Menu

Click bottom right for full screen video.

A+ A A-

HUD Whitewash on DOE Rule Costs, More Washington Manufactured Housing Updates

  • Written by Mark Weiss
  • HUD WHITEWASHES ALLEGED DOE ENERGY RULE COSTS
  • PROCEDURAL CHANGES SHOULD APPLY TO ANY DOE MH RULE 
  • REVISED DTS PLANS RELEASED – CHATTEL STILL IN LIMBO
  • 2018 PRODUCTION UP – BUT SHORT OF 100,000 HOME BENCHMARK
  • UNFINISHED BUSINESS – HUD MONITORING CONTRACT REFORM
  • CONGRESS TAKES UP GSE REFORM 
  • HUD ANNOUNCES MHCC/SUBCOMMITTEE MEETINGS

HUD PRODUCES WHITEWASH OF DOE ENERGY RULE “COSTS”

In the lead-up to the Manufactured Housing Consensus Committee (MHCC) meetings now scheduled for April and May, 2019 (see, article below), HUD’s Office of Policy Development and Research (PD&R) has produced a purported analysis of the cost data underlying the Department of Energy’s (DOE) August 3, 2018 Notice of Data Availability (NODA), setting forth possible revised approaches to DOE manufactured housing energy standards. The bare-bones (and obviously hurried), three-page PD&R analysis, however, developed in response to a request by the MHCC, at its September 2018 meeting, for “PD&R to submit a document to the MHCC which includes comparable cost figures similar to [the DOE-published NODA Package Draft Results],” is little more than an unsubstantiated whitewash of “data” derived from the illegitimate and irretrievably tainted manufactured housing energy standards “negotiated rulemaking” conducted by DOE in 2014-2015.  While the federal manufactured housing program, as noted in other articles below, has thus progressed to some degree as a result of the regulatory reform policies of the Trump Administration, the HUD bureaucratic “swamp” still exists and still must be confronted and curbed by both the industry and consumers.

PD&R, in its memorandum (dated October 26, 2018, but only released to the public and presumably MHCC members as well on or about February 14, 2019) states that: “in response to the MHCC’s request, PD&R staff conducted a review of relevant documents” (emphasis added) from the DOE manufactured housing energy standards “public comment webpage, and contacted multiple individuals with expertise in manufactured housing related-energy matters.” The PD&R memorandum, however, fails to specifically identify what data from the DOE webpage that it reviewed and which“individuals” with alleged “expertise in manufactured housing related energy matters,” it contacted.  Nevertheless, while admitting that “PD&R staff was not able to recreate the survey conducted by the [DOE manufactured housing negotiated rulemaking] Working Group given the short timeframe provided by the MHCC,” PD&R, on the basis of threeunsupported, conclusory paragraphs in its October 26, 2018 memorandum, states that it “concurs with the [DOE] methodology and resultant cost figures.”

As MHARR will set forth soon in greater detail in a comprehensiveresponse, analysis and refutationof the PD&R memorandum in advance of the relevant MHCC subcommittee and full committee proceedings on this matter, however, the underlying data and “information” used to develop the NODA were the same, non-credible, fatally-flawed and irretrievably-tainted data developed as part of, and incident to, the contrived and illegitimate DOE “negotiated rulemaking,” as was fully described and exposed by MHARR in its August 8, 2016 comments on DOE’s initial proposed manufactured housing energy standards rule andits September 17, 2018 NODA comments. To the extent that the NODA proposals and related DOE cost calculations rely on the same fatally-flawed data, analyses and assumptions (including the now discarded “Social Cost of Carbon” construct) that were the purported basis for the original 2016 DOE proposed manufactured housing energy standards rule, anymaterials derived by PD&R from the DOE manufactured housing energy webpage or the NODA itself, would necessarily be invalid, illegitimate, irrelevant and baseless. Consequently, PD&R’s “concurrence” with DOE’s “methodology and resulting cost figures,” means – and proves – exactly nothing.

Furthermore, the PD&R memorandum, insofar as it: (1) does not identify, in any way, the “multiple individuals with expertise in manufactured housing related-energy matters,” that it allegedly contacted; (2) does not indicate or disclose whether those unidentified “individuals” might have – or might represent — special energy interests or other related special interests; (3) does not indicate or disclose whether it contacted smaller, independent manufactured housing businesses or national representatives of those businesses that would be disproportionately impacted by DOE energy standards (as emphasized by both MHARR and the U.S. Small Business Administration in DOE energy rule comments), particularly in light of information provided to DOE by MHARR showing a retail cost impact for smaller, independent manufactured housing producers approaching $6,000.00 for a multi-section home; and (4) does not indicate or disclose whether it contacted potential manufactured housing purchasers to assess the impact of significantly higher home purchase prices that would result from the DOE proposals — provides no legitimate factual basis for its supposed “concurrence” with the fatally-flawed DOE cost calculations.  As a result, the MHCC should reject – and should advise HUD and DOE that it rejects – the purported “factual” and/or data predicate for boththe 2016 DOE proposed manufactured housing energy standards rule andthe August 3, 2018 DOE NODA.

DOE PROCEDURAL CHANGES SHOULD APPLY TO ANY PROPOSED MH RULE

As recently reported by MHARR, the U.S. Department of Energy (DOE), on February 13, 2019, published a proposed rule in the Federal Register that would significantly modify its procedures for developing new or revised energy conservation standards and related testing procedures for consumer products, “appliances,” and certain commercial and industrial equipment. While this proposed rule, as published, does not specificallyreference standards development and/or testing procedures under section 413 of the Energy Independence and Security Act of 2007 (42 U.S.C. 17071) directly pertaining to manufactured homes, the proposed rule does, by its terms, apply to DOE’s Appliance Standards Program — the sameprogram under which the original June 17, 2016 proposed DOE manufactured housing energy standards rule was developed and subsequently supplanted by DOE pursuant to a Notice of Data Availability (NODA) published on August 3, 2018 (see, article above).

Given that the proposed (and still pending) DOE manufactured housing standards were developed under DOE Appliance Standards Program procedures that areaddressed by the changes proposed in the February 13, 2019 DOE Notice, the procedural modifications noted in that proposed rule shouldbe applied to the manufactured housing proceeding – as MHARR will assert in comments to be filed with DOE.  That, in turn, would constitute yet another basis (among many others previously detailed by MHARR) for the withdrawal of any and all previously-proposed versions of the DOE manufactured housing standards – developed under or derived from — the inherently tainted DOE “negotiated rulemaking” process, and the ultimate development of a new rule (if necessary) based on a legitimate and lawful standards-development process consistent with the regulatory policies of the Trump Administration. The application of the new procedural rule to the manufactured housing energy rulemaking, could also help to assure that any future revisions of that rule are not subjected to the same type of coordination between part of the industry and energy special interests that led to the fatally-tainted and illegitimate “negotiated rulemaking” which resulted in both DOE’s original 2016 proposed manufactured housing energy standards rule and subsequent 2018 NODA proposal.

Among other things, the February 13, 2019 proposed DOE procedural rule would: (1) expand various procedural protections to the development of testing standards for regulated products; (2) define “a significant energy savings threshold that must be met before DOE will update an energy conservation standard;” (3) address issues related to the cumulative regulatory burdens imposed on regulated products and consumers of those products; and (4) “clarify DOE’s commitment to publish a test procedure six months before a related standards [Notice of Proposed Rulemaking].”  This latter provision is particularly significant in relation to DOE’s proposed manufactured housing energy standards, insofar as proposed test procedures were not published by DOE until afterpublication of the June 17, 2016 proposed rule, as was pointed out by MHARR at the time.

Written comments on the proposed DOE procedural rule are due by April 15, 2019.  MHARR will provide industry members with copies of its written comments on this matter for consideration and possible use, in advance of the comment submission deadline. 

