Retail Sales Trend Up Despite New, Looming Threat

According to Statistical Surveys, a provider of objective industry data, Texas' new manufactured home retail sales were up 29 percent for the three months ending March 31 over the same period last year. This follows on the heels of a flat Q4 2011 when compared with Q4 2010. Texas also ranks first in national shipments to retailers through March 2012 with a 20 percent share, and number one in units produced with a 27 percent share according to the latest MHI Monthly Economic Report for March 2012. 

While great news for the industry, an ominous threat lies ahead as the young Consumer Financial Protection Bureau (CFPB) begins rule writing for implementing Dodd-Frank and the S.A.F.E. Act.

On behalf of the membership, the TMHA Board approved taking an active part in the federal arena, where this will all play out, at our May 18 Third Quarter Board Meeting. 

I have been in the industry 43 years – the spectrum of consequences we face from this new regulation is something never witnessed.   

 

Some examples:

• New rules could potentially force lenders to discontinue making lower balance loans such as what we typically see for single section home-only loans, and result in an exit of lenders.
  • One of the largest industry lenders estimates 40 percent of their loan volume is under this threshold.
• These new federal rules would also certainly impact retailers, manufacturers and communities.
  • While MHI introduced an industry-supported bill in Congress (HR 3849) to reduce regulatory burdens that impede access to affordable manufactured housing financing, the likelihood of this passing anytime soon if at all in our deadlocked Congress is slim.
    • We have been told this directly by those that should know and have extensive knowledge of the current national legislative climate.

 

Experience has shown it's much easier to influence the writing of a new rule than it is to change a rule once it's written. TMHA is not going to sit on the sidelines to see what happens.

 

Your association has several key resources that, if combined with that of MHI, fellow state associations and industry members, will see that manufactured housing has direct input in the federal rule writing process:

1. First, our large, informed and dedicated member base understands the dynamics of our business model and that it relies heavily on portfolio lenders.
   • While mortgage lenders in the traditional housing market produce loans, sell the servicing to another party and look to the government through Fannie Mae or Freddie Mac to take the risk of loss, our lenders do none of that.
   • MH lenders originate loans, service their loans and take the hit on any loss.
     • This requires different loan pricing, fees and loan origination systems than previously envisioned by those writing the new federal laws and most likely the officials charged with writing the rules.
2. Secondly, our seasoned board and Executive Director DJ Pendleton will give us a voice in this process.
   • DJ brings a strong academic and professional background as an attorney coupled with industry experience, allowing him to understand the new laws, rule writing process and nuances of guiding the consultants we will require to help ensure the industry is heard.

Finally, through conservative fiscal policy, financial support from members over the years and God Bless our Texas economy, TMHA has the financial resources to commit in coordination with others to support this effort in D.C. While no one can guarantee our success, we will at the very least have a voice at the table.

 

Sincerely,

 

Ronnie Richards
Chairman
Texas Manufactured Housing Association