In Alana Semuels’ The Case for Trailer Parks, The Atlantic picks up on a prior MH report made in 2011 by Derek Thompson during the IBISWorld flap which headlined – incorrectly – that Manufactured Housing (MH) was “a dying industry.” Semuels’ article weaves between the sensationalistic, to ‘cutesy-humorous’ and complimentary-to-the-MH-Industry. No one is quoted from the manufactured housing finance or production sectors by The Atlantic, while pro-CFPB and not-for-profit sources are cited often in her report.
One comment made to MHProNews about the subtext to Semuel’s headline was that it’s an example of the ‘good, bad and ugly’ from their latest foray into manufactured home focused journalism. Quoting The Atlantic, “Houses made in a factory are a cheap and energy-efficient way for poorer Americans to become homeowners—plus, these days, the mass-produced units can be pretty spiffy.”
Image credit: Frontier Homes – published in The Atlantic.
Presuming someone clicks on the photo gallery labeled “New Manufactured Homes,” Atlantic readers get an idea of what “spiffy” means in modern MH. But was “cheap” supposed to mean low cost or shoddy?
Semuels writes, “The snobs among us may judge these pre-fab homes as shoddily built, cheap eyesores in a country that’s increasingly eschewing the suburbs for walkable urban areas.
But pre-fabricated homes just might be part of the solution to America’s affordable housing crisis.“
Photo credit – Primavera-Foundation – published in The Atlantic.
Not-for-profit consumer advocacy groups are indeed embracing modern manufactured homes as a key part of the solution for Americans facing generally lower incomes, rising rents and a need to fill an estimated 20 million new housing units needed in the U.S., per Census Bureau projections. The Atlantic gets that right.
Image credit, CBS News – click here for their video report.
The Atlantic’s “Cheap” or CBS News’ “Trendy”?
Apparently, Semuels didn’t see the CBS News video report featuring working class, middle class and millionaires living in modern manufactured homes, with individuals in the millionaire-class asserting manufactured homes are appealing and “trendy.”
“The manufactured home is probably the most cost-effective way to provide quality affordable housing,” said Donna M. Blaze, the CEO of the Affordable Housing Alliance, which helped provide manufactured homes for Sandy refugees. “Most of our new units are light years ahead of the apartments for rent in today’s market.”
Photo credit Manufactured Housing Institute (MHI) published in The Atlantic.
Stacey Epperson, CEO of NextStep and a site builder-turned MH believer, is cited for their organization’s support of modern MH. So was a home owner Wanita Ordway, retired, and her husband Kevin – a carpenter – are described as a working-class family who are clearly delighted with their manufactured home. Wanita said her home is so energy efficient, it was too efficient to qualify for their local utility company’s energy audit.
Photo credit: Frontier Homes – published in The Atlantic.
“It’s just a wonderful option for people who cannot get a conventional home,” Wanita said. “If you get past the stereotype of a mobile home, these are just as well-constructed as a stick home.”
Joe Stegmayer – CEO and Chairman of Cavco Industries, a leading producer of manufactured and modular homes featured on NBC’s American Dream Builders – said:
“The Atlantic article makes some very good points about the quality and value of factory built homes. Unfortunately the article does not provide information about the variety of borrowing options for homebuyers such as FHA, VA, USDA and conventional mortgages. Nor does it provide a balance view of personal property or chattel lending.”
Photo credit – MHI – published in The Atlantic.
ROC USA’s CEO was quoted, “These are homes that travel down the highway at 55 miles-per-hour, which site-built homes don’t,” said Paul Bradley, the president of Resident Owned Communities USA, a group that works to help residents of mobile-home parks or manufactured-housing communities buy their own land. “You can inarguably buy very good quality, very energy-efficient HUD-code homes that are better built than site-built ones.” Bradley penned a popular reply to correct the IBISWorld/Atlantic report made in March of 2011.
CFED’s (Corporation for Enterprise Development), Doug Ryan said, “The biggest problem is with how the loans are done,” alleging, “It’s about as enjoyable as buying a used car.” the reason cited by The Atlantic is higher rates for personal property loans, and the CFPB’s report was referenced.
Photo credit – MHI – published in The Atlantic.
At Odds with Reality?
“One premise of the article is spot on: that manufactured housing represents America’s best housing value at a number of price points,” said Tyler Craddock, Executive Director of the Virginia Manufactured and Modular Housing Association (VAMMA). “Unfortunately, the article fails when it accepts at face value that the changes wrought by Dodd-Frank and other federal initiatives are entirely positive for the industry or its consumers. The failure to include insight from any number of industry experts is a disservice to the reader and presents an impression of the industry that is at odds with reality.”
Photo credit – MHI – published in The Atlantic.
To balance the record on points Tyler Craddock raised, MHProNews turned to manufactured housing finance expert, Dick Ernst, the newly elected chairman of MHI’s Financial Services division and president of FinmarkUSA.com.