REVISED DTS PLANS LEAVE MH PERSONAL PROPERTY (CHATTEL) LOANS IN LIMBO

The first annual revisions to the erstwhile “Duty to Serve Underserved Markets” (DTS) implementation plans developed by Fannie Mae and Freddie Mac were approved by the Federal Housing Finance Agency (FHFA) and published recently by the Government Sponsored Enterprises (GSEs).  While Freddie Mac’s DTS plan – which provided for only minimal possible purchases of the personal property (i.e., chattel) loans which comprise nearly 80% of all manufactured home consumer loans over its three-year term – was not modified with respect to manufactured housing, the manufactured housing provisions of Fannie Mae’s original DTS plan have, in fact, been substantively modified, in a manner which could seriously dilute, to the point of virtual insignificance, the already miniscule targeted purchases of manufactured home personal property/chattel loans set forth in its original DTS plan.

As proposed by Fannie Mae, and as approved by FHFA, Fannie Mae’s supposed commitment to purchase a sharply limited number of manufactured home personal property/chattel loans as part of a supposed “pilot program” in the out-years of its DTS plan, would be reduced by an alternative option to either “participate in a debt structure,” or “guarantee a security” containing manufactured home chattel loans instead. Fannie Mae sought to justify this modification to its original DTS plan by noting its “conclus[ion] that there is limited interest in selling whole [chattel] loans.” Instead, it noted that after “extensive industry outreach,” “multiple lenders expressed unwillingness to sell loans because they perceived that chattel assets perform well and provide strong returns when kept on portfolio,” while another potential seller “indicated that it has sufficient outlets for chattel assets….”

There is no indication, however, as stressed by MHARR in its comments to FHFA on the proposed modifications, that this supposed “extensive outreach” included any potential newlenders not already involved in the manufactured housing personal property/chattel loan market that could become competitors with existing industry-dominant lenders – with resulting market pressure for lower interest rates – if DTS personal property/chattel loan purchases were implemented in a market-significant manner, as MHARR has sought.  Instead, it appears from Fannie Mae’s own language (in its DTS plan modification request), that this “outreach” was directed at – and to – the existing handful of industry-dominant lenders.  These same lenders have benefited from the failure of the GSEs and FHFA to implement DTS to anysignificant degree with respect to manufactured housing personal property/chattel loans and also possess, but have reportedly failed to provide to the GSEs, Ginnie Mae and FHFA, the type of loan performance data which they all claim to need in order to establish a market-significant manufactured housing personal property/chattel loan securitization program – thus creating a classic “catch-22” for both potential manufactured housing consumers and the broader industry.        

Such action, to further minimize the GSEs’ already negligible and glacially-paced alleged “commitment” under DTS to support and expand manufactured home personal property/chattel loans — which, again, comprise the vast bulk of HUD Code consumer lending (as well as a parallel effort to divert DTS from the mainstream of the existing manufactured housing market) is — and should be — unacceptable to both the industry and consumers of affordable housing. This is particularly the case insofar as a January 2019 report by the Consumer Financial Protection Bureau (CFPB) entitled “Ability to Repay and Qualified Mortgage Rule Assessment Report,” shows that manufactured housing loans, since 2012, have declinedas a share of home loan originations for bothlarge and small lenders. (See, January 2019 CFPB Report, p. 222, Table 39 and related text).

Thus, while Congress intended to bolsterGSE support for consumer lending on affordable manufactured homes through DTS to market-significant levels, and thereby increase the availability of affordable manufactured homes for lower and moderate-income American families, the GSEs’ continuing failure to comply with that mandate — particularly with respect to manufactured home personal property/chattel loans — has actually had an adverse impact on manufactured home consumer lending, and is further indication that the GSEs are not, in fact, interested in providing market-significant support for the personal property/chattel loans that the vast bulk of moderate and lower-income American families rely upon to purchase an inherently affordable manufactured home.

MHARR, accordingly, will continue to aggressivelypress for the full and market-significant implementation of DTS as FHFA (and oversight of the GSEs) transitions to new leadership appointed by President Trump.

MH PRODUCTION GROWS IN 2018 BUT STILL SHORT OF 100K BENCHMARK

While the production of HUD Code manufactured homes in 2018 continued to gradually increase from its historic low of just 49,683 homes in 2009, total production for the year still failed to break the benchmark 100,000 home level, last surpassed in 2006. While the consistent production growth achieved by industry manufacturers since 2009 is encouraging, the industry’s inability to return to production levels that consistently exceeded 100,000 homes-per-year for decades – often by significant margins – in a strong economy with strong corresponding demand for the type of inherently affordable homeownership that manufactured housing provides, points to continuing problems affecting the manufactured housing market, and particularly its post-production sector, that must be effectivelyaddressed to allow the entire industry to meet its full economic potential.

As reported by the U.S. Department of Housing and Urban Development (HUD), industry manufacturers, in 2018, produced a total of 96,555 homes, an increase of 3.9% over the 92,902 HUD Code homes built by industry manufacturers in 2017. After nearly 85 months of sustained production growth, however, 2018 ended with four consecutive months of year-over-year production declines, leaving the annual production total just short of the 100,000-home benchmark. While overall industry production, therefore, has expanded by a factor of nearly 95% since reaching its low-point in 2009, production over the same period has remained well below not only the 100,000-home benchmark, but also the industry’s twenty-year (1999-2018) production average of 166,008 homes per year, and its thirty-year (1989-2018) production average of 169,662 homes per year.

The fundamental question arising from this data is, why is the HUD Code industry – from both a short and longer-term perspective – not doing better (i.e., producing and selling hundreds-of-thousands-of homes per year)? As MHARR has explained in detail, the problem does not currently lie within the industry’s production sector. While still burdened by HUD (and other government) regulatory overreach and regulatory compliance costs in various respects, the production (or supply) side of the industry’s economic equation is notthe principal culprit in its failure to return to – and exceed – its historical level of market performance.  Rather, objective analysis shows that the principal market-limiting factors for the industry today, are clustered, almost entirelyon the demand – or post-production— side of the equation (i.e., once the home leaves the factory), where they have not been addressed either decisively or effectively.

Those market-limiting post-production factors are primarily concentrated in three areas: (1) exclusionary local zoning ordinances and mandates that discriminate against manufactured homes and manufactured homeowners; (2) other types of local placement restrictions or limitations on individual manufactured homes and manufactured home communities; and, most importantly (3) the continuing lack of support for mainstream manufactured home consumer financing – and most particularly manufactured home personal property (i.e., chattel) loans — by Fannie Mae and Freddie Mac under the “Duty to Serve Underserved Markets” (DTS) mandate, and the Federal Housing Administration (FHA) and Government National Mortgage Association (Ginnie Mae) under HUD’s nearly moribund Title I manufactured housing program.

Both individually and in combination, this post-production “brick wall,” has created an economic “perfect storm” that especially harms smaller industry businesses and HUD Code consumers, while benefitting only the industry’s largest businesses. Being unresolved and left to fester through ineffective national-level representation of the post-production sector, they have taken a cumulative toll on the industry as a whole, while eliminating large numbers of potential purchasers from the manufactured housing market and unfairly penalizing the rest. This state of affairs must change in order for the industry to reach its full potential. But that will require industry members to demand aggressiveaction on these and a full-range of other post-production issues, including, but not limited to, national-level marketing, promotion and advertising programs to advance the industry and its homes.

Consistent with this, and as with its in-depth November 1, 2017 study exposing the dire need for an independent, national manufactured housing post-production representation, MHARR will now undertake a new study regarding such much-needed, national-level programs.  This subject will then be addressed at the upcoming MHARR Board of Directors meeting.

