Washington, D.C., October 11, 2018 – The Manufactured Housing Association for Regulatory Reform (MHARR), in written comments filed with the U.S. Department of Housing and Urban Development (HUD) on October 11, 2018 (see, copy attached) has called on HUD to promote zoning and placement parity for federally-regulated manufactured homes as part of the Department’s plan to amend its regulations for Affirmatively Furthering Fair Housing (AFFH).
Noting that Secretary Carson and HUD itself have recently cited restrictive local zoning measures – including zoning mandates that discriminatorily exclude or restrict the placement of HUD-regulated manufactured homes – as a significant root cause underlying the lack of affordable housing in many areas of the United States, MHARR’s comments seek amendments to the AFFH regulations that would: (1) identify the discriminatory exclusion of HUD Code manufactured homes and/or manufactured home communities (or the discriminatory limitation of manufactured home placements in compatible residential areas) as an obstacle to fair housing that program participants must address as part of their AFFH compliance efforts; and (2) “encourage actions that increase housing choice,” by promoting changes to local zoning and land-use ordinances that would permit the siting of HUD Code manufactured homes in all compatible residential areas, as well as the development of new and/or expanded HUD Code manufactured housing communities in such compatible residential areas.
To ensure compliance with these amendments, MHARR urges HUD to expressly and specifically condition the receipt of grant (or other) funds on the elimination of discriminatory restrictions on the placement of HUD Code manufactured homes or — absent voluntary compliance by local jurisdictions — to federally preempt such discriminatory measures pursuant to the enhanced statutory preemption authority provided by Congress in the Manufactured Housing Improvement Act of 2000.
Strong and effective action by HUD is absolutely essential to ensure that all Americans have access to the inherently affordable, non-subsidized homeownership offered by today’s federally-regulated manufactured homes. Although these homes are the best that the industry has ever produced, and represent an outstanding value that is intrinsically affordable for all Americans, including lower and moderate-income families, access to manufactured housing is being needlessly – and unlawfully – restricted by discriminatory zoning and placement restrictions that the industry’s post-production sector has been unable to effectively counter. Given Congress’ specific grant of authority to HUD to override such discriminatory zoning measures, HUD’s amendments to AFFH should ensure fullaccess to manufactured housing by every American everywhere in the United States.
In addition to removing such discriminatory local barriers to affordable, non-subsidized manufactured housing, MHARR has also called on HUD – in meetings with Secretary Carson and Assistant Secretary Brian Montgomery – to take concrete steps to place manufactured home consumer financing, and most especially federal support for the 80% of the manufactured housing consumer financing market represented by personal property or “chattel” loans on par with other types of consumer home lending. MHARR has thus urged HUD to support and encourage market-significant securitization and secondary market support by Fannie Mae and Freddie Mac for manufactured homes under the “Duty to Serve” provision of the Housing and Economic Recovery Act of 2008 (HERA) and has also urged HUD leadership to revive and expand manufactured home chattel loan support under the existing Federal Housing Administration (FHA) Title I manufactured housing program.
In Washington, D.C., MHARR President and CEO, Mark Weiss, stated: “Once again, the leadership of President Trump and Secretary Carson is offering significant new opportunities for both consumers and producers of HUD Code manufactured housing. As the federal government agency responsible for housing-related matters for the nation, HUD should use all of the tools that are available to it – through grant funding mechanisms and through mandatory federal preemption, if necessary – to ensure zoning, placement and consumer financing parity for inherently affordable manufactured homes and the mostly lower and moderate-income American families who rely on those homes to achieve the American Dream of homeownership. Baseless NIMBY-ism is no excuse for denying the benefits of homeownership to every American in every community.”
The Manufactured Housing Association for Regulatory Reform is a Washington, D.C.-based national trade association representing the views and interests of independent producers of federally-regulated manufactured housing.
FOR IMMEDIATE RELEASEContact: MHARR (202) 783-4087
Washington, D.C., September 27, 2018 – The Manufactured Housing Association for Regulatory Reform (MHARR), in a submission (copy attached) to the House of Representatives’ Financial Services Committee in conjunction with a September 27, 2018 oversight hearing on regulation of the two “Government Sponsored Enterprises” (GSEs) – Fannie Mae and Freddie Mac – strongly criticized the Federal Housing Finance Agency (FHFA), for failing to implement federal law and, instead, sanctioning the GSEs’ continuing discrimination against lower and moderate-income American consumers seeking to purchase manufactured homes through personal property, or chattel loans.
Specifically, MHARR’s submission emphasizes that under the “Duty to Serve Underserved Markets” (DTS) provision of the Housing and Economic Recovery Act of 2008 (HERA), so-called DTS “implementation plans” developed by the GSEs and approved by FHFA in late 2017, fail to provide for market-significant participation by Fannie Mae and Freddie Mac in the manufactured housing chattel finance market some ten yearsafter Congress, through DTS, specifically directed the GSEs to “develop loan products and flexible underwriting guidelines to facilitate a secondary market for mortgages on manufactured homes for very low, low, and moderate-income families,” including chattel loans. Such chattel loans account for 80%(or more) of the entire manufactured housing market, according to U.S. Census Bureau data.
As MHARR’s submission explains, the so-called Fannie Mae and Freddie Mac DTS “implementation plans,” by failing to provide for market-significant participation in the manufactured housing chattel financing market – beyond tiny, highly-conditional, “pilot programs” that through 2020 would serve, atmost, little more than 1% of the manufactured housing market – do not and cannot, by definition, satisfy the express statutory mandate of DTS. Indeed, it is utterly inconceivable that Congress, in adopting DTS, intended for the vast bulk of all manufactured housing purchasers — and potential purchasers — seeking to access the nation’s most affordable source of non-subsidized homeownership, to gounservedunder DTS indefinitely and, potentially, forever.
Relying on an alleged lack of chattel loan “performance” data that is a direct result of their own long-term, discriminatory failure to serve the manufactured housing market – that DTS was specifically designed to remedy – Fannie Mae and Freddie Mac instead seek to evade that “duty” indefinitely. As emphasized by MHARR, this will effectively force the 80% (or more) of the manufactured housing purchasers who currently rely on chattel financing to seek loans from one of the existing market-dominant manufactured housing lenders that do not require or seek secondary-market securitization or support from the GSEs and provide such financing at interest rates that are higher than would be the case if the GSEs were significant participants in the manufactured housing chattel market. Even worse, many more potential lower and moderate-income manufactured home purchasers, who might otherwise qualify for a loan, will continue to be needlessly excludedfrom the manufactured housing market – and from homeownership altogether – because of the higher chattel loan interest rates and monthly loan costs resulting from the GSEs’ continuing discriminatory refusal to fully implement DTS with respect to chattel loans.
MHARR, accordingly, will continue to press for the fullimplementation and application of DTS to manufactured home chattel loans and will continue to address, through all necessary means (including Congress and the Administration) the ongoing failure of FHFA, Fannie Mae and Freddie Mac to implement DTS in a timely and market-significant manner, thereby depriving lower and moderate-income Americans of the full access to affordable, non-subsidized manufactured homeownership that Congress sought to provide.
In Washington, D.C., MHARR President and CEO, Mark Weiss, stated: “Congress, in its vital oversight role concerninhg FHFA, must hold that agency – and, by extension, Fannie Mae and Freddie Mac, which are being and have been bailed-out with billions of taxpayer dollars — accountable for their ongoing discriminatory failure, more than a decade after-the-fact, to fully implement DTS with respect to the 80% of the federally-regulated manufactured housing market that is represented by chattel purchase-money loans. Affordable homeownership is desperately needed in the United States and is at the coreof the GSEs’ statutory mission. Neither FHFA nor the GSEs should be allowed to flout this mission, nor the specific mandate of DTS with regard to manufactured housing chattel loans.”