“Overall, it is a pretty fair piece but the glaring point that this article and consumer advocates fail to connect the dots on is the point of no secondary market!” Ernst exclaimed, adding, “All they have to realize and say is that 90% of all residential mortgages are backed or sold to GNMA, Fannie Mae and Freddie Mac. Why…because it locks in the cost of funds and eliminates the need for the originating lender to put a substantial hedge on loans that may run 15-20 years. If the conventional mortgage market had no secondary market their housing sales would drop to a level that would create severe economic hardships in the economy!“
“I also found it interesting that the New Hampshire Housing Agency (a government agency using presumably bond money) still charged the consumers mentioned an 8.875% loan which is still almost 500 basis points over a prime conventional loan. Consumer advocates need to stop hammering the industry and help establish a viable secondary market for home only transactions with the GSE’s!” Ernst stated.
Photo credit – MHI – published in The Atlantic.
Ernst is referencing a fact that the Government Accounting Office (GAO) also pointed out in their report last summer on manufactured housing, namely the lack of a secondary market.
The Housing and Reform act of 2008 (HERA 2008) required the Government Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac to fulfill a “Duty to Serve” (DTS) the manufactured housing, and establish a secondary market for MH that would include home only loans. But when the GSE’s went into receivership under the FHFA, those portions of the law weren’t implemented. Meanwhile, other forms of government backed lending which were actually involved the financial melt-down of 2008 continued on.
Photo credit – MHI – published in The Atlantic.
Reality or Cheap Stand up Comedy?
“Lots peoples’ impressions of Manufactured Homes (MH) are based on cheap standup comedy lines they’ve been hearing all their lives.” So said William “Bill” Matchneer, JD, recently retired from the Consumer Financial Protection Bureau (CFPB) and a prior Administrator of the Manufactured Housing Program at HUD. “From experience, I know how hard it is to break through those attitudes. But modern MH products really are comparable to site-built housing, and are infinitely better than the Section 8 housing that really is for poor people.
Matchneer elaborated. “As always, the challenge is getting the general public to realize that modern MH really is a good housing option. There are lots of clever national PR firms that could probably help, especially for younger couples. All you need is cash.”
Photo credit – MHI – published in The Atlantic.
But we already have an image campaign…?
Spoken as if giving a planned response in a classy comedy routine, Martin V. “Marty” Lavin, JD – a MHCommunity owner, attorney, consultant & expert witness who was a prior chair for MHI’s Financial Services division – said: “What the article shows more than anything is that we can pass as an industry on spending the money for an Image Campaign, but we must never, ever think an Image Campaign on MH is not happening. The media is doing it for free!”
A legal claim under Disparate Impact?
“The refusal of lenders to loan on manufactured homes in a land-lease community seems to me to cause a disparate impact on at least three protected classes; age, disability and family status. The industry is not making this argument and I truly believe this is a talking point we should make for our cause.” observed Amy Bliss from the Wisconsin Housing Alliance, in a longer OpEd on The Atlantic’s article, linked here.
Photo credit – MHI – published in The Atlantic.
Spawn of the CFPB…
“I suspect that the CFPB report will spawn several of these types of “stories” and I am not sure what we can do to make sure they are correct BEFORE they get published,” an industry lender to MHProNews, off the record. “Most journalist don’t want to consider the facts as they would just get in the way of a sensationalist story, which is what sells I guess.”
Indeed, the New York Times and others have published articles on this topic. If more publicity leads others to dig deeper into a better understanding of modern manufactured homes, that could be a good for the industry and millions of potential consumers. Manufactured homes are arguably a key part of the solution to America’s affordable housing crisis.
Grading the Atlantic MH article?
The photos of various model homes were nicely done, but that too lacked balance, as there was no photos of homes that represented the entry level “shade and shelter” models, only more mid-level or residential style manufactured homes were shown.
As published, did Alana Semuels’ mix of
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whimsy,
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accuracy,
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interesting quotes,
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improper terminology and
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wide-misses-of-the-mark
cause the Atlantic column to live up the peer-reviewed standards of sound academia? What grade would you give it?
Please see the original article, linked below, and other resources related to this topic and answer those closing questions for yourself. ##
Links to related articles:
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The Case for Trailer Parks – by Alana Semuels, as published in The Atlantic
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Deconstructing The High Cost Mortgage Loan – by Dick Ernst
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An analysis of The Atlantic’s report on Manufactured Housing, CFPB and MH Financing – by Amy Bliss
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CFPB Report alleges Manufactured Housing Lending is Expensive, sparks controversial comments from CFED, MHI and other MH industry professionals – by L. A. “Tony” Kovach
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The GAO releases long awaited report on HUD Code Manufactured Housing Program – by L. A. “Tony” Kovach
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A Cup of Coffee with Congressman Stephen Fincher, author of HR 1779, Preserving Access to Manufactured Housing Act of 2013.