FOCUS SHIFTS TO HUD MONITORING CONTRACT

As activity continues at HUD on the implementation of Trump Administration regulatory reform Executive Orders (EOs) 13771 and 13777, a crucial ongoing issue for the institutional reform of the HUD manufactured housing program will be the award of a new program “monitoring” contract.

The Manufactured Housing Improvement Act of 2000 mandates, among other things, two major institutional reforms of the HUD manufactured housing program — (1) the appointment of a non-career administrator to run the program; and (2) the competitive selection of an independent “monitoring” contractor, responsible for the statutorily limited and definedfunction of evaluating the performance of Primary Inspection Agencies. And while MHARR continues to urge HUD to appoint a non-career program administrator as required by the 2000 reform law, and addressed that issue at a recent meeting with HUD Assistant Secretary Brian Montgomery, only a few months remain before HUD solicits and awards a new contract for program “monitoring” services, which directly impacts in-plant regulatory (and regulatory-related) activity.

As was previously reported by MHARR, the last multi-year HUD manufactured housing monitoring contract expired in mid-2018. In November 2017 HUD hosted an “Industry Day” event for potential bidders, which attracted several interested firms. With the Trump Administration’s reassignment of former program Administrator, Pamela Danner at the end of 2017, however, the procurement of a long-term replacement contract did not take place. Instead, HUD issued a one-year, sole-source, “bridge contract” to the incumbent contractor – the Institute for Building Technology and Safety (IBTS). That non-competitive contract, however, will expire soon, meaning that HUD will once again be faced with soliciting a new replacement contract.

While “monitoring”-related abuses within the program appear to have abated somewhat, over the short-term, due in part to oversight by the Trump Administration and HUD Secretary Ben Carson, as well as apparent caution on the part of the incumbent contractor with the award of a new contract hanging in the balance, the reality is that this abatement in a long-term history of regulatory abuses, ever-expanding contract functions and baseless, costly intrusions in the factory-based construction process — with a resulting program “culture” that needlessly stifles innovation and additional cost savings that could be passed to consumers — could (and, most likely, would) turn on a dime and return to, or even exceed, unacceptable past levels.  It is essential, therefore, that the Trump Administration fullycomply with the 2000 reform law in soliciting and awarding the next full-term monitoring contract, and that it act decisively to end the 40-year-plus defactocontract monopoly of the incumbent contractor, IBTS.

Indeed, for any of the Trump Administration’s regulatory reform agenda to have a real or lasting impact on the federal manufactured housing program, the 40-year-plus monitoring contract monopoly mustbe ended, and the contracting process itself mustbe reformed in order to produce full and fair competition, as required by law throughout the federal government.  Put differently, real and lastingchange for the federal program will require a fundamentalshift in the way that the program does business with respect to the monitoring function, including the monitoring contract itself, the nature and scope of the monitoring function, and ultimately, hiring a new program monitoring contractor.

The contract manipulation that has sustained this defactomonopoly and the resulting domination of the program over the course of its existence by oneentrenched, self-servingcontractor, has had a ruinous effect on the HUD manufactured housing program, the industry itself and consumers in particular, as the purchase price of manufactured homes has needlessly been inflated by unnecessary, unjustified and baseless expansions of regulatory compliance burdens at the initiative and behest of the entrenched contractor.  The needless regulatory costs and burdens imposed because of the contractor, moreover, disproportionatelyimpact and harm smaller industry businesses (and consumers of affordable housing) while conversely benefitting the industry’s largest producers, which can spread spurious pseudo-regulatory costs over a larger base of production.

If this is to change and if the HUD manufactured housing regulatory “swamp” is to be “drained,” the program mustconduct an open, competitive and unbiased monitoring contract solicitation, leading to full and fair competition and, most importantly, a new contractor.

CONGRESS RENEWS GSE REFORM DEBATE

The institutional reform of the housing finance market – and federal government involvement with that market — has once again emerged as a potential issue both in Congress and within the Trump Administration.

In Congress, the Chairman of the Senate Banking Committee has offered a summary “blueprint” for reform of the two Government Sponsored Enterprises (GSEs) – Fannie Mae and Freddie Mac. Similarly, there have been indications that the Treasury Department and/or the Federal Housing Finance Agency (FHFA) – soon to be under the leadership of a new Director appointed by the Trump Administration — could unilaterally propose and implement unspecified changes to the role and/or activities of the GSEs via existing administrative oversight and enforcement authority.

In conjunction with these reports, some within the industry have touted the alleged need for – and ostensibly have begun to pursue as part of the GSE “reform” process – new statutory provisions to supposedly spur institutional GSE (or GSE-successor organization) support for manufactured home consumer lending.  New laws, however, are not only unnecessary, given the good laws that the industry already has on the books, but represent a distraction and diversion from the effort that is genuinely neededand, in fact, essential for manufactured housing to realize its full economic potential, i.e.– (1) the full and market-significant implementationof all aspectsof the Duty to Serve Underserved Markets (DTS) addressing manufactured housing but, most particularly, the full implementation of DTS with respect to the personal property loans/chattel which constitute the vast bulk of the manufactured housing consumer finance market; and (2) the full and proper implementation of allremaining reform aspects of the Manufactured Housing Improvement Act of 2000, including the appointment of a non-career program administrator and a “top-to-bottom” reform of the process for the solicitation and selection of a new monitoring contractor, leading to an end to the existing 40-year-plus monopoly on that contract.

Simply put, there is no legitimate need to “reinvent the wheel” with respect to either manufactured home consumer financing or the full, proper and final reform of the HUD manufactured housing program in accordance with the 2000 reform law. In each case, the industry — and relevant federal government agencies — have all the statutory authority that they need to accomplish the ends that Congress intended.  (And in the case of GSE reform, MHARR has already researched and draftedrelevant statutory reform language, which was previously included in a proposed GSE reform bill, S. 1217, entitled “The Housing Finance Reform and Taxpayer Protection Act of 2014” — in the event that such language is ever needed.)  What is needed now, however, is not a new statutory diversion, but a legitimate, focused and aggressive effort to fully implement the good laws that have already been enacted to spur the growth of the HUD Code manufactured housing industry and the availability of affordable manufactured homes for millions of American homebuyers.  MHARR is fully committed to such an effort, and, accordingly, will develop new and additional approaches to this matter for consideration at its upcoming Board of Directors meeting.

HUD ANNOUNCES MHCC AND SUBCOMMITTEE MEETINGS

HUD, in a series of notices published in the February 14, 2019 edition of the Federal Register, has announced the next in-person meeting of the full Manufactured Housing Consensus Committee (MHCC) (April 30, 2019 to May 1, 2019) and teleconference meetings of both he MHCC’s Regulatory Enforcement (April 2, 2019) and Technical Systems subcommittees (April 3, 2019). Based on the tentative agendas published together with the meeting notices, the April 2, 2019 Regulatory Enforcement Subcommittee meeting will focus primarily on the revised manufactured housing energy standards proposed by the U.S. Department of Energy (DOE) in its August 3, 2018 Notice of Data Availability (NODA), while the April 3, 2019 Technical Systems Subcommittee meeting will focus primarily on issues (including de-regulatory proposals) relating to HUD’s proposed Interpretive Bulletin (IB) concerning “frost-free” foundations.  The full MHCC meeting, in turn, will address a long list of pending log items left-over from the MHCC’s September 2018 in-person meeting, including numerous de-regulatory proposals growing out of HUD’s Executive Order 13771 and 13777 regulatory review processes, as well, possibly, as any recommendations flowing from the subcommittee meetings in early April.

In addition, with the end of the partial federal government shutdown, HUD has named new members to the MHCC — including a new producer-member — although the names of the new appointees (as of press time for this Update) have not yet been made public by the Department.

