MHARR Letter to HUD – Federal Housing Administration-Insurance for Manufactured Housing

Manufactured Housing Association for Regulatory Reform
1331 Pennsylvania Avenue, NW, Suite 508
Washington, DC 20004
202-783-4087
Fax 202-783-4075

March 5,2010

VIA ELECTRONIC FILING

Regulations Division
Office of General Counsel
Department of Housing and Urban Development
45 1 Seventh Street, S.W.
Room 10276
Washington, D.C. 2041 0-0001

Re: Docket Number FR-5075-N-02
Federal Housing Administration-Insurance for Manufactured Housing
Re-Opening of Public Comment Period

Dear Sir or Madam:

The following comments are submitted on behalf of the Manufactured Housing Association for Regulatory Reform (MHARR). MHARR is a national trade association representing the views and interests of producers of manufactured housing regulated by the Department of Housing and Urban Development (HUD) pursuant to the National Manufactured Housing Construction and Safety Standards Act of 1974, as amended, 42 U.S.C. 5401, et seq. (Act).

I. INTRODUCTION

On September 15, 2008, the Office of the Assistant Secretary for Housing – Federal Housing Commissioner published a proposed rule to amend HUD’s regulations governing manufactured homes that secure Federal Housing Administration (FHA) Title I loans and Title II insured mortgages. Under the proposed rule, portions of the current regulations, 24 C.F.R. 201.21 and 24 C.F.R. 203-43f, which require such homes to be installed in compliance with HUD’s “Permanent Foundation Guide for Manufactured Housing” (HUD Handbook 4930.3G), HUD’s “Minimum Property Standards for One and Two-Family Dwellings” and other related criteria, would be deleted and replaced with new sections that would allow FHA to insure most HUD Code manufactured homes installed in a manner that meets or exceeds the requirements set forth in the federal Model Installation Standard (MIS) adopted by HUD on October 19,2007 pursuant to the Manufactured Housing Improvement Act of 2000 (2000 reform law).

MHARR submitted comments (incorporated herein by reference) generally supporting this proposed rule — subject to concerns related to the non-preemptive status of the federal Model Installation Standard and corresponding federal installation program – on October 17, 2008. MHARR generally supported the proposed rule because, as HUD correctly notes, the “acceptance of mortgages on manufactured homes installed in accordance with the Model Installation Standards would provide for greater flexibility of design, thereby permitting additional options for affordable housing.”See,75 Federal Register, No. 23, February 4,2010, at 5706).

Subsequently, on February 4,2010, HUD re-opened comments on the September 15, 2008 proposed rule, because implementation of the federal manufactured home installation program (adopted by final rule dated June 20, 2008), including HUD certification of complying state-law manufactured home installation programs and provisions for HUD enforcement of the federal installation standards in states without state-law installation programs has been delayed. As stated by HUD in its February 4, 2010 Federal Register notice regarding re-opening of the comment period for the proposed rule:

“… there have been some delays in submissions of state certifications, in HUDts review and acceptance of state certifications and in the implementation of HUD’s program for states in which HUD will administer the installation program. As a result, there are several states in which there is not yet either a state-certified and fully-accepted installation program or an operational HUD-administered installation program.”

(Id. at 5706-5707).

Because of this delay, HUD now seeks comment on whether it should: (1) promulgate a final rule based on the September 15, 2008 proposed rule, applicable in a given state only at such time that the state has either an operational state-certified and fully accepted installation program, or operational HUD-administered program, or (2) “delay promulgation of a final rule based on the September 15,2008 proposed rule until all states and territories have an operational state-certified and fully accepted installation program or a HUD-administered program.”

II. COMMENTS

MHARR opposes any further needless delay in the implementation of the proposed rule and, therefore, supports the first option proposed by HUD — the promulgation of a final rule based upon the September 15,2008 proposed rule that would become applicable in each state when the state has either an operational state-certified and fully-accepted state-law installation program, or an operational HUD-administered installation program.

The 2000 reform law, as one of the centerpiece reforms of the HUD manufactured housing program, directed HUD to adopt and implement federal installation standards and a corresponding federal installation program, by 2005, in each state that had not yet implemented state-law installation standards and a state installation enforcement program. Today, some ten years after the adoption of the 2000 reform law and five years after the deadline established by Congress for the full implementation of the fallback federal installation program in default states (i.e., states without a state-law installation program), that program, by HUD’s own acknowledgement, is still not fully operational. As a result, installation oversight, that would benefit consumers and help expand the availability of consumer financing (by enhancing the value of manufactured homes), is still absent in many areas. This delay, in turn, has become an obstacle to the full implementation of the September 15, 2008 proposed rule that would similarly benefit consumers by expanding their affordable housing options and the availability of muchneeded FHA financing.

Very simply, there is no excuse for this long — and continuing — delay in the full implementation of the federal installation program, a reform deemed so vital by Congress that it alone is subject to a specific statutory deadline set forth in the 2000 reform law. The full implementation of the federal installation program, however, like many other manufactured housing program reforms mandated by the 2000 law (as previously documented by MHARR), has fallen victim to continuing mismanagement of the HUD program — in the absence of the non-career manufactured housing program Administrator provided by the 2000 law — that has skewed program priorities and returned the program to the controversial, non-consensus practices that the 2000 reform law sought to change. For example, while the full implementation of the federal installation program has been delayed for years, HUD program regulators, for the past three years, have devoted limited program resources to the establishment of a “shadow” in-plant inspection system and procedure, wholly outside of existing regulations and without the consensus procedures required by the 2000 reform law.

In the interim, as the HUD program has resisted the reforms of the 2000 reform law, production and sales of manufactured homes have declined by nearly 90%, to their lowest level ever, representing a catastrophic loss of affordable housing opportunities for lower and moderate-income American families, as well as the loss of thousands of manufactured housing industry and related jobs across the United States.

As a result, it is essential that HUD reverse the deterioration of the manufactured housing program and move forward, as rapidly as possible, to fully implement all of the 2000 law reforms, including the fallback federal installation program and final certification of compliant state-law programs.

Consistent with this and for all the foregoing reasons, HUD should adopt, as soon as possible, a final rule based on the September 15, 2008 proposed rule that would become effective on a state-by-state basis upon certification of a compliant state-law program or the implementation of an operational HUD-administered program in accordance with option one as set forth in HUD’s February 4, 2010 Federal Register notice.

Sincerely,
Mark Weiss
Senior Vice President
Manufactured Housing Association for Regulatory Reform
1331 Pennsylvania Avenue, N. W.
Suite 508
Washington, D.C. 20004
(202) 783-4087 (Office)
(703) 509-9489 (Direct)
(202) 783-4075 (Fax)
mmarkweiss@aol.com (Email)
cc: Mr. Danny Ghorbani, MHARR