Washington, D.C., May 3, 2016 – 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), manufactured housing industry production experienced strong growth once again during March 2016. Just-released statistics indicate that HUD Code manufacturers produced 7,110 homes in March 2016, a 26.9% increase over the 5,602 HUD Code homes produced during March 2015. Cumulative industry production for 2016 now totals 19,101 homes, a 24.2% increase over the 15,374 HUD Code homes produced over the same period in 2015.
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 March 2016 -- with cumulative, monthly, current year (2016) and prior year (2015) shipments per category as indicated -- are:
Surging production growth in the manufactured housing market – at the same time that the overall U.S. home ownership rate, according to U.S. Commerce Department data, fell to its third-lowest level on record in the first quarter of 2016 – proves what MHARR has been saying all along, that Americans increasingly recognize the affordability and quality of HUD Code homes and want to be manufactured homebuyers. As a result, industry production levels should have alreadyreached the threshold of 100,000 homes annually.
The fact that they have not, to date, is, in large part, a result of a distorted financing market for chattel loans, which represent the vast bulk (80%) of the industry’s output. The total absence of securitization and secondary market support for those loans by the Government Sponsored Enterprises (GSEs) is a travesty that discriminates against the same lower and moderate-income Americans that the GSEs are statutorily charged with serving. Those discriminatory policies restrict genuine free-market competition for consumer financing within the manufactured housing market, create an uneven financial playing field between manufactured homes and other types of homes, and effectively exclude untold numbers of borrowers and potential manufactured home owners from the market. At the same time, though they provide a rationale and basis for the higher-cost interest rates charged by the industry’s dominant lenders, which clearly want to continue profiting through those higher rates.
As a result, while part of the industry has stubbornly pursued modifications to the Dodd-Frank law in order to legitimize and protect those high-cost rates, the post-production sector has simultaneously dropped the ball in Washington, D.C. with respect to chattel financing and federally-based securitization and secondary market support for manufactured housing chattel loans as part of the “Duty to Serve” (DTS) mandated by Congress in 2008.
Such support for HUD Code chattel loans – specifically and pointedly authorized by Congress in the Housing and Economic Recovery Act of 2008 (HERA) -- should be a given, but the industry’s dominant lenders appear to be more interested in maintaining their market position and their high-cost rates, than in expanding the manufactured housing finance market with the new lenders and, more importantly, the new purchasers that would be enticed into the market by non-discriminatory federal securitization and secondary market support.
Instead, though, as became clear at the Federal Housing Finance Agency (FHFA) April 26, 2016 meeting to address the potential inclusion of manufactured home chattel loans in DTS, those dominant lenders appear to be maneuvering to manipulate the system from within, to ensure that any possible inclusion of chattel loans in DTS is severely restricted by the same type of lender participation barriers (i.e. the GNMA “10-10” rule) that have excluded all but those same dominant lenders from the Federal Housing Administration’s (FHA) Title I chattel financing program and have transformed that program from a significant source of manufactured home loans to negligible part of the market.
This activity, to maintain a distorted and dysfunctional financing market, which prevents the industry from reaching its full production capacity – for the benefit of a few – while smaller industry businesses and consumers suffer, is in dire need of a major overhaul.