by Martin V. "Marty" Lavin, JD
Anyone attuned to the immense flood of media today knows that the true facts of any situation can be contorted to create a “new reality." Reality a or the truth - falls to the avalanche of the noise telling you another reality. So the mainstream media bombardment turns Sarah Palin into 'a mean whore' rather than a hard-nosed conservative.
That is only one of many perceptions framed by the media through its loud access to your senses. If they are not convincing you, they certainly set the tenor to the conversation, and they do so in HUDville.
Today I read more of the endless news articles about Manufactured Housing, some were about hurricanes, others about tornadoes. Let’s be kind here, few would select a Manufactured Home as their preferred high wind protection. But how bad is it really? I don’t know. I do know few structures can stand up to a hurricane or tornados. I visited ground zero for Hurricane Andrew south of Miami a week after that category 5 whirlwind blasted through in August, 1992. Few, if any, buildings stood undamaged. Lost roofs, windows and auxiliary structures were gone. Not so much wall damage occurred to the site built, conventional housing but most of it there is constructed of concrete block. Would wood construction have fared worse? Perhaps, but there was enough damage to go around, in any event.
As I kept poking my nose into every accessible nook to see the destruction, I happened upon a level field with concrete pads neatly lined up like a Florida cemetery where corpses do not get buried because of high ground water, but are placed in concrete boxes on the ground. After a short period of trying to correlate what I was viewing with its function, the light went on. I was in the midst of a pretty good sized Manufactured Home Community. The roads, the concrete pads, some utility infrastructure and odds and ends remained. There were no homes to be seen. None. They were gone with the wind. It seemed incredible, and the destruction was total.
So, as the media runs to tornado spots, stalking MH parks like paparazzi for damage before and after, is this wind damage propensity of MH reality or misperception? Admittedly, as a recent story on the Tennessee tornados intoned, everything in the way of a tornado gets smashed HUDc Code or IRC/BOCA. So why this bizarre fascination with “blown-away trailers?" It does seem overdone, surely.
Recently this publication (MHProNews.com) carried an article on an industry full court press of setting misperceptions or stereotypes straight. What misperceptions? MH does blow away in high winds. Still, we found that during some of the 2000’s decade Florida hurricanes, newer homes, properly sited and using approved tie downs, did in fact have an excellent survival rate, perhaps the equal of conventional wood frame buildings. Never mind that at the time Florida proposed the MH tie down standard, sometime in the late 1990’s as I recall, the industry arose like a fury to decry the standards as too expensive and unnecessary. “It will destroy the industry” was the cry. Not too long after the hurricanes, the industry was taking credit for the great survivability performance of the tied-down homes. Not surprising, as success has many fathers.
The recent article on the Tennessee tornado goes on to mention that industry spokesmen say the reason there is a greater risk of high wind damage in MH as opposed to site built housing is that many of the homes are pre-HUD Code, built before June 15, 1976. Further, that many homes constructed up until more recently are not properly tied down to resist high winds. Another of the reasons for the high tornado damage to MH given by the industry, that much of it is sited in rural locales and tornadoes tend to terrorize rural areas, is so laughable that one wonders who was involved in that misperception. The industry has wisely retracted that nonsense.
Is it reality or a misperception that MH fares far worse in high winds than other structures? A reading of the above article, corroborated by industry sources, reveals that older homes and untied homes of any age do not fare as well as other types of housing, and I think the industry implicitly accepts that. Regarding tornadoes, short of a below-ground bomb shelter, if you are in its path, no matter the structure, hang on.
Who created this “misperception” of MH going rolling end over end in high winds? It might have been the homeowners as when the seller/home installer sold the home, the homeowner might have opted not to spend the money to anchor his home, even though he might have been told of the dangers of that decision. That seems like thin gruel though, doesn’t it.
But the industry, which should have known better, because it is their product and knows its capability better than anyone, sold about 10 million homes since 1960, the majority of which were not anchored. As anchoring/tie down laws were considered, the industry generally showed up in large numbers opposing such laws. The cost wasn’t justified or necessary was the industry refrain in concert with the First Principle of Manufactured Housing: Keep costs down! So, who created the perception of tumbling, tumbled homes?
