Top National News
Freddie Mac: Multifamily Affordability Is Now a Key Focus
Freddie Mac reports that residents of apartment communities of five or more rental units currently make up 15 million U.S. households — a figure that is expected to climb with shifting demographics and shelter preferences. Such factors as demographic trends, household formations, higher credit standards for home loans, and changing attitudes about homeownership are driving the increase in rental housing affordability, notes Freddie Mac senior vice president of multifamily David Brickman. At the same time, though, affordable rental housing is becoming more elusive in certain parts of the country because of gross rent, or rent plus resident-paid utilities. More than half of all people who rent spend more than 30 percent of their income on housing — an increase from 40 percent in 2000. Low-income households tend to spend even larger portions of their incomes on rent, based on the U.S. Census Bureau’s American Community Survey 2000-2011. Brickman asserts that Freddie Mac remains dedicated to supporting affordable rental housing. He concludes, “Working closely with multifamily property owner/borrowers and our network of lenders, Freddie Mac Multifamily structures financings in a way that lets us offer very competitive, long-term rates.
From “Freddie Mac: Multifamily Affordability Is Now a Key Focus”
Housing Wire (02/18/13) Mlynski, Christina
Real Estate Outlook: Multifamily Housing Industry Also Key to Housing, Economic Recovery
According to a report from the National Apartment Association and the National Multi Housing Council, the apartment housing market added $1.1 trillion to the U.S. economy during the poorest economic climate in a generation. The research further noted that apartments support approximately 25.4 million jobs and apartment residents spend more than $420 million for goods and services, including apartment furnishings and moving costs. In 2011, the study added, the apartment sector spent $14.8 billion on the construction of 130,000 units and another $67.9 billion to operate and improve the country’s existing stock of 19.3 million apartments. Dr. Stephen S. Fuller of George Mason University’s Center for Regional Analysis, who conducted the study, notes that a great deal of emphasis is placed on home building and the single-family sector with regards to the economic impact of housing. He urges market watchers not to discount the annual construction and operating outlays for apartment communities as major sources of economic activity, jobs, and personal earnings.
From “Real Estate Outlook: Multifamily Housing Industry Also Key to Housing, Economic Recovery”
Realty Times (02/18/13) Perkins, Broderick
Mortgage-Interest Tax Deduction Costs Less Than Feared
Critics of the mortgage interest tax deduction have long argued that the popular write-off used by millions of American homeowners costs the government in the range of $100 billion a year. As a result, the deduction has placed high on the hit list of most tax reformers’ agendas. Now, though, the nonpartisan Joint Committee on Taxation has come up with new estimates that have found that the incentive actually costs tens of billions of dollars less than the government previously believed. Because of changes in the economy and tax legislation, the researchers calculate that the cost of the deduction for fiscal 2013 will be $69.7 billion — a dramatic reduction from the committee’s own earlier numbers. In a projection released three years ago last month, it said the cost of the tax break in fiscal 2013 would reach a record high of $134.7 billion.
From “Mortgage-Interest Tax Deduction Costs Less Than Feared”
Boston Herald (02/17/13) Harney, Kenneth R.
Multifamily Housing Growth Poised to Continue in 2013
Home building is once again contributing to the nation’s economic growth, and a major factor behind that growth has been the expansion of multifamily construction such as apartment communities and for-sale condominiums. Homeownership remains down, especially among younger households. Additionally, the overall number of households — homeowners and renters combined — is lower than it should be considering U.S. population growth. With a boom in household formation expected in the years to come, most of them are expected to start out as renters as economic and labor market conditions improve. The result for the building industry has been an increase in the demand for rental units, which in turn has reduced rental vacancy rates and propelled new multifamily construction. There are some potential “wild cards” in the multifamily housing forecast. The future of the Low-Income Housing Tax Credit, for instance, could be affected by tax reform on Capitol Hill. The tax credit has been a major development tool that ensures the financing of affordable housing.
From “Multifamily Housing Growth Poised to Continue in 2013”
U.S. News & World Report (02/13/13) Dietz, Robert
Industry News
Cavco Industries Reports Fiscal Third Quarter Results
Phoenix-based Cavco Industries, a designer and producer of manufactured homes, reported flat results for its third quarter ended Dec. 29, 2012. Net sales for the period came in at $114.6 million, unchanged from the same period of fiscal 2012. “The average sales price per home was approximately $50,100 during the third quarter of fiscal year 2013 compared to $53,200 during the third quarter last year, a 5.8 percent decrease,” Cavco Chairman, President, and CEO Joseph Stegmayer explained. “On a positive note, home sales increased this quarter to 2,065 homes, 4.7 percent higher than 1,972 homes sold during the same quarter last year.” He expressed optimism for the future, based on the company’s continued expansion in strategic markets nationwide as well as on market fundamentals. “Rising apartment occupancy rates and higher rental costs should make affordable manufactured housing an increasingly attractive alternative for many people,” Stegmayer declared. “As employment and consumer confidence levels improve, we anticipate rising demand for homes.”