The Manufactured Housing Association for Regulatory Reform is a Washington, D.C.-based national trade association representing the views and interests of independent producers of federally-regulated manufactured housing.
The U.S. Department of Energy (DOE) has published a “Notice of Data Availability and Request for Information” (“Notice”) regarding its previously dormant manufactured housing energy conservation standards rulemaking in the August 3, 2018 edition of the Federal Register (seecopy attached).
The DOE Notice seeks information and comments on possible alternatives to the horrific proposed manufactured housing energy rule previously published by DOE on June 17, 2016. To refresh your recollection, this rulemaking was initiated in response to language contained in the Energy Independence and Security Act of 2007 (EISA) which purported to shift responsibility for manufactured housing energy standards from HUD to DOE. This directive – which lacks any substantive basis and is totally unnecessary – as demonstrated by Census Bureau data showing that manufactured housing energy costs are either lower than, or comparable to those of other types of homes, hasconsistentlybeen opposed byMHARR, which was successful in stopping the imposition of such damaging and discriminatory standards at least three times over the past decade.
Each time, though, the rulemaking proceeding was revived with the assistance and cooperation of some in the industry. The most recent DOE activity, the January 2017 proposed rule, was the product of a fundamentally tainted and arguably scandalous “negotiated rulemaking” whichMHARRvehemently opposed, and was ultimately rejected by the Office of Management and Budget’s Office of Information and Regulatory Affairs (OIRA) in late 2016. That proposal was subsequently withdrawn by the Trump Administration on January 31, 2017, afterMHARRcast theonly“no” vote against the proposed rule within the DOE Manufactured Housing Energy Standards Work Group and emphatically opposed the proposed rule in written comments to DOE and direct meetings with senior DOE and OIRA officials.
Unfortunately, after declaring the manufactured housing energy rulemaking “inactive” in the Fall 2017 Federal Semi-Annual Regulatory Agenda (SRA), DOE — apparently pressured by litigation filed in late December 2017 in Federal District Court in Washington, D.C. by the special interest Sierra Club – has now revived this manufactured housing rulemaking proceeding once again.
While the Notice offers certain clues as to the possible direction that DOE may be pursuing, it will require extremely thorough study and an extremely strong response to prevent the imposition of debilitating and discriminatory energy standards on federally-regulated manufactured homes that could potentially exclude millions of moderate and lower-income Americans from the HUD Code manufactured housing market and the only type of non-subsidized home ownership that they can afford.
MHARRwill carefully examine the DOE Notice and will respond in a strong and thorough manner consistent with its previous activity on this rulemaking. By copy of this package,MHARRis urging others in the industry to further oppose any such rule. MHARRwill prepare and submit written comments on this matter soon, and will make those comments available to all HUD Code industry members.
Washington, D.C., August 6, 2018 – The Manufactured Housing Association for Regulatory Reform (MHARR) reports that according to official statistics compiled on behalf of the U.S. Department of Housing and Urban Development (HUD), year-over-year manufactured housing industry production growth was sustained in June 2018. Just-released statistics indicate that HUD Code manufacturers produced 8,258 homes in June 2018, a 1.3% increase over the 8,152 HUD Code homes produced during June 2017. Cumulative industry production for 2018 now totals 50,897 homes, a 9.4% increase over the 46,502 HUD Code homes produced over the same period in 2017.
A further analysis of the official industry statistics shows that the top ten shipment states from the beginning of the industry production rebound in August 2011 through June 2018 — with cumulative, monthly, current year (2018) and prior year (2017) shipments per category as indicated — are:
The latest information for June 2018 results in no changes to the cumulative top ten list.
The Manufactured Housing Association for Regulatory Reform is a Washington, D.C.-based national trade association representing the views and interests of independent producers of federally-regulated manufactured housing.
As was referenced in MHARR’s July 26, 2018 memorandum concerning its recent meeting with HUD Assistant Secretary-Federal Housing Commissioner, Brian Montgomery, HUD has now published formal notice of an upcoming meeting of the Manufactured Housing Consensus Committee (MHCC) in the July 31, 2018 edition of the Federal Register (see, copy attached).
The meeting, scheduled to be held from September 11 through September 13, 2018 in Washington, D.C., will be the first meeting of the MHCC – of any kind – in more than a year-and-a-half, with the last telephone conference meeting of the MHCC having been held in December 2016 and the last in-person MHCC meeting having been conducted in October 2016.
Significantly, notwithstanding indications (and assurances) at MHARR’s July 25, 2018 meeting with Commissioner Montgomery that aspects of HUD’s “top-to-bottom” regulatory reform process for the federal manufactured housing program pursuant to Trump Administration Executive Orders (EO) 13771 and 13777 would be presented to – and considered by – the MHCC at this meeting, the bare-bones meeting agenda contained in the Federal Register announcement gives no specific indication of any such activity. Instead, the “tentative agenda” included in the meeting notice refers to a continuing “Review of Current Log and Action Items,” even though the last “log” of proposed code changes posted at the federal program website – dated April 2018 – indicates that the MHCC (with just one exception) has already taken “final action” on all pending log items and submitted corresponding recommendations for action by HUD.
That said, it remains to be seen: (1) what – if any – presentation or review of proposed regulatory reform actions will be brought to the MHCC for consideration at this meeting; and/or (2) what other new proposals or action items may be brought to the Committee – if any – for consideration at this meeting, given HUD’s failure, to date, to publish or make those materials available to program stakeholders for review priorto the MHCC meeting and possible input or comment to the MHCC, at the meeting, regarding their specific content. Therefore, while further HUD action on this point is certainly possible prior to the September meeting, it remains to be seen whether such action – if any — will provide either the Committee and/or program stakeholders with sufficient time and information to fully and completely evaluate any such proposals in advance of the meeting, in order to provide meaningful, substantive input.
Given the past history of the federal program in similar situations, MHARR will closely monitor this matter and will take further steps as necessary to ensure the integrity of the MHCC process, while keeping the industry apprised of further developments as warranted.
TO: MHARR MANUFACTURERS MHARR STATE AFFILIATES MHARR TECHNICAL REVIEW GROUP (TRG) FROM: MARK WEISS
RE: MHARR MEETING WITH HUD ASSISTANT SECRETARY BRIAN Montgomery
A delegation of MHARR officials, including MHARR Chairman, James Shea, Jr., MHARR Immediate-Past Chairman, John Bostick, MHARR President Mark Weiss and MHARR Senior Advisor, Danny D. Ghorbani, met on July 25, 2018 with HUD Assistant Secretary–Federal Housing Commissioner, Brian Montgomery, the highest-ranking political appointee with direct oversight of the HUD manufactured housing program, to address issues concerning the both the program and the Federal Housing Administration’s (FHA) Title I manufactured housing loan insurance program. Scheduled shortly after Commissioner Montgomery was confirmed by the U.S. Senate, the meeting represents a continuation of MHARR’s direct interaction with Trump Administration officials at HUD and others agencies concerning both the federal manufactured housing program and federal financing support for affordable manufactured homes, including meetings with HUD Secretary Ben Carson and HUD Deputy Assistant Secretary Dana Wade, and Federal Housing Finance Agency (FHFA) director Melvin Watt, among others.
The main purpose of the meeting with Commissioner Montgomery who, while holding the same position in the Administration of President George W. Bush, was instrumental in establishing the statutory Manufactured Housing Consensus Committee (MHCC) and securing major achievements in the implementation of the Manufactured Housing Improvement Act of 2000, was to address key aspects of the ongoing manufactured housing program review and reform process initiated by President Trump and Secretary Carson, with a view toward putting the federal program back on track, in full compliance with all elements of the 2000 reform law.
