GSE Reform Legislation Introduced in Senate
On June 25, 2013, the most promising legislation yet to reform and effectively replace the current Government Sponsored Enterprises (GSEs) was introduced in the U.S. Senate by a bi-partisan group including lead co-sponsors Sens. Bob Corker (R-TN) and Sen. Mark Warner (D-VA). The legislation, titled “The Housing Finance Reform and Taxpayer Protection Act (S. 1217), is the latest in a series of efforts in both houses of Congress to comprehensively reform – and restructure or replace – the two GSEs (i.e., Fannie Mae and Freddie Mac).
As MHARR has recently reported — and will analyze in greater detail in forthcoming papers and articles – this legislation would dramatically change the existing home financing secondary market support structure and, in turn, will have a major impact on the manufactured housing industry and American consumers of affordable housing. Designed specifically to reduce “the footprint of the federal government in housing,” according to Senator Corker, the bill, among other things, would replace the current GSEs with a “Federal Mortgage Insurance Corporation” employing a partially privatized system, that would provide a 90 percent institutional guarantee, with private financiers taking the “first loss” of as much as 10 percent of any given loan. The proposed legislation would also wind down the current system of affordable housing goals and replace it with a “user fee” that would finance an affordable housing fund. At present, there is no companion legislation in the House of Representatives but, as MHARR has also reported, the House has conducted multiple hearings on this topic and word in Washington is that the House may soon unveil its own version of GSE reform legislation.
At present, reports indicate that the proposed bill – the text of which has not yet been published – does not specifically address manufactured housing. Ultimately, however, any final GSE reform legislation must address – and provide support for — both manufactured home real estate mortgages and manufactured home personal property (i.e., chattel) loans.
Fortunately, from the information currently available, it appears that the broad reform patterns envisioned by the proposed bill are consistent with emerging Obama Administration housing finance policy which favors maintaining reasonable support for credit-worthy moderate and lower-income consumers of affordable housing and first-time purchasers – rather than high-income borrowers – who constitute the core of the manufactured housing market. An analysis of this emerging Obama Administration housing finance policy will be addressed in an upcoming MHARR paper that will appear in the July 2013 issue of The Journal of Manufactured Housing.
The filing of GSE reform legislation also parallels President Obama’s nomination of Rep. Melvin Watt (D-NC) to serve as director of the GSEs’ federal regulator – the Federal Housing Finance Agency (FHFA). Rep. Watt’s Senate confirmation hearing is currently scheduled to be held on June 27, 2013. If confirmed by the full Senate, Mr. Watt will undoubtedly begin to advance the same Obama Administration policies, with their emphasis on assisting middle-Americans, within the existing GSE – FHFA apparatus for as long as it continues in operation. MHARR has also been assessing the impact and interaction between such administrative policies and the emerging GSE reform legislation in an analysis paper that is targeted for publication in the August 2013 issue of The Journal of Manufactured Housing.
MHARR will continue to keep you apprised of further developments as they unfold.
DOE Seeks Further Information for Energy Rule
The Department of Energy (DOE) has published a request in the June 25, 2013 Federal Register seeking further information related to its development of energy conservation standards for manufactured homes under the Energy Independence and Security Act of 2007 (EISA). The DOE Request for Information (RFI) (copy attached), focuses primarily on three issues that have repeatedly been emphasized by MHARR in connection with this rulemaking, as well as prior efforts to impose harsh energy mandates on manufactured housing consumers:
(1) the inter-relationship between more stringent air infiltration or air exchange rate standards and indoor air quality (AQL) within manufactured homes;
(2) the impact of more stringent and costly energy mandates on the availability and cost of already-scarce financing for manufactured home purchasers; and
(3) the ultimate nature of the enforcement mechanism for any such standards given the already-existing HUD Code enforcement system.
These inquiries directly parallel points raised by MHARR – based on extensive manufacturer input — in March 5, 2010 written comments to DOE on an Advance Notice of Proposed Rulemaking concerning these same rules and in a July 16, 2010 follow-up letter to DOE Secretary Steven Chu. Specifically, MHARR stated:
(1) “…manufactured homes are already subject to HUD energy conservation standards that result in a relatively tight thermal envelope, consistent with overall affordability and are carefully balanced against concerns related to air exchange and condensation within the home living space. Any change to the standards could upset that balance with … negative consequences.”
(2) “With … manufactured housing consumers unable to obtain or qualify for financing now, matters would be much worse if the purchase price of manufactured homes were unnecessarily increased … due to DOE energy regulations.”
(3) “…the federal government should not impose costly new energy mandates combined with a totally new DOE enforcement system that would parallel the existing HUD system.” “…HUD … is best suited to fully assess and ensure the affordability aspects of energy regulation within the context of the HUD Code and maintain the delicate balance between regulation and affordability that is embedded in relevant federal law.”
With the publication of the June 25, 2013 RFI, it appears that DOE may be giving these issues the weight, gravity and serious consideration that they deserve, prior to the publication of a specific proposed rule, thus increasing the chances that relevant information will receive proper consideration by the agency. MHARR, accordingly, will submit further comments and information to DOE on behalf of industry members prior to the July 25, 2013 deadline. Individual industry members and consumers – who would be negatively impacted by harsh mandates that would displace energy option packages which currently give consumers freedom of choice as to how and where to spend their hard-earned dollars – should also file comments and relevant information with DOE.
In addition, and as MHARR has urged from the outset, the Manufactured Housing Consensus Committee (MHCC), with its extensive technical expertise and input from all manufactured housing stakeholders, should take this opportunity to develop responsive information for DOE from the perspective of the careful balance between regulation and affordability required by the Manufactured Housing Improvement Act of 2000.
Significantly, thanks to the joint efforts of MHARR and MHI at the time, the 2007 EISA law specifically states that any new standards “shall” be estaablished after DOE consultation with HUD. HUD, in turn, should do what is right and in the best interests of both consumers and the industry by seeking consensus-based MHCC input for this specific DOE request.
MHARR will continue to keep you updated on this important matter.