From “Cavco Industries Reports Fiscal Third Quarter Results”
4-Traders (01/31/13)
Project Builds Port Traffic
Shipments of modular housing units produced by Champion Homes are giving the Port of Albany a boost. The residential modules are being delivered from New York to an Exxon/Mobil offshore drilling project in Newfoundland, Canada, where they will house oil workers. In late January Champion shipped off 40 of the units, which came out of a manufacturing facility in Sangerfield in New York’s Oneida County.
From “Project Builds Port Traffic”
Albany Times Union (NY) (01/28/13) Anderson, Eric
Sun Communities Gives 2013 FFO Guidance
Sun Communities announced on Feb. 13th that it expects full-year funds from operations (FFO), a key measure of profitability, to beat analysts’ projections for 2013. The Michigan-based real estate investment trust anticipates FFO of between $3.45 and $3.55 a share. Sun Communities owns and operates 183 manufactured housing and recreational vehicle communities in Connecticut, Maine, Massachusetts, New Jersey, Ohio, Virginia, and Wisconsin. The company also announced that it added another 10 RV communities for about $111.5 million, purchasing some homes and cottages located in the communities for another $1.3 million.
From “Sun Communities Gives 2013 FFO Guidance”
BusinessWeek (02/13/13)
Drew Industries Relocating to Elkhart County, Indiana, to Consolidate Corporate and Manufacturing Divisions
Drew Industries — which makes components for manufactured and modular homes, recreational vehicles, and other sectors — is moving its corporate headquarters to Elkhart County, Ind., from White Plains, N.Y. Elkhart is already home to Drew’s wholly owned Kinro and Lippert Components units. The consolidation is expected to net savings of about $2 million a year in general administrative costs while cultivating greater exchange of ideas and knowledge between Drew’s management team and RV and manufactured housing executives.
From “Drew Industries Relocating to Elkhart County, Indiana, to Consolidate Corporate and Manufacturing Divisions”
Area Development Online (02/18/13)
Portland Affordable Housing Complex Takes Modular Approach to Green
Portland’s first modular housing development, Kah San Chako Haws, opened during the week of Feb. 11th. The development, whose name is Chinook for “East House,” is a LEED Gold-certified apartment complex designed to provide Native Americans living in poverty with energy-efficient homes. Ray Espana, director of community development for the Native American Youth and Family Center, which lead the development of the housing project, said “This is the first modular housing development that is made up of stacked modular units in an apartment style.” The nine units that comprise the complex were built by Blazer Industries and include a mix of studios, one-bedroom apartments, and two-bedroom units.
From “Portland Affordable Housing Complex Takes Modular Approach to Green”
Sustainable Business Oregon (02/15/13) Williams, Christina
Modular Homes Shed Cookie-Cutter Reputation
With climate-controlled home-building factories increasingly catering to high-end home buyers with customized products packed with amenities, factory-built houses are beginning to lose their low-end reputation. Saddle River, N.J., Re/Max agent Edward Mathis notes that of late he has noticed more modular homes being built and put on the market, leading him to believe that both homeowners and home builders in his area are beginning to see these homes as sturdy luxurious options. Mathis is also the listing agent for a modular home from Excel Homes and has noted that people he shows the home to are completely unaware that it is modular. Home buyers can work with design teams from companies like Big Sky Custom Homes to design their modular home; they only need ideas, buildable land, and a construction loan, which can later be refinanced into a conventional mortgage. Not only can modular homes be packed with amenities and be quite high-end they also have lower labor costs, as builders can buy in bulk and can avoid construction delays related to extreme weather. Rob Ebbets, an executive at Excel Home’s parent company, commented that depending on the amenities in the modular home, people save between 5 percent to 20 percent when compared to traditional stick-built homes. Douglas Smith, owner of Environmental Construction, remarked that he sees annual increases in modular home construction, saying “I think that the quality is better, […] very high quality, energy-efficient, more green.”