MHARR, as always, will fully participate in all MHCC and MHCC subcommittee proceedings to ensure that the interests of the industry’s independent manufactured housing businesses – as well as manufactured housing consumers – are fully represented and protected.  In addition, as noted previously, MHARR will prepare and distribute, in advance of the MHCC meetings, a comprehensive analysis and refutation of a HUD Office of Policy Development and Research (PD&R) memorandum concurring with DOE data and methodologies underlying its August 3, 2018 NODA proposals for manufactured housing energy standards (see, article above).

For pdf click the link below:

https://manufacturedhousingassociationregulatoryreform.org/wp-content/uploads/2019/02/MHARR.FEB2019WASHINGTONUPDATE-2.pdf

 

“The Illusion of Motion Versus Real-World Challenges”

  • Written by Mark Weiss

Motion – or, more accurately, activity – in and of itself, is not necessarily synonymous with, or equivalent to, realprogress, or, in fact, anyprogress at all.  Recent reports emerging from elsewhere within the universe of organizations representing the manufactured housing industry paint a uniformly rosy picture of almost non-stop engagement, dialogue, meetings, conferences, photo-opportunities (presumably to prove the reality of the supposed engagement, dialogue, meetings and conferences) and other related confabs, particularly at the national level. This “good news” all the time meme, in turn, is replicated, repeated and touted by those who, for whatever reason, have determined that it is to their advantage to do so. Indeed, an entire new publication has appeared with the apparent mission of wet-nursing this meme. Meanwhile, others touting and promoting the new meme, urge industry-wide “boycotts” – the intellectual equivalent of book-burning -- of anyone who dares question the legitimacy of the meme, or the possible motives of some of its proponents.    

As President Ronald Reagan famously said, though, “facts are stubborn things.”  And the irrefutable facts that are emerging from behind the veil of “group-think” (defined as “a psychological phenomenonthat occurs within a group of peoplein which the desire for harmony or conformity in the group results in an irrational or dysfunctional decision-makingoutcome”), unfortunately, show that the happy-talk is just that – talk -- a veneer designed to create an “illusion of motion” regarding the critical issues that helped tank industry progress and prosperity a decade ago and continueto needlessly restrain and undermine its recovery, growth and development years later, even as the need for affordable, non-subsidized homeownership reaches new heights every day.

So, instead of the endless hype and happy-talk that industry members can get elsewhere if they wish, let’s take a look at those stubborn facts and what they actually mean for the HUD Code industry and the millions of lower and moderate-income Americans who rely on its affordable, non-subsidized homes.  

Put simply, where does the HUD Code industry stand today? While the industry initially appeared poised to exceed its historical 100,000 homes-per-year benchmark in 2018, that prospect has now substantially diminished, and, while the recent statistical production decline could turn on a dime, the industry’s longer-term status relative to the broader housing market has remained low and continues to decline, particularly when contrasted with the huge and growing need in the United States for inherently affordable housing and the vast potential possessed by mainstream manufactured housing to meet that need for millions of American families.

The key question, then, for the industry, its representatives and its consumers, is why is the HUD Code industry -- both over the longer-term and currently – not doing better?  In a climate of significanteconomic growth, job creation (with unemployment at an 18-year low) and wage growth (with an average hourly wage of $22.95 per hour, an all-time high) on the one hand, and increasingly unaffordable prices and interest rates for other types of homes and other types of consumer home loans on the other – and with HUD Code manufacturers today producing their best homes ever at the most affordable prices ever (both inherently and relative to other types of housing) – why is the industry not producing and selling hundreds-of-thousandsof homes each and every year?

The short answer, is that the problem – for the most part -- does not currently lie within the industry’s production sector. While still burdened by HUD (and other government) regulatory overreach and related costs in various respects, the production (or supply) side of the industry’s economic equation is notthe principal culprit in the industry’s failure to reach its full market potential. Instead, it is afterthe industry’s outstanding, inherently affordable homes leave the factory that they hit a proverbial “brick wall.” Indeed, objective analysis shows that the principal market-limiting factors for the industry today, are clustered, almost entirelyon the demand – or post-production-- side of the equation (i.e., once the home leaves the factory) where they have not been addressed either decisively or effectively.

And what are the principalpost-production problems that have – and continue to – substantially hamper the growth of the HUD Code manufactured housing industry?  As MHARR has previously explained and analyzed in detail, they are: (1) exclusionary local zoning ordinances and mandates that discriminate against manufactured homes and manufactured homeowners; (2) other types of local placement restrictions or limitations on individual manufactured homes and manufactured home communities; and, most importantly (3) the continuing lack of support for mainstream manufactured home consumer financing – and most particularly manufactured home chattel loans-- by Fannie Mae and Freddie Mac under the “Duty to Serve Underserved Markets” (DTS) mandate, and the Federal Housing Administration (FHA) and Government National Mortgage Association (Ginnie Mae) under HUD’s nearly moribund Title I manufactured housing program. Together and in combination, these elements of the post-production “brick wall,” have created a perfect economic storm that especially harms smaller industry businesses and HUD Code consumers, while benefitting only the industry’s largest businesses.

And while none of these problems are new, nearly all have gotten substantially worse, particularly in recent years. Being unresolved and thereby left to fester by a national-level post-production representation that has been ineffective at best, and a failure at worst, they have taken a regressive and cumulative toll on the industry as a whole, while eliminating large numbers of potential purchasers from the manufactured housing market and unfairly penalizing the rest.

With regard to zoning and placement restrictions that have severely limited or virtually eliminated the expansion of existing manufactured home communities, or the development of new ones, or even single-home placements, the existing national post-production representation (as detailed by MHARR in its December 2015 and January 2016 MHARR Viewpoint articles) has failed to take effective advantage of the enhanced federal preemption provision of the 2000 reform law drafted jointly by MHARR officials and the late-president of the Texas Manufactured Housing Association (TMHA) Will Ehrle, and subsequently incorporated into the law after further development and refinement through the legislative process. That provision extends federal preemption beyond state and/or local standards that differ from the HUD Code standards, to also reach other state or local “requirements” which impair the federal superintendence of the industry or otherwise hinder or interfere with the accomplishment of the federal policy goals of the National Manufactured Housing Construction and Safety Standards Act of 1974. MHARR has consistentlyencouraged the post-production sector to aggressively advance the enforcement of this enhanced preemption to its full extent – through federal court action as appropriate – to curtail or eliminate, wherever possible, exclusionary local zoning and placement mandates. Support for that position by the nominal post-production representative at the national level, however, has historically been either weak, half-hearted, or non-existent.  

As a result, the number of manufactured housing communities across the nation – a key direct consumer of manufactured homes anda placement resource for new and existing manufactured homeowners – has at best been stagnant and has at worst declined, as illustrated by the fact that virtually no new manufactured housing communities have been approved in key manufactured housing states in approximately two decades. This phenomenon, replicated on a large scale throughout the country, and combined with other land-use-type restrictions in both urban and non-urban areas, not only limits the market for HUD Code manufactured housing, but also amounts to defactodiscrimination against lower-income Americans and various economically-disadvantaged minority groups that rely on HUD Code homes as a source of affordable homeownership.  Indeed, a national post-production representative of any other industry would have taken full advantage of the hard-earned enhanced federal preemption of the 2000 reform law – litigating it all the way to the Supreme Court if necessary to have it fully and properly implemented.  That has not happened, though, nearly two decadesafter the 2000 reform law was enacted. Why? Why not even make the effort when this factor alone substantially limits and restricts the industry’s growth potential and ability to serve millions more Americans?