Consequently, among other topics, the meeting addressed: (1) the status of the appointed manufactured housing program administrator mandated by the 2000 reform law; (2) the status of the pending “top-to-bottom” manufactured housing program regulatory review pursuant to Trump Administration Executive Orders (EOs) 13771 and 13777; (3) the status of the program monitoring contract, which is slated to expire in August 2018, the urgent need for a fully-competitive contracting process after more than 40 years of defactosole-source monitoring procurements, and the selection of a new program “monitoring” contractor; (4) the necessity of retaining state participation in the HUD program and proper funding for State Administrative Agencies (SAAs); and (5) the restoration of collective industry representation on the MHCC. In addition, the MHARR delegation urged Commissioner Montgomery to consider reforms at the Federal Housing Administration and the Government National Mortgage Association (GNMA), to expand the utilization of the FHA Title I manufactured housing program and the availability of insured manufactured home chattel loans under that program, particularly in light of the highly-restricted implementation of the “Duty to Serve Underserved Markets” with respect to manufactured home chattel loansby FHFA and the Government Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac.
In particular, the MHARR delegation focused on harm to consumers and the industry resulting from unjustified, unwarranted, and/or misdirected HUD regulations (or pseudo-regulations), citing, as an example, HUD’s excessively costly and needlessly burdensome 2016 “on-site” construction rule, which, rather than reducing the cost and increasing the efficiency of on-site work and related approvals, has instead led to a decline in on-site completions and features requiring on-site completion, which has unnecessarily harmed the HUD Code market and unnecessarily denied consumers various on-site features that they seek in HUD Code homes. The MHARR delegation thus urged Assistant Secretary Montgomery to continue with – and aggressively implement and advance – the EO 13771/13777 regulatory reform process within the federal program that was initially spearheaded by Deputy Assistant Secretary Wade. And, in fact, it appears from responses at the meeting, that aspects of the Department’s regulatory reform process will be presented to – and considered by – the MHCC at a meeting currently expected to be held (but not yet formally announced in the Federal Register) on September 11-13, 2018 in Washington, D.C.
The MHARR delegation also addressed the decline – under the former federal program administrator — in the federal-state partnership that lies at the core of the HUD program and its proper operation. Noting that state SAAs and state Primary Inspection Agencies (PIAs) had been tasked with numerous additional functions by HUD under its change to the “focus” of program inspections and monitoring, from the detection of specific standards violations to a new alleged emphasis on “quality control” and, worst of all, new unwarranted and baseless demands on long-standing and fully-compliant state installation programs – all without any corresponding rulemaking or regulatory process – MHARR pointed out that to date, there has been no corresponding increase in the compensation of such state agencies, leading some to either withdraw from the program or consider withdrawing. This, in turn, increases the power and influence of the entrenched monitoring contractor (and program installation contractor) – which assumes those expanded regulatory roles in “default” states, without the accountability, responsibility and responsiveness of the former state government entities. Meanwhile, a proposal to increase state SAA funding, recommended by the MHCC and published for notice and comment in 2016, needlessly remains in limbo, some two yearsafter-the-fact. The MHARR delegation, accordingly, urged Commissioner Montgomery to address this matter as a priority issue for the program.
In addition, the MHARR delegation encouraged Commissioner Montgomery, as Federal Housing Commissioner, to explore the re-vitalization and expansion of the FHA Title I manufactured housing program which, after being a significant source of consumer financing for HUD Code homes in the past, has declined drastically, to minimal activity levels in recent years. Such a revitalization and expansion in FHA Title I support for manufactured home financing is particularly crucial in light of the minimal and long-delayed “implementation” of the Duty to Serve Underserved Markets (DTS) by Fannie Mae and Freddie Mac, and their federal regulator, FHFA, and their failure to establish – any time soon – market-significant levels of securitization and secondary market support for manufactured home chattel loans, which comprise upwards of 80% of all manufactured home consumer loans.
In particular, MHARR noted that the “10-10” net worth and reserve rule implemented by the Government National Mortgage Association (Ginne Mae) for FHA Title I financial institutions has severely and unjustifiably limited lender participation in the Title I program to just two approved lenders, both of which are finance subsidiaries of the industry’s largest corporate conglomerate. As a result, for far too many Americans, the inherently affordable home ownership offered by today’s manufactured homes, is simply not available – contrary to HUD and FHA’s fundamental mission — due to the lack of available, accessible, competitive financing. Consequently, as MHARR stressed, in addition to the reform of its regulatory activities, HUD should also re-examine and reform its financing-related programs for manufactured housing.
MHARR, as it has since the inauguration of President Trump – in all forms of direct and formal interaction with relevant officials — will continue to press the case for HUD Code manufactured housing, for increased governmental support for manufactured home consumer financing, in full accordance with all applicable laws, and for fundamentalregulatory reform within the federal manufactured housing program in full compliance with the 2000 reform law, including proper program leadership in the person of an administrator appointed in accordance with the 2000 reform law.
MHARR Meeting with Hud Assistant Secretary Brian Montgomery-pdf
MHARR —ISSUES AND PERSPECTIVES By Mark Weiss JULY 2018
The rule of law, and the supremacy of law over the arbitrary whims of individuals who happen to wield government power, was a profound concern for the founders who debated and developed the Constitution of the United States. For over two centuries, legal scholars have pointed to the primacy of the “rule of law” in the system of limited government and defined powers established by the Constitution, stating, for example: “The rule of law may be the most significant and influential accomplishment of Western constitutional thinking. The very meaning and structure of our Constitution embody this principle. Nowhere expressed yet evident throughout the Constitution, this bedrock concept is the first principle on which the American legal and political system was built.”
For too long, though, the rule of law, as envisioned by the nation’s founders, has been undermined, ignored, or bypassed by the so-called “Fourth Branch” of government – the permanent, overgrown and largely unaccountable bureaucracy that has ballooned within the federal government, often in concert with overpaid and largely unaccountable government contractors. While this is a major socio-political issue with ramifications that extend far beyond the scope of this column, federally-regulated manufactured housing faces challenges of its own regarding the rule of law, and with a new Administration – with a new regulatory philosophy — now in place, there is no time like the present to clearly address this issue within the unique context of manufactured housing regulation.
In the manufactured housing arena, the most fundamental expression of the primacy of the rule of law is the Manufactured Housing Improvement Act of 2000. Indeed, the 2000 reform law is a direct outgrowth of – and a direct congressional response to and remedy for – administrative abuses that had piled-up within the federal manufactured housing program over the first quarter-century of its existence. These included, but by no means were limited to: (1) defactorulemaking by “interpretation;” (2) circumventing, evading, or ignoring notice and comment requirements; (3) abuses of the “Interpretive Bulletin” process; (4) closed-door standards development activity; (5) non-consensus standards development; (6) contracting abuses resulting in a non-competitive, defacto“sole-source” program monitoring contract, the same monitoring contractor for the (now) entire40-year-plus history of the program, and the delegation of governmental power to an unaccountable private entity; and (7) activity to subvert the operation and objectivity of the former Manufactured Housing Advisory Council, and a hostof other actions that undermined the basic fairness, reasonableness and, ultimately, legitimacy of the federal manufactured housing program.