From “Modular Homes Shed Cookie-Cutter Reputation”
Pittsburgh Post-Gazette (PA) (02/03/13) Diduch, Mary
Alliance Provides Housing Options for Displaced Residents
About 17 manufactured homes are being prepared in Eatontown, N.J., for Hurricane Sandy victims who are still seeking permanent or temporary shelter. “After Sandy, with the resources available, we were able to offer this as a solution since manufactured housing is a quality product and can be put in place in a timely way and we had existing vacancies” in our manufactured home community, said Donna Blaze, CEO of the alliance that operates the Pine Tree community. The homes will rent for $750 to $850 a month with an option to buy, she said in a Feb. 1st interview, adding that they would be installed over the following month. The first three are expected to be available at the end of February, with another three units rolling out each week after that.
From “Alliance Provides Housing Options for Displaced Residents”
Atlanticville (02/07/13) Antonucci, Nicole
Manufactured Home Advocates Back Bean, Hooper Insurance Bill
Legislation in both of Florida’s legislative chambers, Senate Bill 378 filed by Sen. Aaron Bean (R-Fernandina Beach) and House Bill 573 filed by Rep. Ed Hooper (R-Clearwater), has the backing of those who support manufactured homes. The legislation would require Citizens Property Insurance Corp. to provide its policyholders with adequate coverage for such property and their related structures, such as awnings, carports, decks, glass or screen enclosures, and others. In a release, Bean said, “The purpose of this bill is to do right by Florida’s mobile or manufactured home owners by allowing those insured by Citizens to be covered for the full market value of their homes.” Florida Manufactured Housing Association executive director James Ayotte agreed, stating, “Mobile and manufactured home owners should be spared the injustice of disparate assessment on the value of their homes.”
From “Manufactured Home Advocates Back Bean, Hooper Insurance Bill”
Sunshine State News (FL) (02/04/13) Turner, Jim
MHI News
CFPB and Dodd-Frank Financial Services Updates
CFPB Releases Mortgage Rule Implementation Plan
On February 13th, the CFPB announced an implementation plan that focuses on the mortgage industry’s compliance with new consumer protections that go into effect in January 2014. In a new release the CFPB indicated, that in an effort to support rule implementation and ensure industry is ready for the new borrower protections, it will:
• Coordinate with other agencies: The CFPB is coordinating with other federal government regulators that also conduct examinations of mortgage companies to ensure all regulators have a shared understanding of the CFPB’s new rules.
• Publish plain-language guides: The CFPB will publish summaries of the regulations in both written and video form. The guides will be available this spring.
• Publish updates to the official interpretations: The CFPB plans to issue updates of the “official interpretations,” which provide guidance on how to comply with the rules. The Bureau expects to issue the first update this spring and issue additional updates, as needed.
• Publish readiness guides: These guides, available this summer, will help mortgage originators and servicers prepare to comply with the new rules by giving them helpful check-lists, such as suggesting that implementation plans include revisions to policies and procedures and finalizing training plans for staff. More in-depth examination procedures are expected to be published later this year by the Federal Financial Institutions Examination Council (FFIEC). Industry members will be able to use these examination procedures to conduct self-assessments and internal reviews of their readiness and compliance.
• Educate consumers: As the January 2014 date approaches, the CFPB will give consumers information about their new protections under these rules through a broad-reaching consumer education campaign.
MHI will be tracking and distributing these updates as they become available. For more information on the CFPB’s plan, click here.
Senate Moves to Remake CFPB Structure
On January 31st, Sen. Jerry Moran (R-KS) introduced legislation that would replace the CFPB director with a five-member commission and subject the CFPB to the same congressional appropriations process as most other federal agencies are subject to. The legislation is similar to legislation introduced last year by Moran. In late-January 2013, House Financial Services Committee Chairman Jen Hensarling (R-TX) indicated that the panel would also be working to advance similar legislation during the 113th Congress, particularly in light of legal events calling into question the legality of President Obama’s recess appointment of Richard Cordray as the CFPB Director.
In response to the administration’s recent re-nomination of Cordray to the CFPB post, Senate Minority Leader Mitch McConnell (R-KY) and 42 other Republican Senators sent a letter to the President indicating that they will block the confirmation of any nominee to the CFPB Director post until the structure of the agency is reformed. Click here to view the letter. Republicans are specifically seeking to establish a bipartisan commission to oversee the CFPB; subject the CFPB to the annual appropriations process; and, establish a safety-and-soundness check for the prudential regulators. These revisions to the CFPB are similar to those that were sought by Congressional Republicans last Congress.