Even more importantly, it goes without saying that consumer financing is the lifeblood of any “big-ticket” industry, such as manufactured housing.  Regardless of how affordable manufactured homes are, most consumers ultimately need third-party financing to purchase a HUD Code home. Accordingly, the availability and relative affordability of consumer financing is a vital factor for the success and growth of the HUD Code market.  A necessary corollary to that truism is the simple reality that a robust financing market (including secondary market and securitization support by the Government Sponsored Enterprises as well as Title I program support by FHA and Ginnie Mae) drives competition, which, in turn, yields competitive interest rates and the best overall value for consumers.  

Unfortunately, though, the unavailability of any(let alone comparable) GSE support for the manufactured housing chattel market, has had the opposite effect, severely limiting the number of lenders serving that market, and needlessly inflating interest rates. Indeed, data presented in a January 2019 report by the Consumer Financial Protection Bureau (CFPB) entitled “Ability to Repay and Qualified Mortgage Rule Assessment Report,” shows that manufactured housing loans, since 2012, have declined as a share of home loan originations for bothlarge and small lenders. (See, CFPB Report, p. 222, Table 39 and related text). DTS, with its specific allowance for the inclusion of manufactured home chattel loanswas meant to address this, but Fannie Mae and Freddie Mac, while touting chattel lending support, are actually doinglittle or nothing. Instead, citing a lack of performance data for manufactured housing chattel loans, which could be, but apparently has not been made available by the current few industry-dominant lenders, the GSEs continue to seek to dilute even the miniscule level of support for such loans -- comprising nearly 80% of the manufactured housing consumer finance market– which they proposed in their initial DTS “implementation plans.” Meanwhile, the same industry-dominant lenders, free from the increased competition that would be engendered by the full and robust implementation of DTS, continue to originate (and retain on portfolio), manufactured home chattel loans, albeit at a much higher interest rate, with absolutely no incentive to provide such information to Fannie Mae, Freddie Mac, or Ginnie Mae.  

Sadly, this is a self-perpetuating vicious cycle on all sides. The GSEs, having failed for years to properly serve the HUD Code market are directed to do so by Congress through DTS. They then rely on a “lack of data” arising from the very same failurethat Congress sought to remedy, to continuefailing to serve the vast bulk of the manufactured home consumer finance market represented by chattel loans. Meanwhile, the industry-dominant portfolio lenders that have benefited from the GSEs’ failure to properly serve the HUD Code chattel market, have (apparently) not disclosed the type of chattel loan performance information that the GSEs and Ginnie Mae allegedly need.  As a result, their competition remains limited or non-existent, enabling them to continue charging higher interest rates within an artificially and needlessly limited market that is increasingly under-performing broader economic parameters. 

This unacceptable state of affairs will not change without aggressive push-back by – and on behalf of – the industry’s post-production sector. Quite simply, in 2019, thatis where the problems are that limit the potential of the mainstream manufactured housing market, and, with it, the growth of the industry to where it shouldbe. The existing scenario for the post-production sector is a façade that primarily serves the narrow interests of the industry’s largest corporate conglomerates while smaller businesses – and lower and moderate-income American families -- suffer the consequences. This situation must change.  But for that to occur, industry members must reject the “fluff” that they are constantly peddled, confront the “stubborn facts” that will not just go away otherwise, and demand real, aggressive action on these and a full-range of other post-production issues.

Mark Weiss

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 permis

September 2018 Manufactured Home Production Data Shows Slight Flatline

  • Written by Mark Weiss

Washington, D.C., November 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), HUD Code manufactured home production flat-lined slightly in September 2018. Just-released statistics indicate that HUD Code manufacturers produced 7,519 homes in September 2018, a 0.8% decline from the 7,580 HUD Code homes produced during September 2017. Cumulative industry production for 2018 now totals 74,207 homes, an 8.4% increase over the 68,419 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 September 2018  — with cumulative, monthly, current year (2018) and prior year (2017) shipments per category as indicated — are:

September 2018 Manufactured Home Production Data Shows Slight Flatline image

The latest information for September 2018, does not result in any 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.

“A HUD MONITORING CONTRACT ‘BRIDGE TO NOWHERE’”

  • Written by Mark Weiss

Let’s start off with a truism. And that truism, quite simply, is that within the HUD manufactured housing program, the so-called “monitoring” function has grown, expanded and metamorphosized over time, to become something that it was never meant, designed or intended to be, with a private contractor exercising defactogovernmental authority over regulated parties. Of course, HUD claims (and protests loudly whenever confronted) that ithas the final say, and the final authority on all regulatory matters, and that, as a result, everything is perfectly legitimate. But the reality, for decades – in fact, since the very inceptionof the HUD program more than forty years ago – has been quite different.

A detailed review and analysis of the last monitoring contract by MHARR (see, MHARR Viewpoint, October 2015, “Monitoring Contractor’s Domination of Federal Program Must End”), shows quite clearly that the program monitoring contractor is (and has been) tasked by HUD with the performance of pseudo-governmental functions, and rendering what amount to final decisions on discretionary enforcement matters, often with no substantive involvement by responsible HUD officials at all. And driving the inexorable expansion of contractor functions over time, the inexorable expansion of related regulatory burdens and costs imposed on regulated parties, and, not surprisingly, corresponding increases in monitoring contractor revenues — has been a defacto, HUD-sustained monopoly on the program monitoring contract by just one entity (the Institute for Building Safety and Technology, “IBTS,” previously named the National Conference of States on Building Codes and Standards, “NCSBCS” and Housing and Building Technology, “HBT”).

For any of the Trump Administration’s regulatory reform agenda to have a real or lasting impact on the federal manufactured housing program, however, the Administration’s political leadership at HUD mustassert itself, the 40-year-plus monitoring contract monopoly mustbe ended, and the contracting process itself mustbe reformed in order to produce full and fair competition, as required by law throughout the federal government. Sadly, though, after a seemingly promising start, concern is growing that this particular aspect of “draining the swamp” could be starting to backslide in the wrong direction – unless, that is, the entireindustry and consumers take action to stop the slide.

Why is the monitoring contract so important? Well, the Trump Administration and Secretary Carson have taken a number of important steps to startthe process of reforming the federal program, and to bring it back to what Congress and the law – particularly the Manufactured Housing Improvement Act of 2000 – designed it to be, a preemptive program of minimum performance-based standards and uniform enforcement that protects consumers while simultaneously preserving, protecting and advancing the inherent (i.e., non-subsidized) affordability of manufactured homes. At MHARR’s specific urging, the Trump Administration, in late 2017, replaced and re-assigned the over-reaching career administrator of the HUD program, Pamela Danner. Shortly thereafter, again as advanced by MHARR, HUD began a “top-to-bottom” review of all existing (and proposed) HUD standards, regulations, and pseudo-regulatory action (such as “Interpretive Bulletins” and “Field Guidance” documents), incident to concurrent rulings by the Attorney General that the Justice Department would not undertake enforcement actions in federal court based on such “pseudo-regulatory” guidance documents.

Both of these actions represented necessary first-stepsto begin the process of restoring the rule of law – and common-sense – to the federal program, consistent with the express statutory purposes of the 2000 reform law. The job, though, does not end with initiating a “process.” “Process,” in and of itself, is not a goal. Positive, substantivechange within the program and for both the industry and its consumers is the goal. For genuine progress, the program administrator’s position, for example, must now be filled by a non-career appointee, as required by the 2000 reform law, andthe regulatory reform process initiated under Trump Administration Executive Orders 13771 and 13777 must lead to substantive action by the Administration to repeal (or significantly modify) layer-upon-layer of unnecessary and debilitating regulations, interpretations, and pseudo-regulations, developed and imposed over time with little or – in most cases – noconsideration for their impact on the cost of manufactured housing or the ability of lower and moderate-income American families to purchase a manufactured home.

As important as those steps are, though – and ultimately could be with proper follow-through – real, on the ground, and lastingchange for the federal program will require a fundamental shift in the way that the program does business with respect to the monitoring function, including the monitoring contract itself, the nature and scope of the monitoring function, and ultimately, hiring a new program monitoring contractor after 40-plus years of defactomonopoly.