Manufactured housing communities have recently undergone a new stated purpose to deliver a “value” proposition to the residents of Land Lease Communities (LLC’s). This is espoused by numerous industry luminaries who not too long ago were equating the value return they sought in annual rent increases to be the same as the indices of single family real estate lot values for site built housing. The impact of that formula was to have the LLC resident “buying” his rental site every year as the price changed annually, rent being nothing more than the capitalized return on investment, expenses, and . . . profit. This would be the same as a site built home owner having the increased value of his lot tacked onto his mortgage annually. Wouldn’t make site-built so attractive now, would it?
These lads running around just a few years ago trumpeting the OFHEO home site value increase index as a long term LLC lease trigger for setting annual rent increases, have since decided to tout three part and five part industry salvation plans, some being widely viewed as the way to proceed, to save the industry, which, by the way, could use some saving. I must say I can trump all these recent industry “saving” plans as I proposed several all during the early 2000’s when there was still something of this industry to save. Some of these plans of mine - silly boy! - went on into 30 points or more. At last look, few points if any had been adopted. No doubt the current savior plans will fare little better, just a nice chat at an Urban Land Institute (ULI) or Manufactured Housing Institute (MHI) meeting, with polite bravos! Since the Manufactured Housing Association for Regulatory Reform (MHARR) seldom meets - and because it’s the LLC contingent trying to save the industry - and those community owners come from the dreaded “after market segment,” the savior plans are unlikely to gain much traction there. Once again with feeling at MHARR, a non-career administrator is needed for the MH section at HUD, as though the entrenched bureaucracy there with civil service protections will collapse at the foot of a non-career administrator, LOL. It seems as though it is more than common recently to find resident/ownership fights over “unfair lease increases.” These are widely covered in the media. Other than a few hard hearts like Sam Zell and me, who do you think sides with the community ownership?
Articles seem daily to report another community closing or rumored to be closing. The homes usually are old and can’t be moved (apparently not the “improved” newer homes), there are no vacant homesites in the area to move the homes to, the residents can’t afford a new home or the move, so woe is me, what to do? Again, who might the sympathies be with in this situation? The resident is viewed as a lower income person or family, or why else would they live in a - dare I say it - trailer, and the LLC owner is often a “big guy.” The owner has at some point essentially said to the people renting in the community, “Listen, come live with me. Finance your home for up to 30 years with your lender, and then sell your home to another, who buys with the same understandings.” Is this in writing? Of course not. But it must be implied, and understood by all. Otherwise, to believe the owner will close the park, throw the people out, and not help them in moving their homes, or buying them, the implied understanding has to be, “Hey, trailer-buying sap, get a 30 year mortgage, pay a high interest rate, know that I will ruthlessly raise your rent as I want, and then, remember, if I feel like it, I will close the park, throw you, your fat ass, and your home out, and you’ll get no help from me in this event.” Wow, how many residents would have accepted that deal in the beginning? For a closing LLC, most often this is reality, not perception. As these stories of discord between park residents and their owners abound in news accounts, and their grievances are aired before municipal authorities which have the power to do things which can punish and constrict the industry, is it misperception that frequently mobile home park residents are not always accorded fair treatment, or is the reality that the treatment can be very unfair, often of extremely financially fragile people whose world can be collapsed by rent increases or park closings. I don’t pretend we are our brother’s keeper and financial catastrophes of many stripes can visit the financially fragile. Nonetheless the aforementioned events with the park owner will get a lot more media notice and coverage than a loss of job by the MH owner, though the damage could ensue in either event, but closing an LLC affects so many at once.
With the “New Deal” coming to MH customers, the new touted value proposition will be welcome indeed, assuming it happens, of course. There are many other perceptions regarding MH. The public and the news media believe that like motor boats, MH will undergo substantial value depreciation during its life, a view the NADA MH Appraisal Guide has adopted. It is believed that many MH are poorly construction. Of course, that doesn’t include the homes “constructed recently,” which is the same thing I’ve heard for over 40 years, “recently” being in the just past 5 years or so, a constantly moving target. The homes constructed since 1976 are far better built than before that time as a federal housing code went into effect then, so the industry says. But the media often regurgitates the industry line of “better built recently” while at the same time questioning construction quality of all homes except the famous “those built recently.” Ok, so industry, what does “recent” mean, and what about “quality,” misperception or reality?