Additional States Join CFPB Lawsuit
Attorneys general in eight states (AL, GA, KS, MT, NE, OH, TX and WV) are seeking to join an existing lawsuit filed in June 2012 in the U.S. District Court for the District of Columbia by State National Bank of Big Spring (TX), the Competitive Enterprise Institute, and the 60 Plus Association and later joined by Oklahoma, South Carolina, and Michigan in September 2012 which challenges the constitutionality of the Dodd-Frank Act and the CFPB. The suit challenges portions of the Act and the President’s authority to make a recess appointment to head the CFPB. Click here for more information.
Bankers Estimate Mortgages Missing QM Threshold
A recent survey by the American Bankers Association (ABA) indicates that a relatively significant portion of bankers estimate that roughly 20 percent of their current mortgage production would fail to qualify as a Qualified Mortgage (QM) as defined by recent CFPB rules. For more information, click here to visit the ABA website.
Borrower Can Sue after Three Years to Rescind Mortgage
On February 5th, the U.S. Court ruled that a borrower can bring a lawsuit seeking rescission more than three years after loan consummation as long as they have sent a written notice of rescission within the three-year period. The court rejected a lender’s argument that a borrower’s lawsuit was untimely because it was not filed within three years of the loan’s closing date. However, in a reversal of a lower court’s judgment, the court held that the borrower had validly rescinded the loan by sending a notice within the three-year period. For more information, click here.
Regulators Issue Guidance on Social Marketing
On January 22nd, the Federal Financial Institutions Examination Council (FFIEC) released proposed guidance on the applicability of consumer protection and compliance laws, regulations, and policies to activities conducted via social media by banks, savings associations, and credit unions, as well as nonbank entities supervised by the CFPB and state regulators.
The guidance is intended to help financial institutions understand potential consumer compliance, legal, reputation, and operational risks associated with the use of social media, along with expectations for managing those risks. Although the guidance does not impose additional obligations on financial institutions, the FFIEC expects financial institutions to take steps to manage potential risks associated with social media, as they would with any new process or product channel.
Click here for a summary of the guidance.
Washington Leaders to Participate in MHI Legislative Conference and Winter Meeting
Several important political and Washington personalities will be participating as speakers during the upcoming MHI Legislative Conference and Winter Meeting which will be held February 24th through the 26th at the Sheraton Hotel in Arlington, Virginia.
On Monday morning, MHI members will hear from Byron York, Chief political correspondent for The Washington Examiner. York began this post in early 2009 following his work as White House correspondent for National Review magazine and a columnist for The Hill. He is also a syndicated columnist. Also on Monday morning, Frank Nothaft, Chief economist and vice president at Freddie Mac will address MHI members. Nothaft is responsible for forecasts, research and analysis of the macroeconomy, housing and mortgage markets. Nothaft is also involved in affordable lending analysis and policy issues affecting the housing finance industry. A widely quoted expert on housing and economic issues, Nothaft makes frequent appearances in both local and national media outlets.
At lunch on Monday, Congressman Stephen Fincher (R-TN) will speak. Fincher is a member of the House Committee on Financial Services and serves on the Financial Institutions and Consumer Credit Subcommittee as well as the Oversight and Investigations Subcommittee. Since being elected, Fincher has been working on multiple issues to create jobs, cut government spending, and request government accountability to tax payers.
After lunch, Senator Joe Donnelly (D-IN) will begin the afternoon general session. Senator Donnelly was first elected to the U.S. House of Representatives in 2006 and was re-elected twice, representing Indiana’s Second Congressional District for three terms. In 2012, Donnelly was elected to the U.S. Senate to represent the State of Indiana.
Later in the afternoon an “Overview and Analysis of the Political Climate Surrounding Housing Finance: An Elected Official’s Perspective” panel discussion will be held. The panel will be moderated by Dwight Fettig from Porterfield, Lowenthal & Fettig and invited panelists are:
• The Honorable Robert Ehrlich, 60th Governor of Maryland from 2003 to 2007. Prior to serving as governor, Ehrlich represented Maryland’s 2nd Congressional district in the U.S. House of Representatives.
• John Savercool, Senior Lobbyist and Managing Director of UBS Americas Inc., which covers all of the primary business units within UBS, including the Investment Bank, Wealth Management and Global Asset Management.
• Warren Tryon, Majority Deputy Staff Director on the House Financial Services Committee, working under Committee Chairman Jen Hensarling (R-TX).