Thatdefactomonopoly, for which MHARR has been unable to find anyparallel anywhere else in the federal government, is the most compelling and probative evidence that the HUD monitoring contract process itself is entirely dysfunctional. While repeated monitoring contract procurements at HUD, since the inception of the federal manufactured housing program, have allegedlybeen “competitive” in nature (as defined by federal law), and have been conducted asallegedlycompetitive procurements (i.e., without the formal protections required by law for non-competitive, sole-source contract solicitations), the facts show this to be patently false (and arguably fraudulent). Instead, based on HUD contract “award criteria” that, through successive solicitations, have been tailored to match the “experience” of the one and only entity to ever hold the contract – i.e., NCSBCS/HBT/IBTS – the monitoring contract procurement, through its entire history, has been a defactosole-source procurement without any type of meaningful, actual or legitimate competition.

Indeed, on the one occasion when a competing bid, lower than that of the one-and-only monitoring contractor –IBTS — wassubmitted, nearly three decades ago, by a highly-respected and credible code organization (i.e., the former Council of American Building Officials – “CABO” — now, the International Code Council – “ICC”), HUD, rather than awarding the contract to another entity, initiated a “best and final” round of revised offers, which ultimately led to an award, once again, to the one-and-only monitoring contractor — IBTS — (as shown by documents grudgingly provided by HUD to Congress after multiple requests by former North Carolina Senator Lauch Faircloth).

This contract manipulation and the resulting domination of the program over the course of its existence by oneentrenched, self-servingcontractor, has had a ruinous effect on the HUD manufactured housing program, the industry itself and consumers in particular, as the purchase price of manufactured homes has needlessly been inflated by unnecessary, unjustified and baseless expansions of regulatory compliance burdens at the initiative and behest of the entrenched monitoring contractor. Indeed, detailed MHARR analyses have demonstrated how HUD payments to the monitoring contractor have ballooned over the past decade in particular (to more than $25 million in the last five-year contract), even as industry production levels have fallen to historic lows and referrals to the HUD dispute resolution system (reflecting unresolved consumer issues in new HUD Code homes) have been – and remain – at microscopic levels, well below 1% of corresponding industry production over the same period.

The needless regulatory costs and burdens imposed because of the contractor, moreover, disproportionatelyimpact and harm smaller industry businesses (and consumers of affordable housing) while conversely benefitting the industry’s largest producers, which can spread spurious pseudo-regulatory costs over a larger base of production. It should thus be no surprise that you will hear little or nothing about this issue from other industry organizations, which are beholden to the support of those larger entities.

Recognizing this as a major structural and policy problem within the federal program — as a result of education efforts by MHARR — Congress, in the Manufactured Housing Improvement Act of 2000, attempted to halt this manipulation of the HUD contracting process. Remedial provisions thus inserted in the 2000 reform law by Congress included, among other things, a mandate for an appointed, non-career program administrator, a requirement for “separate and independent” contractors for monitoring and other functions, a narrow and limited definition of the “monitoring” function (i.e., the “periodic review of the primary inspection agencies … for the purpose of ensuring that [they] are discharging their duties under” the 1974 Act as amended), and a requirement – in section 604(b)(6) – for notice and comment rulemaking and Manufactured Housing Consensus Committee (MHCC) review and approval for all changes to HUD policies, practices and procedures concerning enforcement-related activities.

HUD, though, over the past two decades, has either totally ignored, unduly restricted, or chipped awayat these safeguards, effectively neutering Congress’ effort to restore standards and accountability to the monitoring contract process. HUD has thus not only failed to protect the industry’s smaller businesses (and consumers of affordable housing) from regulatory excesses and abuses, but has actually undermined one of the primarypurposes of the 2000 reform law.

Nevertheless, there were indications, in 2017, that HUD, under Secretary Carson, would begin to reform this process and actually conduct a legitimate procurement for the monitoring function. This included an “Industry Day” meeting for prospective bidders in November 2017 and the division of the monitoring contract into design and production monitoring functions. Now, though, there is disconcerting evidence that HUD could be backsliding on this essential program reform. Specifically, MHARR has learned that the last IBTS monitoring contract, which was due to expire in August 2018, instead of being replacedwith a new, genuinely competitive contract, has instead been extendedfor (at least) one year through a no-bid, sole-source, so-called “bridge” contract.

As objectionable and damaging as this is in itself, for continuing – on a dejurebasis – HUD’s addiction to sole-source procurements for this function, the official HUD “Justification for Other than Full and Open Competition” (Justification Document) for this contract, actually lauds the entrenched incumbent contractor in ways that could indicate that there will be no “full and open” competition for the full-term monitoring contract that succeeds the alleged “bridge” contract. For example, the Justification Document states, among other things: “the depth and breadth of knowledge demonstrated by the contractor [i.e., IBTS] during the performance of the current contract makes them uniquely qualifiedto perform services during the 12-month bridge. *** The contractor’s experience is uniquebecause the contractor has extensive knowledge of working with HUD’s national building code 924 C.F.R. 3280) in areas of code administration and enforcement for several decades.” (Emphasis added).

Such language – coupled with the no-bid, sole-source “bridge” contract itself – indicate that HUD could well have no intention of conducting a legitimate, competitive solicitation for the next monitoring contract that will “drain the swamp” of 40-plus years of abuse. Indeed, such accolades for the entrenched incumbent could become a self-fulfilling prophecy, discouraging other bidders from even competing for the contract, thereby continuing and reinforcing HUD’s multiple violations of applicable law (again, MHARR has searched for, but has been unable to locate, anysimilar instance of such a 40-year-plus dependence on one entrenched defactosole-source contractor) and undermining Secretary Carson’s effort to reform the manufactured housing program. Indeed, legitimate competition, a new monitoring contractor and a monitoring contract that complies with substantive law regarding the limited nature of the monitoring function, are essentialto the successful implementation of any such reforms.

This no-bid, sole-source “bridge” contract is — and should be — totally unacceptable to the entireindustry, and particularly its smaller businesses, as well as consumers of affordable housing.

If the HUD monitoring contract “swamp” is to be “drained,” the time for complying with the law – and finally ensuring full and fair competition for the program monitoring contract – is, emphatically, now.

Mark Weiss
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.

MHARR Communication with HUD Assistant Secretary Brian Montgomery Regarding Program Monitoring Contract

  • Written by Mark Weiss

Hon. Brian Montgomery
Assistant Secretary
U.S. Department of Housing and Urban Development
Suite 9100
451 7thStreet, S.W.
Washington, D.C. 20410
Re: Manufactured Housing Program Monitoring Contract

Dear Secretary Montgomery:

As the national representative organization for small businesses within the comprehensively-regulated manufactured housing industry, the Manufactured Housing Association for Regulatory Reform (MHARR) continuously monitors regulatory and regulation-related matters that could negatively impact the purchase affordability of manufactured homes – the nation’s premiere source of inherently affordable, non-subsidized homeownership.

Given this core mission, MHARR has been gratified by the actions undertaken by President Trump since his inauguration – and by Secretary Carson – to reduce unnecessary regulatory burdens at HUD, including those imposed on the nation’s manufactured housing producers. That said, however, MHARR has begun to observe, in recent months, what appears to be backsliding within the manufactured housing program, away from the full implementation of the regulatory reform policies exemplified by Executive Orders 13771 and 13777, and toward a return to the type of baseless, unwarranted and excessively costly regulatory excesses and abuses that characterized the program under previous administrations. In particular, there is an extremely serious and damaging aspect of that activity that warrants your personal involvement and intervention.