I’ve heard it said recently in the industry that since the Great MH Meltdown of 1999-2011, MH chattel loan quality and security is vastly improved. Some of that is due to greater loan detail awareness by lenders, far stricter credit qualifications, and attempts to limit fraud by retailers and others. Let’s also say that increasing the average FICO score of approved loans 50 to 100 points depending on the lender didn’t hurt. Those multi-billion dollar 580 FICO portfolios of yore are gone, and the former FICO portfolio average of 640 or often less, common previously with lenders, now is a score below which many lenders will even accept an application! Thus it is usual for industry leaders now to say that chattel loan quality is substantially improved, and it has surely improved for the loans done. But of course, loan volume in chattel loans has shrunken by perhaps 90% since 1998. So why is it with all this loan goodness we can’t seem to catch a break and lure many new lenders into the MH arena?
The answer to these questions are never easy, but as one who has had the pleasure of speaking with many regulated lenders and who advised Fannie Mae on factory built lending for years, the answer starts with perceptions. Regardless of what the industry may say, the “perception," augmented by loan performance figures, is that chattel lending on MH is ultra-hazardous activity and usually sets up the participant to log large losses for their institution and the end of the employer contributions to the loan officer’s 401(k), the lender no longer funding it for past employees. Perception, or reality? Well, I do know there is far more money available already in the MH lender space than there are qualified borrowers to take loans. And the long time perception of the dangers of MH chattel lending became reality within the industry for many years, as each cog in the MH chain took certain liberties along the way and dumped those “liberties” in the lap of unwary or unprepared lenders. That is where the perception arose and in this case perception and reality merged. Perhaps not today, but the lingering lender perception is the residue of long time industry action to game lenders, which lingers even today. When will it end? A common call to action now and in the past for industry is to combat stereotypes with the public revolves around the clarion call of semantics. “Thou shalt not use the ‘T’ word,” nor even call the homes 'mobile homes.' No, no today’s factory built, pre-engineered, energy efficient homes shall be designated “manufactured housing.” And as an industry, we will be vigilant that the “T” word shall never again be used in verbal or written form. After all, semantics is destroying the industry, clear that up, and all will be well. Would it be it were that easy.
I for one come from the William Shakespeare school of semantics. “Tis but thy name that is my enemy; . . . . . . . . . . , O be some other name! What’s in a name? That which we call a rose by any other name would smell as sweet!” said his fictional character Juliet in 1600. Its beauty, odor, and enchanting qualities make the rose, not its name. Change the name of nettles to roses, and the nettles will still sting one upon touching them. Their odor will be offensive upon close inspection. Changing the name of nettle to something else will not change the underlying reality of the foul plant it is.
So I suggest to those who defiantly chastise those in the industry and within the media who use the “T” word to get far angrier when fraud is visited on some unsuspecting consumer, hardly a rare event. Get angry that communities are often closed with people thrown to the streets. Show some indignation when rent increases occur which make us all gulp. Get absolutely crazed that many industry segments screwed lenders, leading to loan losses, which plagues the industry even today. Go insane that the industry, 60 years after its emergence, still fails all too often to deliver a value proposition, which has doomed its former shipments volume. Get angry over calling the home a “trailer” or mobile home? Not so much.
You see, the homes today are well constructed, energy efficient and relatively inexpensive to buy (if not to own). But the value proposition attendant to the homes is wanting; compromising the home’s cost of ownership, creating auto or boat-like depreciation, ultimately taking the consumer/buyer and the industry in its undertow. It is this we must work on. If the home fails to create a value proposition for the consumer, a campaign to censure semantics will be of limited value, even as the industry builds better homes, but continues to deliver the same product. Where’s the change?
One must conclude the “misperception” the industry has been plainly combating since the beginning of the industry is self-created and industry perpetuated. Only when the industry makes serious attempts and succeeds in delivering the promised value proposition far better than the one which started melting down in 1999 and continues apace, will industry action improve. Unless, of course, you are taken to wonderment by a return to 60-70,000 annual home shipments, not the 245,000 homes trend line from 1975 to 2005. Or perhaps you count lenders at night and see, jumping over the fence, GreenTree, Conseco, Security Pacific, BankAmerica, Access, Ford Credit, CIT Group, MCI, NBD, Michigan National, Dynex, SouthTrust, Bloomfield, Origen, Bombardier and Belgravia. When they return, we’ll get together then.
So questions arise in the media and, yes, the public sphere, of quality, industry value, home safety, fairness, and lenders’ ability to profit. These and other industry perceptions continue to dog an ailing industry looking for a way out. Recent baby steps give some evidence of a small scale shipments turn around. Will this blossom into the “big recovery” predicted 52 times since the last industry top in 1998. Are 373,000 home shipments, as in 1998, just around the corner? I might categorize that as an industry misperception.