Taking cognizance of these (and other) serious program failings, Congress incorporatedmultipleprotections in the 2000 reform law designed to restore and enhancethe program’s compliance with – and adherence to – the rule of law, as reflected in the basic due process norms and substantive protections included in the original 1974 manufactured housing act. In large measure, then, the 2000 reform law is: (1) a reflection of Congress’ concern over program abuses which had – and continue to — unnecessarily limit the use and availability of affordable manufactured housing for millions of Americans and the growth of the industry; as well as (2) a compendium of targeted remedies designed to halt, cure and reverse those abuses.
As a result, the 2000 reform law, among manyother things: (1) established a balanced Manufactured Housing Consensus Committee (MHCC) and consensus process to develop and update consensus standards andprogram enforcement regulations; (2) reiterated and strengthened notice and comment requirements for all standards, regulations and “Interpretive Bulletins;” and (3) made the consensus process andnotice and comment, “mandatory” absent a statutorily-defined “emergency.” Moreover, to make sure that no-one misunderstood the extremely broad scope of the review and approval authority of the MHCC and the other due process protections incorporated in the 2000 reform law, Congress included what is commonly known as a “catchall” provision in the section of the law that establishes the MHCC and defines the scope of its powers. The specific – and specifically targeted — purpose of that provision, was to ensure that HUD regulators would not fall back on their established practice of bypassing notice and comment rulemaking (and consensus committee review and approval under the new 2000 law) by the simple expedient of calling new (or modified) defactostandards and/or regulations by some other name, whether it be an “interpretation,” “guidance,” a “policy statement,” or some other moniker not mentioned as requiring rulemaking in either the original 1974 law or the federal Administrative Procedure Act (APA). That “catchall” provision is section 604(b)(6) of the 2000 reform law.
Section 604(b)(6), as MHARR has written and observed many times before, is straightforward and unequivocal. It provides that: “Anystatement of policies, practices, or procedures relating toconstructionand safety standards, regulations, inspections, monitoring, or other enforcement activities that constitutes a statement of general or particular applicability to implement, interpret, or prescribe law or policy by the Secretary is subject to subsection (a) or this subsection. Any change adopted in violation of subsection (a) or this subsection is void.” (Emphasis added). The “subsection (a)” that is referred to, is the part of the 2000 reform law (i.e., section 604(a)) which requires MHCC consideration and approval of new or modified standards and their publication by HUD for notice and comment, among other things. Effectively then, section 604(b)(6) requires the same procedural safeguards mandated by the 2000 reform law for standards and regulations, to be applied with equal force to “any” change to HUD’s policies, practices, or procedures relating to either the standards, the regulations, monitoring, inspections or virtually any other aspect of standards-setting and enforcement in an extremelybroad, inclusive and comprehensive way.
Through this language, Congress sought to ensure the rule of law, rather than administrative fiat, in connection with manufactured housing regulation, in order to preserve the core purposes of the 1974 law as amended – i.e., to ensure the availability and affordability of manufactured housing for all Americans, and to avoid arbitrary, capricious, excessive and/or unnecessary regulation that would undermine or interfere with those objectives. Or at least, that was the idea.
It did not take long, though, for HUD to start backtracking on section 604(b)(6), with a campaign designed: (1) to first limit its application and scope; (2) to subsequently read it out of the 2000 reform law entirely; and (3) having accomplished that, revert to the type of “sub-regulatory” actions and practices that section 604(b)(6) was designed to stop in the first place.
The first salvo in the war over section 604(b)(6) came in February 2004, in the form of a letter from the MHCC to HUD, asking the Department to confirm the broad scope and applicability of the MHCC’s review authority under section 604. The MHCC stated, in part: “It is the Committee’s opinion that the terms ‘procedural and enforcement regulations’ cited in subsections 604(b)(1) and (2) and ‘procedural or enforcement regulations’ cited in subsection 604(b)(3) refer to ‘any … regulations, inspections, monitoring or other enforcement activities that constitutes a statement of general or particular applicability to implement, interpret, or prescribe law or policy be the Secretary,’ as stipulated in section 604(b)(6), and, as such, must be submitted to the Committee….” (Emphasis added). HUD responded, however, in May 2004, with a five-page tome which drastically curtailed the role and authority of the MHCC. HUD’s opinion letter concluded that section 604(b)(6) – directly contrary to its clear and unequivocal language— rather than constituting a broad “catchall” provision, designed to bring most program activities withinthe scope of the MHCC’s consensus review and recommendation role, was actually designed to limitthe scope of section 604 to an extremely narrow category of HUD “statements on the construction and safety standards and [their] enforcement,” thereby excluding allof the sub-regulatory “interpretations” and other pseudo-regulatory statements and activity that section 604(b)(6), by its plain language, was actually designed and intended to embrace.
Matters, though, only got worse from there. In February 2010, HUD published an “interpretive rule” – without opportunity for notice and comment — which further slashed the scope and applicability of section 604(b)(6), to the point that it waseffectively read out of the law, concluding that section 604(b)(6) applies only to HUD statements and actions that would constitute a “rule” within the meaning of the APA in any event. This position, however – as MHARR noted at the time and many times since — stands the law on its head and violates a basic rule of statutory construction which prohibits interpretations that would nullify either all – or any part – of an enactment of Congress. Put differently, since the APA already requires notice and comment for APA “rules,” construing section 604(b)(6) to require notice and comment only for APA rules is redundant and renders section 604(b)(6) – and Congress’ action in adopting that section – meaningless, in violation of settled law concerning statutory interpretation.
The damage had been done, though, and the 2010 interpretive rule, in particular, opened the floodgates for a wave – or, more accurately, flood — of new sub-regulatory and pseudo-regulatory program actions (i.e., at least 14 “guidance” memoranda between 2014 and 2016 alone, not counting “monitoring”-related “guidance”) that imposed new and/or expanded mandates on regulated parties including, most significantly, wholesale changes to the Subpart I-related “monitoring” function, based on a new/modified “focus” that shifted from the detection of specific alleged standards violations, to a broader concentration on “quality control,” at a time when industry production was rapidly declining. This had the effect of maintaining and even increasing contractor work hours and compensation (as previously detailed by MHARR) while resulting in needlessly higher regulatory compliance costs for manufacturers and, ultimately, consumers – not a single part of which was ever considered by the statutory consensus committee or subject to notice and comment rulemaking.
The HUD program, accordingly, has spent much of the past decade operating outside of the rule of law, in direct violation of the clear language of its own authorizing statute, exercising authority it was never granted by Congress, in ways that were never authorized by Congress, while giving short-shrift to the statutory MHCC, all to the detriment of the industry – and particularly its smaller businesses – and the millions of Americans in need of affordable, non-subsidized home ownership.
Just as importantly, through nearly every step of this decade-plus subversion of the 2000 reform law, “deep state” regulators at HUD have been aided and abetted by “institutional” program contractors – i.e., defactosole-source contractors, such as the program monitoring contractor – which constitute a “deep state” of their very own, wielding unlawfully-delegated and largely unaccountable governmental power, together with a built-in incentive to continually expand both the scope and cost of regulation, thereby increasing their own power and influence and, not surprisingly, their contract revenues. This needless regulatory expansion, in itself, has excluded hundreds-of-thousands of Americans from the benefits of manufactured home ownership, based on studies conducted by the National Association of Home Builders (NAHB), and has unnecessarily slowed and stunted the industry’s recovery from its modern production low in 2009, disproportionately harming smaller industry businesses. Nor does the industry itself escape part of the blame for this activity, as far too many of its largest corporate conglomerates – and their representatives — have provided protection and “cover” for the HUD statusquoand program “leaders” who have gone to extraordinary lengths to undermine the most important elements of the 2000 reform law.
