A Cup of Coffee with... Bill Matchneer

1) Who, What and Where: (Your name, and your role/job title at HUD and how it relates to manufactured housing)

Bill Matchneer is my name. I am Associate Deputy Assistant Secretary for the Office of Regulatory Affairs and Manufactured Housing at HUD. I manage the Office of Manufactured Housing Programs which is responsible for the Manufactured Home Construction and Safety Standards, the Model Manufactured Home Installation Standards and the Manufactured Home Dispute Resolution Program. Also under my management are the Real Estate Settlement Procedures (RESPA) and Interstate Land Sales programs, as well as the new Safe and Fair Enforcement Mortgage Licensing (SAFE) program.

2) Background: (Educational/Professional before entering HUD and the factory-built housing arena)

Before coming to HUD in 2002, my only previous experience with factory-built housing had been as a lawyer reading case law involving worker safety practices in the industry. I first came to Washington in 1991 as Chief Counsel at the OSHA Review Commission and have also served as Chief Counsel to a special project in the House Committee on Government Reform and Oversight. Before coming to Washington I was a private practice attorney for twelve years in White Plains, New York specializing in civil defense litigation and residential real estate. I also worked with a title company in White Plains for several months immediately following law school graduation. I graduated from St. John's Law School in 1978 and Pace University in 1975, both of which are located in New York.

3) When and How: (When and how you got into your role at HUD and as it relates to the Manufactured Housing Industry)

I first came to HUD in 2002, when I became the first non-career Administrator of the Office of Manufactured Housing Programs. As most of your readers know, this position was authorized by the Manufactured Housing Improvement Act of 2000 (2000 Act).

4) What are your personal interests or hobbies? How do you like to spend non-work time?

You mean what would I rather be doing? I'm a life-long motorsports guy. Just as Bob Tanger at TRA used to compete in flat track motorcycle racing, I spent the 80s and early 90s racing in SCCA Formula Vee. I sold my equipment when I moved to DC, though I continued to run Formula Vee on a rental basis until 1996. Since then I've dabbled in things like licensing schools for NHRA and NASCAR, though my wife continues to insist that I'm retired to spectating. We'll see. Anyway, I restored a 1969 Triumph Bonneville about 10 years ago that I like to ride, and I enjoy collecting and building models of the cars and bikes I can't afford. Along the same lines, I'm currently building a model railroad of the area in Western Pennsylvania where my grandfather built railroad bridges over a hundred years ago. Music and fly fishing are also favorites.

5) Doug Gorman, who has served on the MHCC, is a supporter of both MHI and MHARR. Doug knows you and related a story about you that perhaps sheds a different light on your vision of the industry than some may realize about you. Paraphrasing, Doug related how you attended an industry trade show and walked every home with him; how you showed great interest and - my word now - 'pride.' Please share your vision for the importance of manufactured housing as it relates to affordable housing opportunities for millions of Americans.

My experience at Doug's Tulsa show last year was great. So great, in fact, that I decided to schedule a Manufactured Housing Consensus Committee (MHCC) meeting in conjunction with this year's Tulsa show at the end April. Doug's right about feeling pride in the quality of the homes as we walked through the show, though I can just as easily say the same thing about him. It was really gratifying to know that the work we do at HUD had contributed to such a variety of attractive and affordable homes. And Doug tells me there will be many more homes to admire at this year's Tulsa show.

Our critics like to portray HUD as an agency staffed by "bureaucrats" that "hate the industry". I've always found this criticism highly overwrought, since the people I work with at HUD are every bit as invested in the success of the industry as the critics themselves are. The HUD "bureaucrats" I know are dedicated professional people like engineers and attorneys who take pride in what they do, and that means they take pride in the affordable homes they see your industry producing. Like most of the industry, HUD's manufactured housing staff level is at an all time low and so the folks we have left are working very hard. And like many of your readers, they also depend on the success of the industry for their jobs. I'll say more about affordable housing in my answer to question 14).

6) What do you consider the largest challenges facing the manufactured housing industry today?