Georgian date June 12, 2069.
Toronto, Province of Canada, The Earth.
To the World Housing Council. I've just finished the report ordered by the Housing Council relative to the possibility of reviving the factory built housing type formerly known as Manufactured Housing or HUD Code housing and in the vernacular known as "trailers" or "mobile homes."
I started with the archives or records from the period 1950 when that form of housing first reached popularity, then through the two big shipment periods of 1969-1973 and 1994-1999, ending in 2025, the final production year when strict government regulation drove the last production facility of HUD Code housing to close down. Thus, all HUD Code production ceased. While the HUD Code homes still exist in certain very limited nooks, all of it is aging and much of it is in relatively poor condition, and without replacement homes being constructed, this is and has been a dead industry.
My mandate by the Council was to determine whether through government action this industry could effectively be re-established, maintaining build quality, while assuring consumer satisfaction, which is now the Prime Directive for all private businesses licensed to serve the public good. My research revealed that even as the industry increased build quality throughout the 2000s before closing down, certain cultural elements within the industry frustrated attempts to deliver the desired value proposition government expected from this most important builder of affordable housing.
Today, lack of affordable housing continues to plague the World Council and its citizens, and it has been hoped recently that the advantages HUD Code housing promised but failed to deliver consistently in the past, could be revived and reformed. One of the major industry publications of the time was the Manufactured Housing Merchandiser which failed in the first decade of the 2000s, after many years of documenting the successes and failures of the industry. Its mantle was picked up by an Ezine, MHProNews.com, with a similar role. Both publications carried industry articles of a controversial nature by writers like one Martin V. Lavin, a lawyer long experienced in general industry matters and chattel, personal property lending in particular. I have included one of his essays herewith as it seems prescient in retrospect. Both publications are to be commended for a seeming allowance of publication of controversial writers such as Lavin, though there is no indication in the archives of either publication that the editors themselves subscribed to these industry critiques. Instead, the publications vowed to bring disparate views for industry dissemination, at which goal they seemingly succeeded.
I found that the archives reflected that as the industry crested at some 372,800 homes in 1998, it started a long decline to 50,000 homes by 2011, never again able to reach the longtime trend line of 245,000 homes annually. The failure code for the industry was now in full stride. After the well remembered SubPrime Mess of 2008, government action to control lending operating procedures, enacted primarily to control real estate lending, ensnared HUD Code housing. The industry sensed they were highly endangered, barred from performing many operations previously used as standard industry procedures.
The industry tried in vain to reform the industry operating model. Pundits and scholars joined with the industry questioning what ailed the industry, right up to the 2025 close down date. And what the scholars and research revealed is that the industry suffered from a "defect gene."
They found that the greatest part of industry participants, corporate and individual, were honorable, honest and empathetic. They attempted to generally comport themselves in commendable fashion. But a small, but aggressive contingent was not honorable or honest. Their predilection seemed to be based on predatory inclinations. This stain by the few on the industry swamped the good dealings of the many, the industry judged on its bad aspects, the good seemingly overlooked. Again, as so often, the bad drove out the good. Government reacted strongly to manacle the bad, but the reaction seemed mainly to destroy the good industry action. The government prohibitions were like a Burmese python, strangling a whole industry, unable to recover.
Thus the autopsy of the industry reveals a mixed bag. The question now remains of whether the HUD Code home segment of the factory built housing industry can be returned to the housing economy with stringent government guidance and encouragement. With proper supervision, can this housing segment return to the role of providing low cost housing for our citizens without the problems previously created by the unscrupulous few? It is this question which must be considered by the Housing Council, as I submit the massive report my team and I created, sent along with this cover letter.
Unaddressed by this report will be the suitability of this type of housing for extraterrestrial colonies on the Inner and Outer Spheres. Should the Housing Council decide in the affirmative for the resumption of HUD Code housing for terrestrial use, in all Earth Sectors, then the question would seem ripe for consideration of Off-Earth use as well.
Can I make any recommendation for resumption of production of HUD Code housing to the World Council? I am deeply conflicted with this matter. While I found substantial benefits from this housing type during its 75 year run, I also found a disturbing failure to deliver the full value proposition of which this housing is capable. Now it is in the hands of the Council on how to proceed.
Submitted by: Angus B. Stoddard
Housing Specialist, Elite Class.
Peer of the Realm of the World Council
With all due respect.##