The change in presidential administrations, however, has opened the door to potential remedies for this fundamentally lawless regulatory activity. In particular, the Trump Administration’s “top-to-bottom” review of HUD’s manufactured housing regulations and “regulatory activities,” under Executive Orders 13771 (“Reducing Regulation and Controlling Regulatory Costs”) and 13777 (“Enforcing the Regulatory Reform Agenda”) provides a viable basis for action to repeal both the 2010 HUD interpretive rule andthe slew of “field guidance” and other sub-regulatory mandates issued by HUD based on the Department’s unlawful construction of section 604(b)(6). And indeed, MHARR in its February 20, 2018 regulatory review comments to HUD, specifically urged the program to return to the rule of law, through the withdrawal of the 2010 interpretive rule and allof the program’s sub-regulatory mandates issued without MHCC consideration and notice and comment rulemaking.
This effort, moreover, received a major boost when the U.S. Department of Justice notified federal agencies, through memoranda issued on November 16, 2017 and January 25, 2018 that it would no longer enforce administrative “guidance” documents issued without notice and comment rulemaking. In part, the Justice Department stated: “Guidance documents cannot create biding requirements that do not already exist by statute or regulation. Accordingly … the [Justice] Department may not use its enforcement authority to effectively convert agency guidance documents into binding rules. Likewise, Department litigators may not use noncompliance with guidance documents as a basis for proving violations of applicable law….”
Based on these memoranda, MHARR filed a separate request with HUD on April 25, 2018, reiterating its call for the withdrawal of the 2010 interpretive rule and all HUD manufactured housing “guidance” documents imposed without notice and comment rulemaking (and/or proper MHCC review), stating: “[A]s is demonstrated by the November 16, 2017 and January 25, 2018 memoranda, the Justice Department would quite properly refuse to enforce any such guidance documents issued without rulemaking and prior MHCC consensus review … in any type of enforcement proceeding sought be HUD, in any event. Accordingly, rather than leaving those unenforceable ‘guidance’ documents on the public record … those ‘guidance’ documents … should be declared null and void in accordance with section 604(b)(6) and formally withdrawn.”
As MHARR has observed, the time has come for HUD to restore the rule of law to the manufactured housing program and to finally obey the 2000 reform law as written. The pending EO 13771/13777 regulatory review process provides the perfect opportunity for HUD to finally and formally renounce its past lawlessness and withdraw both the 2010 interpretive rule and the invalid sub-regulatory “guidance” documents issued pursuant to that “rule.” The legitimacy of the federal program – and the rule of law – demand no less.
MHARR is a Washington, D.C.-based national trade association representing the views and interests of independent producers of federally-regulated manufactured housing.
“MHARR-Issues and Perspectives” is available for re-publication in full (i.e., without alteration or substantive modification) without further permission and with proper attribution to MHARR.
Washington, D.C., July 5, 2018 – The Manufactured Housing Association for Regulatory Reform (MHARR) reports that according to official statistics compiled on behalf of the U.S. Department of Housing and Urban Development (HUD), year-over-year manufactured housing industry production grew again in May 2018. Just-released statistics indicate that HUD Code manufacturers produced 8,846 homes in May 2018, a 12.2% increase over the 7,882 HUD Code homes produced during May 2017. Cumulative industry production for 2018 now totals 42,492 homes, a 10.5% increase over the 38,450 HUD Code homes produced over the same period in 2017.
A further analysis of the official industry statistics shows that the top ten shipment states from the beginning of the industry production rebound in August 2011 through May 2018 — with cumulative, monthly, current year (2018) and prior year (2017) shipments per category as indicated — are:
The latest information for May 2018 results in no changes to the cumulative top ten list.
The Manufactured Housing Association for Regulatory Reform is a Washington, D.C.-based national trade association representing the views and interests of independent producers of federally-regulated manufactured housing.
RE: HUD Secretary Carson Addresses Manufactured Housing At Oversight Hearing
The House of Representatives’ Financial Services Committee held an oversight hearing for the U.S. Department of Housing and Urban Development (HUD) on June 27, 2018. The sole witness for this hearing was HUD Secretary Dr. Benjamin Carson. During the two-hour hearing, a number of questions directly relating to HUD-regulated manufactured housing were raised by Committee members.
Multiple Committee members posed questions focusing on the status of the “top-to-bottom” manufactured housing regulatory review announced by the Department in January 2018.
In responding to those inquiries, Secretary Carson first recognized and acknowledged the importance of manufactured housing as a key source of affordable home ownership in the United States, noting that manufactured housing currently represents roughly 10% of the nation’s housing stock. More importantly, the Secretary specifically acknowledged that the regulatory burdens imposed on manufactured housing in recent years by HUD — detailed by MHARR in its written regulatory review comments and emphasized by MHARR manufacturers and staff in a February 2018 meeting with the Secretary – were “ridiculous” and a “major concern” for him and for the Department under his leadership. Further, the Secretary indicated that the Department’s manufactured housing-specific regulatory review – sought by MHARR throughout 2017 as one of its organizational priorities – could potentially be completed before the end of 2018, noting that completion of that review was a “priority” for him and for HUD, and that he would seek to “expedite” that process.
Another more specific question by a Committee member focused on the baseless restrictions imposed by HUD in 2014 on multi-family manufactured housing that are neither required nor authorized by the National Manufactured Housing Construction and Safety Standards Act of 1974, as amended by the Manufactured Housing Improvement Act of 2000. Pointing out that such a restriction appeared to be “illogical,” the same Committee member also asked whether that issue had been addressed by any commenters in the manufactured housing program regulatory review process.
In response, Secretary Carson noted that the specific issue of multi-family manufactured housing had, in fact, been raised within the program regulatory review process, and agreed that the HUD restriction on multi-family HUD Code homes was indeed, “illogical.” Specifically, the matter of multi-family HUD Code homes was raised by MHARR in its February 20, 2018 program regulatory review written comments. (See, MHARR February 20, 2018 regulatory review comments at p. 11, “HUD Should Adopt Standards for Multi-Family Manufactured Homes”). After noting that a proposed standard to permit multi-family HUD Code homes had been approved and recommended by the statutory Manufactured Housing Consensus Committee (MHCC), but that HUD had failed to take action on that proposal within the 12-month timeframe mandated by the 2000 reform law, MHARR stated, in its comments: “Given the extremely beneficial impact that affordable, non-subsidized multi-family manufactured homes would have for lower and moderate-income American families, and given the fact that such an amendment to the HUD Code standards would be fully consistent with existing law … HUD should take immediate action to publish the MHCC-recommended provisions to authorize multi-dwelling unit manufactured homes as a proposed rule and to promulgate such a rule on an expedited time-frame.” (Emphasis added).
And, in fact, Secretary Carson, in response to this question, confirmed that this baseless, “illogical” restriction was being reviewed by the program as part of the ongoing regulatory review process, while the Committee member observed that there appeared to be no correlation between safety and multi-family habitation in manufactured homes.
In summary, the Secretary’s testimony with regard to manufactured housing was both positive and encouraging in acknowledging not only the substantive importance of HUD Code housing as a key affordable housing resource (including multi-family manufactured housing), but also the importance and progress of the program’s – and the Department’s – regulatory review processes.
MHARR will continue to interact directly with HUD appointed officials and will carefully monitor and keep you fully apprised of all developments affecting the manufactured housing program going forward.