To me it would be opening up financing opportunities, maintaining the effectiveness of the federal preemption clause, and overcoming the "trailer" stigma. My answer to question 9) goes into the financing issue, so I'll skip to preemption. If a home is built to the HUD code, the preemption clause in our statute says that state and local building authorities may not apply their own codes to that home. This "federal preemption" of state and local codes is probably the biggest competitive advantage HUD-code manufactured housing has over-site built and modular housing. Maintaining the viability of federal preemption is therefore critical to the entire HUD-code business model. For preemption to work, however, HUD's construction and safety standards must address the same elements of performance as the International Residential Code (IRC) and other local codes. That's because local code authorities are free to enforce their own code provisions to the extent that they address elements of performance not covered by HUD. Our critics would prefer that HUD deal with this problem by making broad claims of preemption for the standards as they are, regardless of the facts. However, HUD is not inclined to make preemption claims that the courts would obviously reject. You can therefore expect to see the Department and the MHCC concentrating on maintaining preemption by updating the elements of performance addressed by the construction and safety standards.

The stigma issue is a tough one. Though the homes responsible for negative stereotyping of the industry's products were built decades ago, the industry continues to carry the burden they created. And Congress hasn't exactly helped by introducing weather radio legislation that singles out manufactured housing as a tornado risk. When financial times were better, I know that MHI was interviewing image consultants with an eye toward a national image campaign. While I think that was a very good idea, I realize there simply isn't money to pay for it now. Since the homes the industry is building now are plainly comparable to site built homes costing much more, perhaps that value will overcome the stigma all by itself. I certainly hope so.

7) As you know, we are an industry with two national trade associations, MHI and MHARR. Many industry observers see their approaches as being, different. Please share your perspective on these two Organizations and their leadership as it relates to your role at HUD.

As everybody with an email account knows, that's a loaded question. Let me start with MHI. While HUD has it's disagreements with MHI, I have always found MHI leadership, from Chris Stinebert to Gail Cardwell and now Thayer Long, to have reasonable approaches to regulatory issues. MHI leadership has always respected HUD's responsibly for public safety and consumer protection, even when we've had to agree to disagree on a particular issue. As a result, we've collaborated successfully with MHI to resolve many issues during my years at HUD.

MHARR takes a different approach. MHARR treats the HUD manufactured housing program as an adversary and reflexively attacks just about everything the program says or does. As a result, I don't remember collaborating with MHARR to resolve any issue during my years at HUD.

8) There are concerns over changes in the composition of the Manufactured Housing Consensus Committee (MHCC), there being no national associations represented, MHI, MHARR, etc. Some believe those changes undercut the very purpose of the MHCC as it relates to regulation by HUD. Your comments on that, please?

It is true that MHI and MHARR themselves no longer have representatives on the MHCC. Your readers should know that the White House decided last year that lobbyists should be barred from serving on Federal Advisory Committees. That is why Commissioner Stevens did not appoint representatives of MHARR and MHI to the MHCC. The MHCC is a code body, and my own view is that technical experts add more value to the rulemaking process than lobbyists do anyway. Though MHI and MHARR themselves no longer have votes, manufacturers are well represented on the MHCC, including members from Cavco, Clayton, Cavalier, Champion and ScotBilt. Also on the MHCC are Theresa Desfosses, a retailer who previously owned and operated Burlington Homes, retailer Doug Gorman and Frank Walter, who was formerly Vice President of Technical Activities for MHI.

We have also made changes to the MHCC charter and bylaws. These changes were strongly recommended by the General Services Administration, which oversees all of the nearly one thousand Federal Advisory Committees. We hope these new rules will allow us to run a tighter ship and, hopefully, get HUD on the same kind of three-year revision cycle that most other code bodies observe.

Our critics would have preferred the MHCC to be some sort of Congressional Oversight Board with "jurisdiction and authority" over the HUD program itself. However, the idea that Congress had authorized a private body that is exempt from federal ethics laws but has jurisdiction and authority over a federal regulatory program was never going to be taken seriously. What Congress actually did give the Department in the 2000 Act is a Federal Advisory Committee that has been an extremely valuable aid to updating HUD's standards and regulations. Despite what our critics might say, we are fully committed to the continued success of the MHCC.