Specifically, as you are aware from your previous tenure at HUD, contracting processes within the federal manufactured housing program – and particularly the contracting process for the program “monitoring” contract, a statutorily defined and circumscribed function – have been dysfunctional at best and unlawful at worst. For the entire40-year-plus history of the federal program, the enforcement “monitoring” contract has been awarded to onecontractor, albeit under different organizational names. Although allegedly a “competitive” procurement, the facts show this is to be false. Instead, based on HUD contract “award criteria” that, through successive procurements, have been tailored to match the “experience” of the one and only incumbent contractor – i.e., the Institute for Building Technology and Safety (IBTS) but previously named the National Conference of States on Building Codes and Standards (NCSBCS) and “Housing and Building Technology” (HBT) – this procurement, through its entire history, has been a defactosole-source procurement without competing bidders, without any type of meaningful, actual or legitimate competition, and without anyof the safeguards required by law and applicable regulations for sole-source contracting.

Indeed, on the one occasion when a competing bid, lower than that of IBTS, wassubmitted, nearly three decades ago, by a highly-respected and credible code organization (i.e., the former Council of American Building Officials – “CABO,” now, the International Code Council – “ICC”), HUD, rather than awarding the contract to another entity, initiated a “best and final” bidding round, which ultimately led to an award – once again – to IBTS (as shown by documents provided Congress after multiple requests).

This contract manipulation and the resulting domination of the program over the course of its existence by oneentrenched, self-servingcontractor — which has effectively been delegated discretionary government authority in violation of federal law — has had a ruinous effect on the HUD manufactured housing program, the industry itself and consumers in particular, as the purchase price of manufactured homes has needlessly been inflated by the unnecessary, unjustified and baseless expansion of regulatory compliance burdens at the initiative and behest of the entrenched monitoring contractor. Indeed, detailed MHARR analyses have demonstrated how HUD payments to the monitoring contractor have ballooned over the past decade in particular (to more than $25 million in the last five-year contract), even as industry production levels have fallen to historic low levels and referrals to the HUD dispute resolution system (reflecting unresolved consumer issues in new HUD Code homes) have been – and remain – at microscopic levels, well below 1% of corresponding industry production over the same period. The needless regulatory costs and burdens imposed by the contractor, moreover, disproportionatelyimpact and harm smaller industry businesses (and consumers of affordable housing) while benefitting the industry’s largest producers, which can spread spurious pseudo-regulatory costs over a larger base of production. It should thus be no surprise that you will hear nothing about this issue from other industry organizations, which are beholden to the support of those larger entities.

Although Congress, in the Manufactured Housing Improvement Act of 2000 attempted to halt this manipulation of the HUD contracting process and the resultant domination of the federal program by the entrenched contractor through, among other things, its mandate for an appointed, non-career program administrator, its requirement for “separate and independent” contractors for monitoring and other functions, its narrow and limited definition of the “monitoring” function, and its requirement – in section 604(b)(6) – for notice and comment rulemaking and Manufactured Housing Consensus Committee review and approval for all changes to HUD policies, practices and procedures concerning enforcement-related activities, HUD has either totally ignored, unduly restricted, or chipped away at these safeguards, effectively neutering Congress’ effort to restore standards and accountability to the monitoring contract process. HUD has thus not only failed to protect the industry’s smaller businesses (and consumers of affordable housing) from regulatory excesses and abuses, but has actually undermined one of the primarypurposes of the 2000 reform law.

And, while there were indications, in 2017, that HUD, under Secretary Carson, would reform this process and conduct a legitimate procurement for the monitoring function (including a meeting for prospective bidders in November 2017 and the division of the monitoring contract into design and production monitoring functions), it now appears that HUD has backtracked from any such reforms, and that is our reason for writing to you.

Specifically, MHARR has learned that the last IBTS monitoring contract, which was due to expire in August 2018 (and which was the subject of the November 2017 bidders meeting), instead of being replaced with a new, genuinely competitive contract, has instead been extended for (at least) one year through a no-bid, sole-source, so-called “bridge” contract.

As objectionable and damaging as this is in itself, for continuing – on a dejurebasis – HUD’s addiction to sole-source procurements for this function, the official HUD “Justification for Other than Full and Open Competition” (Justification Document) document for this contract, lauds the entrenched incumbent contractor in ways that indicate that that there will no “full and open” competition for the full-term monitoring contract that succeeds the alleged “bridge” contract. For example, the Justification Document states, among other things: “the depth and breadth of knowledge demonstrated by the contractor [i.e., IBTS] during the performance of the current contract makes them uniquely qualified to perform services during the 12-month bridge. *** The contractor’s experience is unique because the contractor has extensive knowledge of working with HUD’s national building code 924 C.F.R. 3280) in areas of code administration and enforcement for several decades.”

Such language – coupled with the no-bid, sole-source “bridge” contract itself – indicate that HUD has no intention of conducting a legitimate, competitive solicitation for the next monitoring contract that will “drain the swamp” of 40-plus years of abuse. Indeed, such accolades for the entrenched incumbent could become a self-fulfilling prophecy, discouraging other bidders from competing for the contract, thereby continuing and reinforcing HUD’s multiple violations of applicable law (i.e., MHARR has searched for, but has unable to locate, anysimilar instance of such a 40-year-plus dependence on one entrenched defactosole-source contractor) and undermining Secretary Carson’s effort to reform the manufactured housing program. Indeed, legitimate competition, a new monitoring contractor and a monitoring contract that complies with substantive law regarding the limited nature of the monitoring function, are essentialto the successful implementation of any such reforms.

This no-bid, sole-source “bridge” contract and related activity, accordingly, is totally unacceptable to the industry’s smaller businesses. We will therefore contact your office soon to schedule a meeting to address this extremely serious matter.

Sincerely,

Mark Weiss
President and CEO
cc: Hon. Mike Pence
Hon. Ben Carson
Hon. Mick Mulvaney
Hon. Michael Crapo
Hon. Sherrod Brown
Hon. Jeb Hensarling
Hon. Maxine Waters
HUD Code Industry Manufacturers

Financial Services Chairman Calls for End of GSEs

  • Written by Mark Weiss

NOVEMBER 6, 2018
Rep. Jeb Hensarling (R-TX), retiring Chairman of the House Financial Services Committee, has called for an end to the two Government Sponsored Enterprises (GSEs) – Fannie Mae and Freddie Mac – and the repeal of their federal government charters.

In a Press Release (copy attached) issued on November 2, 2018, the Chairman of the House Committee with oversight responsibility for the GSEs’ federal regulator – the Federal Housing Finance Agency (FHFA) – and, by extension, the GSEs themselves, called the “GSE model a failure,” and asserted that “it is time for it to [be] end[ed]” through “meaningful housing finance reform legislation that protects taxpayers, encourages greater private sector participation, and once and for all … repeals the GSEs’ government charters.”

Perhaps nowhere else has the GSEs’ failure to comply with their respective charters — and their failure to serve the lower and moderate-income homebuyers that they were specifically created to help – had a more profoundly negative impact than in the manufactured housing market and, most especially, the 80% of the manufactured housing market comprised of personal property, or “chattel” loans.

Even in the face of an express statutory directive from Congress to finally begin serving the manufactured housing market, including the chattel loans relied upon to finance the industry’s most affordable homes (i.e., the “Duty to Serve Underserved Markets” mandate of the Housing and Economic Recovery Act of 2008), the GSEs – which for decades have refused to provide securitization or secondary market support for manufactured housing loans – have remained defiant and non-compliant, refusing to provide any level of market-significant support for the vast bulk of manufactured home chattel loans. The resulting harm to lower and moderate-income American homebuyers, in the form of either total exclusion from the housing market or higher interest rates than would be the case otherwise, is indefensible and should be unacceptable to the industry, Congress and FHFA.  Moreover, these extreme negative impacts have been facilitated and exacerbated by the absence of independent, national representation for the industry’s post-production sector in the nation’s capital to aggressively address this matter, not only with FHFA and the GSEs, but with Congress and the Administration as well.