REACTIVATION OF ENERGY RULE MAY REQUIRE LEGAL ACTION
HUD LEADERSHIP CHANGES REFLECTED IN SAA/PIA MEETING
Leadership changes within the HUD manufactured housing program — spearheaded by MHARR — were clearly reflected at the most recent HUD-PIA-SAA conference held from June 19-20, 2018 in St. Louis, Missouri. In both tone and substance, the meeting represented a distinct and positive break from previous such conferences during the tenure of former manufactured housing program administrator, Pamela Danner. This change reflects positively on the leadership of both Secretary Carson and HUD Deputy Assistant Secretary Dana Wade, who have taken the first essential steps toward the implementation of long-overdue program reforms in accordance with the Manufactured Housing Improvement Act of 2000 and the regulatory reform policies of the Trump Administration.
To start, the meeting — although convened by HUD — was organized and led by participating State Administrative Agencies (SAAs), including the Missouri SAA (as the host organization), the Arizona SAA and the Oregon SAA, and included multiple presentations by SAA (and PIA) participants. The conference, accordingly, unlike almost every other such meeting in the past, focused more on: (1) the legitimate role and activities of the states within the federal-state partnership which lies at the core of the HUD program; and (2) practical, cost-effectivesolutions to substantive issues encountered in the field, and less on the overgrown, over-extended and unnecessarily costly activities of HUD’s pseudo-regulatory contractor surrogates. Indeed, HUD’s installation contractor was not even present at the meeting and the program “monitoring” contractor, while represented, played virtually no role in either the conduct or substance of the conference.
Consistent with this fundamentally different theme – and contrary to the baseless regulatory approach taken by HUD and its “monitoring” contractor for the past decade, which has thwarted the performance-based ingenuity that lies at the heart of the affordability of manufactured housing — the Oregon SAA unveiled a new in-plant monitoring/inspection plan focused on actual production outcomes (i.e., specific consumer impacts) rather than seeking, critiquing and tweaking manufacturer quality control (QC) procedures and related minutiae that are not even addressed by the Part 3280 HUD standards, but have instead been unlawfully elevated as defactoregulatory mandates by HUD and its contractors through pseudo-regulatory “guidance” memoranda, “field guidance” pronouncements and other similar devices. This new program, instead of attempting to micro-manage producers’ quality control programs (and thereby expand contractor earnings), if replicated elsewhere, would return the enforcement focus of the HUD program to where it should be – i.e., consumer outcomes related to significantPart 3280 issues, rather than subjective, vague and undefined “process” issues under the QC-based monitoring platform utilized by HUD’s entrenched “monitoring” contractor. This would not only be consistent with the original design of the program and the federal-state partnership which lies at its core, but would also be in accordance with the specific recommendations of the National Commission on Manufactured Housing, which led to the enactment of the 2000 reform law.
Similarly, this approach would also be consistent with MHARR’s separate call — in comments to HUD pursuant to Trump Administration Executive Orders 13771 and 13777 and in a separate communication to HUD based on U.S. Justice Department policy rulings — for the repeal of allsuch pseudo-regulatory “guidance” which was not subjected to notice and comment rulemaking as required both by the Manufactured Housing Improvement Act of 2000. (See, article below).
At the same time, though, the positive and fundamentally different theme of the St. Louis meeting underscores a significant “disconnect” within the program that MHARR has continually emphasized and which must be addressed and corrected by the Trump Administration (and Congress). This “disconnect” involves the radically unbalanced funding of the HUD “monitoring” contractor – with funding that has increased by 62% since 2011 despite substantially declines in industry production – as compared with HUD payments to state SAAs, which have seen their functions expand over the same time period, but have not received a base funding increase in over a decade.
Given the crucial role of the federal-state partnership that underlies the HUD program, and the accountability and responsibility that states bring to the program – as contrasted with unaccountable, revenue-driven contractors – it is essential that the role of the states, at a minimum, be maintained and strengthened. While HUD has already proposed changes to the outdated and clearly inadequate SAA funding system that currently exists, those changes must be advanced more rapidly and implemented in conjunction with fundamental changes to the monitoring contract process, not only to make that process more competitive, but also to restrict and limit the monitoring function to its legitimate PIA evaluation role as prescribed by Congress in the 2000 reform law.
MHARR, accordingly, will continue to seek the renewal, revitalization and reinvigoration of the role of the states within the HUD program and the vital federal-state partnership that lies at the core of both the functionality and legitimacy of that program. This includes – but is by no means limited to – seeking and advancing continued state participation in the HUD manufactured housing program and ensuring a level of funding that will allow and promote that participation. It also includes demanding a legitimatenew monitoring contract and a legitimate procurement process for the next monitoring contract that ensures full and fair competition as required by federal law.
STATES ANNOUNCE NEW INDEPENDENT POST-PRODUCTION ASSOCIATION
State associations representing manufactured housing communities – Manufactured Housing Communities of Arizona (MHCA) and the Manufactured Housing Community Owners Association (MHCO) of Nevada – both of which had previously withdrawn from the Manufactured Housing Institute (MHI), have announced the formation of a new, independent post-production manufactured housing association, similar to that suggested by MHARR in a 2017 study and analysis (see, November 15, 2017 MHARR News Release – “MHARR Releases Study Recommending Independent Collective Representation for Post-Production Sector”) to function at the national level.
In its initial communication regarding the new group, MHCA states:
“The MHCA had joined a national association in the hopes that we would get … representation and effectiveness at a national level. The national legislation and rulemaking over the last ten years has proven that we do not have that representation. *** The MHCA has taken the first steps in establishing a new organization to lobby on behalf of community owners and associations representing community owners. The new organization is the National Association of Manufactured Housing Community Owners, Inc. (NAMHCO)….”
The MHCA communication concludes by observing that “we have a problem at the national level,” and invites other post-production groups to become “part of the solution” by joining and supporting the new national association.
While this action (at present including only HUD Code communities) – is both positive and encouraging, the industry’s entirepost-production sector (communities, as well as retailers, developers, finance providers, insurers and others) remains in desperate need of an independent, collective, national association and representation to deal effectivelywith national-level issues that are today either not being addressed at all, are not being addressed effectively, or are, in effect, being held captive to the interests of the industry’s largest corporate conglomerates.
At present, HUD Code manufactured housing is nearly alone, as a major industry, in being without an independent, national, collective post-production association, and this crucial “missing link” needs to be decisively corrected as soon as possible if the industry is to advance and expand to its full economic and market potential. While HUD Code production is gradually recovering and improving from its recent modern-day minimum level, and manufactured homes, in 2018, offer superb quality with unprecedented value for consumers, the industry’s post-production sector has, conversely, regressed, with repeated failures in critical areas such as consumer financing, placement, zoning and installation, among others.
These failures suppress and unnecessarily restrict industry growth as untold thousands of consumers are eliminated from the market due to unnecessarily high interest rates on manufactured homes and particularly manufactured home chattel loans (due to the ongoing refusal by Fannie Mae and Freddie Mac to provide market-significant securitization and secondary market support for such loans). To make matters worse, even for consumers who would be able to obtain such financing, the refusal of local communities to permit the development of new manufactured housing communities, or otherwise permit the placement of manufactured homes in vast areas of the United States, needlessly drives potential homebuyers away from the HUD Code market. As a result, while manufactured homes have progressed substantially, once they leave the factory, the industry (and consumers) are ill-prepared, ill-equipped and ill-served in the field.
This dichotomy, between significant successes in the production realm, as contrasted with significant failures in the post-production realm, not only undermines industry growth and needlessly excludes large numbers of consumers from the HUD Code market, but also harms, as one of its primary victims, the state associations on which post-production industry businesses rely so heavily. While most state associations continue to do excellent work under difficult circumstances, they are unfairly handicapped in many instances, by a lack of centralized policy information, formulation, direction and coordination. This effectively leaves state associations either “on their own” to individually seek relevant factual and policy information from other states, or worse, dependent on MHI and its few industry-dominant corporate conglomerates on matters that rightfully should be discussed, debated, formulated and decided on a collective, independent and collaborative basis. In either case, the collective functionality of the state associations and the post-production sector is not what it should be, or needs to be, in order to successfully advance both the post-production sector and the industry as a whole.
