As a follow-up to MHARR’s report and analysis of August 14, 2014 regarding the convergence of three matters – (1) the final mandatory implementation of expanded HUD/contractor/IPIA in-plant regulation; (2) a new requirement for monthly IPIA inspections of manufacturer Subpart I-related records; and (3) enhanced program contractor funding as a result of a major increase in the HUD certification label fee – and HUD’s admitted failure to analyze the individual and cumulative cost impact of these changes, a new study by the National Association of Home Builders (NAHB) shows the devastating impact of home price increases on consumers and especially lower and moderate-income purchasers.

The new research by NAHB (never a proponent of HUD Code manufactured housing), illustrates and confirms the ruinous exclusionary impact of even modest increases in the purchase price of manufactured homes (which have been driven primarily by unnecessary regulatory compliance costs) – a point that MHARR has been making for nearly 30 years.  That research shows the number of households that become unable to qualify for new home financing for each $1,000.00 added to the retail price of a manufactured home, as follows:

Price Increase    Households Excluded – Single Section   Households Excluded – Double Section         

$1,000.00                              347,901                                                     315,385   

The same research shows that for a generic “median-priced home,” a $1,000.00 price increase excludes 206,296 “prospective homebuyers.”  The contrast between this number and the much larger figures specifically attributable to HUD Code manufactured homes also confirms the disproportionate exclusionary impact of purchase price increases on the lower and moderate-income consumers that are served by – and traditionally rely upon – HUD Code manufactured housing.

Together with research by the U.S. Small Business Administration (SBA), documenting the disproportionate impact of regulatory compliance costs on small businesses (see, SBA, “The Impact of Regulatory Costs on Small Firms,” September 2010), these studies show that smaller-sized industry businesses, and especially smaller producers of manufactured housing, are uniquely impacted by — and vulnerable to — the market disruptions caused by regulatory compliance costs and regulation-driven product price increases. 

Since the publication of MHARR’s initial August 14, 2014 report, both former and current regulators — enabled by an industry blogger who has obviously since been admonished by HUD Code manufacturers over his lack of understanding of such complex regulatory matters — have focused on the motivations underlying the HUD expansion of in-plant regulation.  Those comments, however (mostly from the architect of that expansion), focused on the isolated problems of one manufacturer, years ago, miss the point. The issue is not why in-plant regulation is being expanded and changed.  The point is that the law requires a specific process for any such change, including proper justification and a cost-benefit analysis, and none of that has been done since this matter first surfaced more than four years ago.   

All of this was presented to Congress by MHARR at the February 1, 2010 oversight hearing that led, among other things, to the recently released Government Accountability Office (GAO) report regarding the HUD program.  Obviously, the blogger offering commentary on this matter not only fails to understand the issues, but is also presenting an incomplete factual record in his biased “reporting.”

Unfortunately, the complexity of this matter, including the convergence of multiple issues, makes it an easy target for diversionary arguments designed to obscure the real issues and strip manufacturers of their ability to: (1) defend themselves against regulatory over-reach; and (2) ensure that regulation is fair and reasonable, and not needlessly costly for either themselves or consumers. MHARR, however, will continue to highlight and aggressively pursue these issues, both with respect to the three-part convergence detailed in MHARR’s August 14, 2014 memorandum and another impending regulatory battle over energy regulation.