are perceived by TMHA’s Executive Board, Board of Directors, our national organization, MHI, and others in our industry as posing a significant risk to our Texas market and our national market. At TMHA’s Third Quarter Board of Directors meeting, it was inescapably clear that inaction at this critical time was not only too risky but too costly.

Therefore, TMHA pledged both efforts and financial resources over the next 12 months to join forces with MHI and others to navigate us through these treacherous waters

The possible successes of our efforts are unknown at this point. Regardless, I fear we will not come out unscathed.

Fundamentally, we first must learn if the regulatory powers care about this area of the housing industry. If so, do they trust us enough to make the changes we advocate? Both of these questions must be answered “yes” in order for us to have a fighting chance. Otherwise their massive regulatory locomotive will run over us.

I can assure you, any potential losses will not be for lack of effort, time, money or passion. Personally, I’m optimistic. We are an industry in unquestionable demand serving good consumers in an industry we passionately believe in. We will succeed, adapt, and thrive regardless of any final rules or regulations.

I recognize there are some who criticize our efforts. Some will continue to deem us another “boy who cried wolf.” To those critics I simply say, if it turns out we are the boy who cried wolf, at least know we did everything in our power to be ready. And, if the wolf actually does show up, we greeted him head on…shotgun in hand. ##

By D. J. Pendleton, J.D. Executive Director, Texas Manufactured Housing Association (TMHA) 505 W. 14th Street, Austin, Texas 78701 512-459-1221

(Editor's Note: The Texas Manufactured Housing Association, Chairman of the Board, Ronnie Richards, who is VP of Marketing at manufacturer and retailer American Homestar, spelled out in detail the concerns DJ's article is referring to, see Ronnie's well documented article here. These are among the reasons why association membership is more important than ever before in our Industry. To find your state, community or national association, click here. To paraphrase Ben Franklin, we will either hang together, or hang separately.

Information on the TMHA's annual event is at this link here. The dates are Sunday, August 19, 2012 – Tuesday, August 21, 2012)

Putting the Qualified Mortgage Dilemma in Perspective

July 19th, 2012 4 comments

Ronnie Richards MHProNewsThe Dodd–Frank Wall Street Reform and Consumer Protection Act was signed into law by President Obama on July 21, 2010. The Act implements financial reform sponsored by the Democratically controlled 111th United States Congress and the Obama administration. Passed as a response to the late-2000s recession, the Act is bringing the most significant changes to financial regulation in the United States since the reform that followed the Great Depression. The biggest threat to the manufactured housing industry and the Texas Manufactured Housing Association is the impact the new more stringent regulations might have on loans under $50,000.

I did some research using sales data available on the Texas Department of Housing and Community Affairs Manufactured Housing Division (TDHCA MH) web site and the Statistical Surveys data my company subscribes to and it confirmed my concerns. According to TDHCA MH data, single section homes comprised 60% of new home retail sales for the five months ending May 31, 2012.

When I ran a retail selling price analysis in Statistical Surveys for the three months ending March 31, 2012, the most recent period available, I found that 92% of all single sections sold at retail had a selling price of $55,000 or less and 7% of multi-sections fell into that bracket. There were 1097 new home single section sales with lender liens titled as personal property (chattel loans) during the first five months of 2012.

Assuming 93% fall below a $55,000 sales price which with a 10% down payment would mean a loan balance of $50,000 or less, 1020 single section homes and 71 multi-section homes would be affected by the new regulations. That is 27% of all new HUD Code sales and 52% of all personal property financed sales.

I don’t need to tell you how that could affect our industry.

Just the manufacturer dues revenue which accounts for approximately 75% of TMHA revenue would decline by 27%. There are sixteen active HUD Code plants in Texas and if you assume a workforce of 150 at each of these plants a reduction in production could result in 648 Texans losing their jobs and that doesn’t even take into consideration the 55 active licensed out of state plants.

Texas currently has 747 active Retailer license holders and 1002 active licensed Retail Sales license holders. Based on a 27% reduction in sales due to the impact of the new regulation, we could see a reduction by 202 retail outlets and 271 retail sales licensees respectively. In total not even counting lenders, contractors, suppliers and so forth we might face a loss of 1120 jobs in our core member group.

The other impact which is difficult to measure is the new regulations could add significant barriers to affordable home ownership with no alternative housing options. There could be a an annual reduction in new HUD Code manufactured housing sales in Texas of 2650 units based on the current run rate if loans of $50,000 and less are highly regulated. Current manufactured home owners wishing to sell their home will find it very difficult to get financing for their buyers under the new regulations.

We can’t let this happen. MHI, TMHA and other interested parties are taking steps to educate those writing the regulations at the federal level about our industry and its unique financing model. The outcome is not guaranteed but at least we are attempting to influence the rule writing and not just sitting on the sidelines.

If you want to learn more about this and a broad range of other industry topics you should consider attending the Annual Convention of the Texas Manufactured Housing Association in Houston August 20th and 21st. You can learn more about all the business building and informational seminars linked at this site. It’s easy to register online at TexasMHA.com or call the TMHA office at 512-459-1221. All are welcome. ##

Ronnie Richards MHProNewsRonnie Richards is the Chairman of the Texas Manufactured Housing Association and Vice President of Marketing for American Homestar Corporation headquartered in League City, Texas.