This matter, moreover, has been unnecessarily complicated by the involvement of self-promoting individuals and/or entities that not only have difficulty in grasping the magnitude of the ongoing failures of the post-production sector – and the damage thereby inflicted on the industry and consumers – but also continue to press and advance ostensible remedies (publications, conferences, meetings, etc.) that are overly simplistic, unduly parochial, and simply inadequate to address the much larger and significantly more complex problems underlying this crucial issue.
MHARR, therefore, for reasons that it has previously spelled-out in detail, supports the formation of the new, independent communities association. In addition, MHARR also supports and encourages the expansion and further development of this association going forward.
SENATE CONFIRMS MONTGOMERY AS HUD ASSISTANT SECRETARY
The United States Senate, after a lengthy delay, has finally voted to confirm Brian Montgomery as HUD Assistant Secretary for Housing-Federal Housing Commissioner. The Senate vote brings to an end an eight-month confirmation marathon that began when Mr. Montgomery – who served in the same position in the Administration of President George W. Bush – was nominated by President Trump in September 2017.
While MHARR supported Mr. Montgomery’s confirmation, he returns to HUD at a crucial juncturefor the Department generally and for the HUD manufactured housing program in particular. As industry members are aware, the HUD program is at a potentially groundbreaking turning point. Its former administrator, an Obama Administration holdover, has been re-assigned, and the program itself – including all of its regulations and related pseudo-regulatory actions – are undergoing a “top-to-bottom” review, pursuant to Trump Administration regulatory reform Executive Orders 13771 and 13777.
With the federal program at a potentially historic cross-roads, Mr. Montgomery effectively will have a second opportunity to achieve what he did not do previously – i.e., ensure the full and proper implementation of the Manufactured Housing Improvement Act of 2000 in ways that cannot be immediately undone or ignored by rogue regulators. While Mr. Montgomery had an opportunity to permanently “set in stone” the key reforms of the 2000 law during his earlier tenure at HUD, he failed to do so, instead adopting a passive stance while career regulators undermined key reforms, such as section 604(b)(6)’s requirement for MHCC pre-approval and full rulemaking for all “changes” to policies, practices and procedures relating to inspections and monitoring.
The reform processes underway within the program and within HUD more broadly, provide a long-overdue opportunity to finally undo these and other baseless distortions of the 2000 reform law that occurred under prior career administrators, and return the HUD program to the policy path and direction mandated by Congress in the 2000 reform law. MHARR will carefully monitor Mr. Montgomery’s actions to ensure that such reforms are finally cemented in place.
MHARR CALLS FOR WITHDRAWAL OF HUD “GUIDANCE” DOCUMENTS
MHARR, based on recent rulings by the U.S. Justice Department, has reiterated and amplifiedits call for HUD to immediately withdraw any and all manufactured housing program “guidance” documents that were not: (1) presented to the statutory Manufactured Housing Consensus Committee (MHCC) for prior review and recommendations; and (2) published for notice and comment rulemaking in the Federal Register.
In a recent communication, MHARR calls for fullHUD compliance with the procedural requirements and safeguards of the Manufactured Housing Improvement Act of 2000 – requiring prior consensus committee review and notice and full rulemaking for allnew and modified standards, regulations and Interpretive Bulletins, andchanges to HUD policies, practices and procedures affecting inspections and monitoring — following Justice Department rulings issued on November 16, 2017 and January 25, 2018 asserting that U.S. Attorneys may “no longer use noncompliance with guidance documents as a basis for proving violations of applicable law” in civil lawsuits to enforce federal health and safety laws, such as the National Manufactured Housing Construction and Safety Standards Act of 1974 (as amended) and standards promulgated under that law.
In rejecting enforcement actions based on such unpublished “guidance” documents, the Justice Department maintained that it could not and would not use its “enforcement authority to effectively convert agency guidance documents into binding rules” and that such “guidance documents cannot create binding requirements that do not already exist by statute or regulation.”
HUD, by contrast, has resorted to “guidance” and other pseudo-regulatory pronouncements to skirt rulemaking and other requirements of applicable law for decades. This abusive practice finally led Congress, in the Manufactured Housing Act of 2000, to include a new section 604(b)(6), which – on its face – requires prior MHCC review and rulemaking for virtually any change to existing rules, regulations, interpretations, policies, practices and/or procedures relating to any aspect of enforcement, inspections or monitoring. HUD, however, promptly ignoredthis mandate, issuing an Interpretive Rule in 2010 designed to negate this clear and unequivocal mandate and effectively strip it out of the 2000 reform law.
As MHARR’s communication makes clear, however, the recent rulings by the Trump Administration Justice Department demonstrate and establish (as MHARR has consistently maintained) that the HUD 2010 Interpretive Rule is plainly wrong and invalid, and should be withdrawn, and that any and all HUD manufactured housing program “guidance” documents which purport to establish requirements not otherwise found in the law or properly promulgated standards and regulations, and which have not themselves been subjected to prior MHCC review and full rulemaking, are unenforceable and must be withdrawn.
MHARR, consequently, has asked that such “guidance” documents, as well as HUD’s arbitrary and clearly erroneous 2010 “Interpretive Rule,” be withdrawn as part of HUD’s pending regulatory review process pursuant to Trump Administration Executive Orders 13771 and 13777.
MHARR WARNS HUD ON MONITORING CONTRACT
MHARR has again warned HUD against any type of re-solicitation process for the manufactured housing program monitoring “contract” that does not entail — and does not, in fact, produce— full and fair competition for that contract, as required by both the Manufactured Housing Improvement Act of 2000 and federal contracting law, and a new monitoring contractor for the federal program. For the moment, however, the monitoring contract re-solicitation, originally scheduled to begin in December 2017 (before the re-assignment of former manufactured housing program Administrator Pamela Danner) remains on “hold.”
In meetings and other communications with the new Trump Administration leadership at HUD, MHARR has stressed that much, if not most, of the dysfunctionality and defactolawlessness of the current HUD manufactured housing program derives from – and is driven by — abuses of the “monitoring” function, which have grown and expanded over the 40-year tenure of the current revenue-driven contractor (particularly during the tenure of the reassigned former program Administrator), to essentially encompass the entire program, while pseudo-governmental powers have unlawfully been delegated to the entrenched incumbent contractor. As has been the case for decades, this unlawful, excessive, unnecessary and unaccountable contractor activity (expanding now into the post-production realm), produces few, if any, benefits for consumers, while needlessly driving-up costs for homebuyers, thus depriving untold thousands of Americans of affordable manufactured homes in violation of the fundamental purpose and objectives of the 2000 reform law.
MHARR reiterated and reasserted allof these points in
written comments recently submitted to HUD in connection with its pending “top-to-bottom” manufactured housing program regulatory review, stressing: (1) that the absurd and indefensible 40-year defactosole-source tenure of the existing “monitoring” contractor must be ended; (2) that there must be full and fair competition for the monitoring contract as required by the Manufactured Housing Improvement Act of 2000 and other applicable law; (3) that the impending RFP for the monitoring contract must be structured to ensure such full and fair competition; and (4) that HUD must award the monitoring contract (or any element of a multi-contract monitoring structure), to “separate and independent” contractors as mandated by the 2000 reform law.
Given the extensive history of abuse – both substantive and procedural – of the program “monitoring” function andthe “monitoring” contract procurement process by both the HUD program and its entrenched contractor, MHARR will closely monitor allactivities relating to the next monitoring contract solicitation and, if HUD violates basic norms and statutory requirements once again to effectively “steer” a new contract to the current entrenched contractor, the Association will have no alternative but to take further action.