9) We are in an era of a difficult economy and tight budgets. Manufactured housing has traditionally done well during such periods, and yet the lack of financing - notably chattel financing - has hampered our industry severely. While larger firms may be able to create their own lending resources, it is precisely the small to mid size independent firms - the ones that create most jobs in America - that are the most hampered by a lack of financing opportunities. Danny Ghorbani at MHARR has stated that if the Congressionally mandated Duty to Serve (DTS) provisions and FHA Title 1 reforms were fully implemented and those financing sources were available now, our industry would double sales in one year, just based on current demand. In a recent interview with us, Industry Veteran Eddie Hicks said, and I'm quoting: "It seems to me that too many people in our industry don't realize the importance of getting financing going. That is the lifeblood of our industry. Implementing FHA Title I would be a big step ahead to getting lending going, and thus driving more retail sales again. I can't understand why there isn't a more forceful push to do that in Washington." Against that backdrop, your comments on such concerns? And can you give us a date certain when the DTS and the FHA Title 1 reforms are in place to serve the industry?

I can't give dates certain for either "duty to serve" or FHA Title 1. With regard to Title I, your readers should first know that the revisions to the Title I statute that Congress passed in 2008 as part of the Housing and Economic Recovery Act (HERA) were entirely initiated by my office and FHA. Though neither MHI nor MHARR thought to request these changes, both groups have since been very supportive. As often happens in government, full implementation of the statutory changes we fought for has taken much longer than we wanted. FHA published a mortgagee letter implementing the new Title I program on April 14, 2009, but there are still a few issues being resolved at Ginnie Mae regarding the government guarantee to expand the investor-base for chattel financing. Once that's done, the new Title I program will be fully operational. After all the work that we at HUD have put into Title I, it is exciting to know that this desperately needed FHA lending source is nearly at hand. The "duty to serve" manufactured housing mandate in HERA does not apply to FHA and Ginnie Mae. Accordingly, we at HUD have not been involved in the negations to implement those requirements. I do know though that MHI and MHARR have been very engaged on this issue with Fannie Mae, Freddie Mac and their regulator the Federal Housing Finance Agency. Your readers should therefore be looking to MHI and MHARR for updates.

10) Can you name some recent significant initiatives your department at HUD has undertaken to support the industry?

Your readers need to understand that, as the industry's primary regulator, HUD's Office of Manufactured Housing Programs can not directly engage in promotion of the industry. Federal regulators, most notably the Federal Aviation Administration, have gotten into serious trouble for promoting the industry they are supposed to be regulating. Under those restrictions, though, I think our current initiative on quality assurance is a very good thing for the industry. Budget pressures in recent years forced us to reconsider how best to apply what resources were available to the Department's primary job of assuring the public that the homes produced by your industry comply with HUD's construction and safety standards. We chose to concentrate on enforcement of the quality assurance regulations, and chose to do so through a process of cooperative assistance rather than traditional enforcement. Many manufacturers have found HUD's attention to quality assurance helpful and have thanked us for helping to improve their production processes and finish quality while reducing warranty costs. MHI has been very supportive of this effort.

11) President Obama stood in one of the hubs of Manufactured Housing construction in 2009 - at Elkhart, IN - and promised jobs for displaced workers. Many industry voices believe that with swift action on the part of HUD, that the Obama administration could take a big step towards making that promise a reality for the manufactured housing industry. That said, how can your office at HUD work with industry leaders to re-ignite sales through regulatory reform?

This is a very timely question. As an executive at both Freddie Mac and Wells Fargo, FHA Commissioner Stevens witnessed first-hand the steep decline in financing available for manufactured housing. Since coming to HUD, he has looked for ways to reverse that trend. For some months now, he has been working with Congressman Donnelly of Elkhart, Indiana to arrange a top-level meeting of the lending and manufactured housing industries. This meeting is now scheduled for April 1 in Elkhart, the same hub of manufactured housing that President Obama has visited. This meeting should provide the industry with an excellent opportunity to appeal to senior figures at major lending institutions to increase their financing of manufactured homes. Your readers should know that Commissioner Stevens is also pushing hard for implementation of the Title I rules and FHA's new foundations rule. This is another HUD-initiated rule that would significantly reduce the foundation costs associated with FHA financing of manufactured homes.