Accordingly, regardless of whether the House of Representatives, following today’s election, is controlled by Democrats or Republicans, the underlying failure of the GSEs and the “GSE model” has been exposed, and the GSEs’ continuing failure to properly serve the manufactured housing chattel market – despite the DTS mandate — will be a major issue going forward, potentially providing the industry’s post-production sector with a second chance to ensure that securitization and secondary market support for manufactured housing and manufactured home chattel loans are provided by the GSEs on a market-significant basis.

This issue will be discussed in more detail at MHARR’s upcoming Board of Directors meeting.

HUD “Clarification” on Frost-Free IB Offers More Questions and Confusion Than Answers

  • Written by Mark Weiss
MHARRFROM:           MHARR
RE:                 HUD “Clarification” on Frost-Free IB Offers
More Questions And Confusion Than Answers

As a follow-up to the MHARR memorandum sent earlier today regarding finalization of the proposed “frost-free” Interpretive Bulletin (IB), it now appears that the HUD program, after doing nothing during the October 16, 2018 installation conference call (which was conducted by the contractor) to correct the impression created by its contractor – that HUD would not be taking action to finalize that IB – is now trying to backpedal, or leave itself room to adopt the proposed IB at some point in the future.

The supposed HUD program “clarification” (reproduced in full below), however, actually creates more confusion and questions about how the program plans to handle this entire matter both near and long-term, and illustrates the type of regulatory and enforcement uncertainty that is inevitably created when regulatory and pseudo-regulatory functions are unlawfully delegated to contractors.

This incident, moreover, and HUD’s conduct regarding this matter, could indicate that the federal program might be starting to gravitate toward the type of unacceptable practices that characterized it before the arrival of the Trump Administration.

MHARR will closely monitor this matter very carefully for further discussion at the upcoming MHARR Board of Directors meeting.

Further, on the specific issue of the proposed “frost-free” IB, MHARR will continue to oppose the final adoption of the proposed IB – or any variant thereof – and will continue to press this matter until it gets full and complete answers.

HUD EMAIL

 
From: Payne, Teresa L This email address is being protected from spambots. You need JavaScript enabled to view it.  
     
To   Lesli Gooch This email address is being protected from spambots. You need JavaScript enabled to view it., mmarkweiss This email address is being protected from spambots. You need JavaScript enabled to view it.  
       
Cc   Gormley, Joseph M This email address is being protected from spambots. You need JavaScript enabled to view it., Mcjury, Jason C This email address is being protected from spambots. You need JavaScript enabled to view it.  

_
Lesli and Mark,

Due to questions from both industry associations, this email is being sent to further clarify the answer provided by SEBA Professional Services to a question received during the Open Industry Conference Call for the Installation program.  The incoming question and response stated:

Question: “Has there been any update to the Interim Guidance on use of Frost-free Foundations?“

Answer: “At this time, HUD has decided not to take action on finalizing the Interpretive Bulletin concerning frost free foundations.”

The answer provided was not intended to state any new or final program or policy decisions by HUD with respect to the future of the proposed Interpretative Bulletin on Foundations in Freezing Temperature Areas (the IB).  Rather, the answer provided was consistent with similar commentary provided by HUD during the recent MHCC Meeting.  To reiterate the essence of those comments, at this time, there has been no work or decisions on finalizing the IB.  HUD’s limited resources and current priorities for the office are not currently focused on finalizing the IB.  To be clear, at this time, there have not been any new or final policy decisions on the future of this proposed action.   The Department has received public comment on the proposed IB and HUD has also received previous comments from the MHCC.  HUD is also aware of the MHCC’s consideration of log items from the September 2018 MHCC meeting agenda.

Teresa

Teresa Payne
HUD Office of Manufactured Housing Programs (OMHP)
Photo courtesy of ManufacturedHomeLivingNews.com

Daily Business News Briefs

Skyline, UMH Gain, Manufactured Housing CV Soars, S&P, NASDAQ Hit New H…

Noteworthy headlines on – CNNMoney – Fox trying to pull Jesse Watters from O’Reilly comedy tour. Oil stocks are the biggest losers of 2017. US unemployment hits 4.4 percent, lowest...

05-05-2017

Read more

New Player Enters Manufactured Home, Communites, RV Game

Gelt Inc., a Tarzana, California based real estate investment firm, has announced the formation of a new subsidiary to purchase and manage manufactured home and RV communities. According to the...

05-05-2017

Read more

Website Upgrade – on MHProNews Begins This Weekend

The long-anticipated upgrade to MHProNews.com to version 3.0 will begin this weekend. The site will go down, starting Friday night/Saturday morning Eastern time. We anticipate the site coming back up...

05-05-2017

Read more

Analyst, Investor Action at Skyline – What’s Happening?

For Skyline Homes, a recent rough patch has analysts and investors making moves. According to the Cerbat Gem, TheStreet downgraded shares of the company from a “c” rating to a...

05-05-2017

Read more

MHARR on Tariffs, DOE, and, Federalized Installation – Exclusive Report and…

The Manufactured Housing Association for Regulatory Reform (MHARR) has released its latest Washington Update, an exclusive report and analysis that addresses key issues with the U.S. Department of Housing and Urban...

01-05-2017

Read more

Magnificent May – New Reports, Announcements, and Schedule

Beginning with RC Williams hot new exclusive this morning on the behind-the-scenes developments in the nation’s capital regarding manufactured housing lending, Magnificent May will continue the MHProNews tradition of independent...

01-05-2017

Read more

Patrick Rises Over 3 Percent, Manufactured Housing CV Broader Markets Jump

Noteworthy headlines on – CNNMoney – United and dragged passenger reach settlement. Southwest Airlines: We won’t overbook anymore. China’s Uber worth $50 billion after raising more cash. 10 things United...

27-04-2017

Read more

Is Time Finally up for the CFPB?

Movement by the House Financial Services Committee, led by Chairman Jeb Hensarling (R-TX), could spell the end for the Consumer Financial Protection Bureau as we know it. According to ACA...

27-04-2017

Read more

More First Nations Turning to Modular

Throughout Canada, many First Nations native tribes are struggling with the dual challenge of quality, and affordable, housing. Mold and other natural elements, when combined with overcrowding, present issues tribal...

27-04-2017

Read more

Bark Worse than Bite? Manufactured Housing Institute Slams Trump Administra…

Comments from Commerce Secretary Wilbur Ross on CNBC yesterday regarding proposed anti-subsidy tariffs on Canadian goods raised quite a stir. “The tariff is not the beginning of a trade war with...

27-04-2017

Read more

Drama in Ohio: Fake News, Facts and Myths

The ongoing battle between the Ohio Manufactured Housing Association (OMHA) and Ohio Governor John Kasich over the status of the Ohio Manufactured Housing Commission (OMHC) has been taken to a...

27-04-2017

Read more

New Sponsors

You Might Like

Classifieds

Press Releases

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.

Schafer, Ed %COMMENTS 05-09-2016 September 2016

Zoning Eased to Allow MH for Flood Victims

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 [...]...

Matthew Silver %COMMENTS 09-05-2012 Daily Business News

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...

Matthew Silver %COMMENTS 12-04-2016 Daily Business News

Zoning Changes on Tap for Manufactured Housing

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...

Matthew Silver %COMMENTS 27-09-2013 Daily Business News

Zoning Changes Could Affect Manufactured Housing

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.

Williams, RC %COMMENTS 04-03-2017 March 2017

Zoning Changes Allow Modular Units

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 [...]...

Matthew Silver %COMMENTS 24-07-2012 Daily Business News