MAJOR UNRESOLVED DODD-FRANK ISSUE RAISES NEW QUESTIONS
While Congress has enacted legislation to eliminate certain restrictions in the original Dodd-Frank finance reform law which prohibited manufactured housing retailers from assisting consumers in the home financing process unless qualified and licensed as “loan originators,” that legislation nevertheless leaves intact – and unresolved – Dodd-Frank restrictions on manufactured home consumer loan interest rates and the statutory designation of loans that exceed those rates as “high-cost” loans, thus triggering additional requirements and/or risks for those lenders. Both the enactment of that loan originator language, however, and the corresponding absence of any interest rate relief – after a full decade of supposed full-scale engagement by part of the industry, leave many open and highly-significant questions for the industry and particularly its post-production sector.
On the one hand, the ten-year delay in securing relief for retailers that wish to provide financing assistance to potential homebuyers – and then, only by divorcing that provision from the interest relief amendment that was also included in the version of the Dodd-Frank reform bill passed in the House of Representatives – raises obvious questions as to: (1) whether such relief could have been obtained more quickly with separate relief bills; (2) why separate relief bills (i.e., one bill for loan origination and a separate bill for interest rate/high-cost loan relief) were not attempted, sought, or advanced previously; and ultimately (3) whether loan originator relief was purposely held captive to “high-cost” relief and thus delayed for years needlessly for the benefit of the industry’s largest corporate conglomerates.
Similarly, industry experts are beginning to question whether the industry’s largest lenders and largest producers are serious about the full and robust implementation of the “Duty to Serve Underserved Markets” (DTS). Specifically, what conceivable incentive do those industry-dominant lenders, in particular, have to demand market-significant securitization support by Fannie Mae, Freddie Mac and FHFA for manufactured home chattel loans – which would likely erode already high interest rates and simultaneously draw additional competing lenders into the HUD Code market – when those current dominant lenders can still seek statutory Dodd-Frank relief from Congress to continue making high-cost loans (or charge even higher rates) with no additional liability risk?
All of this, once again, underscores the lack of accountability of the current “umbrella” industry representation to rank-and-file post-production sector businesses, and the corresponding need for a national, independent, post-production association to represent those businesses.
REACTIVATION OF DOE ENERGY RULE MAY NECESSITATE LEGAL ACTION
As reported by MHARR on June 11, 2018, the revival of a previously “inactive” energy rule for manufactured homes by the U.S. Department of Energy (DOE) may trigger legal action by MHARR on behalf of smaller HUD Code industry businesses.
As MHARR previously advised the industry, the baseless, contrived and excessively-costly DOE-proposed manufactured housing “energy” rule, developed as part of an illegitimate “negotiated rulemaking” process — as shown by documents released by DOE to MHARR under the Freedom of Information Act — was designated an “inactive” rule by DOE in the Fall 2017 Federal Semi-Annual Regulatory Agenda (SRA). That proposed rule, however, has now re-appeared in the Spring 2018 SRA, with a notation indicating that a “supplemental” Notice of Proposed Rulemaking (NPRM) is being targeted for publication by DOE by August 2018.
While there is no information yet as to what the “supplemental” NPRM may propose — or alter from the initial NPRM published by the Obama Administration in June 2016 — MHARR (unlike MHI, which voted in favor of the proposed rule as part of the illegitimate “negotiated” rulemaking process) has consistentlyand strongly opposed this proposed rule, which would needlessly explode the retail price of manufactured housing — by $6,000.00, or more, for a double-section home). A retail price increase of this magnitude would not only effectively force hundreds-of-thousands of potential lower and moderate-income HUD Code purchasers out of the manufactured housing market, based on research conducted by the National Association of Home Builders (NAHB), but would also be a major setback for retailers, communities, finance companies and other post-production sector industry businesses that are just beginning to recover from record-low industry production levels just a few years ago – demonstrating, yet again, the urgent need for an independent, national, collective post-production association.
Furthermore, the phony DOE “cost-benefit” analysis for the 2016 proposed rule, purportedly showing “benefits” for consumers remaining in the market, has been totally invalidated by subsequent actions of the Trump Administration, including: (1) its express disavowal and repeal of the Obama Administration’s invalid “Social Cost of Carbon” (SCC) construct (used by DOE to inflate the alleged benefits of the 2016 proposed rule); and (2) its withdrawal of the United States from the “Paris Climate Accord,” which formed part of the policy basis for the DOE proposed rule.
Consequently, unless the forthcoming “supplemental” NPRM substantiallymodifies and/or withdraws objectionable, unnecessary, and unnecessarily-costly elements of the initial DOE proposed rule, MHARR may have no alternative but to consider legal action to enjoin the enforcement of any resulting “final” rule. Prior to any such court action, however, MHARR (and the industry) will have a further opportunity to comment and take other administrative action, as warranted, with respect to the “supplemental” energy NPRM.
In addition to the revival of the DOE energy rule, HUD announced three regulatory actions in the Spring 2018 SRA impacting manufactured housing. First, HUD has withdrawn a pending “Third Set” of amended HUD Code standards, including recommended standards concerning “carbon monoxide detection, stairways, fire safety considerations for attached garages and duplexes.” Presumably, this action was undertaken pursuant to HUD’s current “top-to-bottom” review of all existing and pending standards and will be subject to further consideration and action as determined by that review.
Meanwhile, HUD has reactivated – on a long-term basis — two other manufactured housing rulemaking proceedings that had previously been suspended under the Trump Administration’s January 2017 regulatory freeze order. These are: (1) an “interim final rule” to amend HUD’s formaldehyde emissions standards based on the new formaldehyde standards adopted by the U.S. Environmental Protection Agency (EPA); and (2) a final rule on amendments to the HUD Code’s regulatory exemption for recreational vehicles. Both of these actions are slated for action by April 2019 and will be addressed further by MHARR on an administrative basis as warranted.
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Zoning, Opening up Urban Infill and Making Sure Citizens who want Manufactured Homes are Heard
by Ed Schafer
For the last three or four years, the South Carolina association’s focus is to move beyond killing bad zoning proposals and working to reopen areas that have been closed to manufactured homes for many years.
Following up on a story concerning the flooding in Minot, North Dakota last spring, KFYR-TV reports the Minot City Council is relaxing zoning requirements to allow manufactured homes to be sited in areas not previously zoned for them, sometimes to the chagrin of neighbors. Working on a case by case basis, many of the homes [...]...
Zoning Commission Recommends against Expansion of Manufactured Home Community
The Yellowstone County Zoning Commission unanimously turned down a zone change application that would have allowed Cherry Creek Estates manufactured home community (MHC) to expand by adding as many as 80 manufactured homes, reports billingsgazette. While the Yellowstone County Board of Commissioners will have the final say when it meets in...
A new proposal from the Columbus Junction (Iowa) Planning and Zoning Commission to the city council would create a manufactured housing (MH) district, and delete MH from R-2 and R-3 residential districts. According to muscatinejournal.com, current ordinances require any MH outside of a community to be placed on a permanent foundation and converted...
by RC Williams
The Washington County, Maryland Board of Commissioners is holding a public hearing today regarding several proposed changes to the county’s zoning ordinance, including ones that affect manufactured homes.
Following up on a story we last posted May 2, 2012 about modular medical units temporarily placed on a property to house loved ones with special needs, MHProNews has learned several states, including Virginia, New York, and California have enacted legislation to allow these units to override local regulations and be sited on properties not [...]...