12) There are those in the industry who believe it is important to have a non-career administrator overseeing the HUD program as it relates to manufactured housing. In fact, some - Danny Ghorbani at MHARR comes to mind - would say it is Congressionally mandated that HUD do so. When the law says it is required, and we have trillions in red ink so 'budget' can't be used as a reason not to do so, how can HUD justify not following the stated intent of law makers?

Let me first correct your question. While the 2000 Act authorizes HUD to appoint a non-career Administrator, it does not require this appointment. HUD's General Counsel has provided a carefully considered written opinion to Danny Ghorbani on this issue. The decision to appoint a non-career Administrator is, therefore, for the Administration to make. I know that the Secretary of HUD has budgeted for a limited number of non-career political appointees in the Office of Housing. As Commissioner Stevens has made clear to both MHI and MHARR, he has had to use these appointments to fill critical positions within FHA. As he has also made clear, if more non-career positions become available, he will consider appointing a non-career Administrator for the Office of Manufactured Housing Programs. If and when appointed, a non-career Administrator would be reporting directly to me.

Your readers should understand that the non-career Administrator has no supervision over FHA lending practices. As non-career Administrator, I only supervised the Office of Manufactured Housing Programs, which is only responsible for building standards and regulations. New lending sources will obviously be the key to the industry's recovery. A non-career Administrator can only affect HUD's building standards, and no serious person believes that HUD's building standards are the reason that industry production is at record lows.

13) Noted MH Industry veteran and blogger George Allen has openly asked if there is a "conspiracy" - his word - at work to destroy manufactured housing, with HUD being a player in that conspiracy. As a bit of a movie buff myself, the word "conspiracy" conjures up images from Oliver Stone's movie JFK or perhaps more to the point, the movie Tucker. How would you reply to Mr. Allen's concerns?

Well let's see. If HUD were engaged in a plot to destroy the industry, would Commissioner Stevens be using his star power in the mortgage industry to bring the major lenders to Elkhart to discuss ways to save the industry? And if HUD were engaged a plot to destroy the industry, would we be putting so much time and energy into a cooperative effort to improve the quality of the homes the industry produces? And if HUD were engaged in a plot to destroy the industry, would we be working with the MHCC to preserve federal preemption rather than letting state and local codes take the industry over? And if HUD were engaged in a plot to destroy the industry, would we have asked Congress to appropriate the Treasury funds necessary to save the HUD Manufactured Housing Program rather than just letting the program die, taking federal preemption with it? I could go on, but I think your readers get the idea.

14) Closing thoughts or comments, sir?

I honestly think that manufactured housing represents the best affordable housing value in the United States today. My personal vision for the industry's future is that site developers will ignore the stigma, take advantage of federal preemption and factory-built quality, and create attractive, affordable subdivisions with manufactured housing. But the industry is obviously in severe distress for lack of available financing. My answers have already summarized the steps HUD is taking to provide new financing for your industry. Right now, we are all hoping for some real breakthroughs at the summit meeting on financing for manufactured housing that Commissioner Stevens and Congressman Donnelly have scheduled for April 1, in Elkhart Indiana. The industry has a real friend in Commissioner Stevens and owes him a serious thank you for making this meeting happen.

Notice! HUD's Mr. Bill Matchneer has agreed to answer FOLLOW UP QUESTIONS from our readers! Please read and post your questions or comments below, or email your questions/statements into Editor Tony Kovach at This e-mail address is being protected from spambots. You need JavaScript enabled to view it with BILL Matchneer Follow up in the subject line. We will gather questions and send it to HUD's Manufactured Housing "point man." Mr. Matchneer's follow up replies will be posted afterwards in the days ahead. Get and keep the conversation going!