For more information on the MHI Legislative Conference and Winter Meeting and to register, click here. Online registration for this event will close on February 21st at midnight. After that time, you will need to register on-site at the Sheraton Crystal City. Registration hours will be as follows:
Sunday, February 24, 2013 11:30 am -7:00 pm
Monday, February 25, 2013 7:00 am – 6:00 pm
Tuesday, February 26, 2013 7:15 am – 9:30am
Advanced Envelope Design Status Report
On February 6th and 7th, the Systems Building Research Alliance (SBRA) in cooperation with the Department of Energy’s Building America (ARIES) team met at the Cavco-Fleetwood research and testing facility in Riverside, CA to build mock-ups and conduct testing on two of six proposed concepts for next generation, high performance wall systems for factory-built homes.
This first of several planned evaluations involved two leading insulation suppliers, AFM Corporation and DOW Chemical Company. The companies are collaborating with the industry-lead committee in developing wall designs that meet the stringent energy efficiency standards of the 2012 International Energy Conservation Code as well as anticipated changes to the HUD-Code. Similar testing of concepts developed in concert with Owens Corning, BASF, and Johns Mansville Corporation will be undertaken later this year.
The team conducted two types of testing. Racking tests (following the ASTM 72/E564 protocols) assessed how the composite wall, including siding, foam sheathing and interior gypsum performed. The second test utilized a mock-up apparatus which allowed the group to investigate how alternative combinations of materials could help streamline production and minimize cost while achieving an ambitious set of thermal, weather barrier, and moisture control goals. The tests demonstrated the value of collaborative problem solving with representatives participating from the window, insulation, siding and fastener industries. The testing was directed by an industry group led by Michael Wade (Cavalier Homes). Cavco-Fleetwood hosted the tests.
Initial results suggest the two concepts tested have potential for achieving greater energy efficiency and meeting higher standards. Therefore a further detailed study is planned. Please contact Emanuel Levy at elevy@research-alliance.org or Lois Starkey at lstarkey@mfghome.org with questions and learn more about the research.
MHI wishes to thank all of its manufacturer and supplier members who participated in this phase of the project, particularly the folks at Cavco-Fleetwood who provided the facility and the personnel to build the prototypes.
Hurricane Sandy Disaster Recovery Relief Enacted into Law
On January 28th, the Senate passed its version of a $50.5 billion Fiscal Year 2013 Supplemental Appropriations bill, providing immediate and long-term relief in response to Superstorm Sandy, which impacted over a half million people, in over seven states in the northeast. The bill includes $17 billion in immediate relief for Hurricane Sandy survivors, and $33.5 billion for short – and long-term assistance for Hurricane Sandy and other Presidentially declared disasters in 2011, 2012 and 2013.
The new law (P.L. 113-2) appropriates the following amounts likely to impact housing:
• $11.5 billion for the Federal Emergency Management Agency’s (FEMA) Disaster Relief Fund for the provision of disaster relief to individuals, including the provision of temporary housing;
• $3 million to FEMA’s Science and Technology Directorate for research and development for disaster mitigation;
• $15 billion for a Federal Community Development Block Grant for long-term housing and economic recovery for Hurricane Sandy and other major disasters in 2011, 2012 and 2013; and
• $520 million for Small Business Administration (SBA) disaster loans.
In addition to providing direct appropriations for disaster recovery, the new law amends the Robert T. Stafford Disaster Relief and Emergency Assistance Act to create alternatives for disaster relief in order to reduce costs, expedite assistance, and provide incentives for states and localities to undertake timely and cost-effective projects.
Of particular interest to the manufactured housing industry are provisions to:
• authorize FEMA to enter into lease agreements with owners of multifamily rental property located in disaster areas, to house disaster survivors, and to make repairs or improvements as may be necessary to ensure safe and adequate temporary housing;
• expedite debris removal; and
• allow states to draw down a portion of their hazard mitigation funds to leverage mitigation opportunities earlier in the reconstruction process.
3,513 New HUD-Code Homes Shipped in December 2012
In December 2012, 3,513 new manufactured homes were shipped, down 8.5 percent from December 2011. Decreases were across the board with both single section and multi-section home shipments down compared with the same month last year.
In comparison with the previous year, 2012 recorded shipment increases every month from January through August. September marked the first month of a decline in shipments with the downward trend continuing for the remainder of the year (see note below).
Industry shipments for 2012 were 54,891 homes compared with 51,606 homes in the previous year, a net increase of 6.4 percent. A total of 5,462 floors were shipped in December, a decrease of 7.2 percent compared with December 2011.
The seasonally adjusted annual rate (SAAR) of shipments was 53,430 in December 2012, down 3.4 percent from the November 2012 pace of 55,289 homes. The SAAR corrects for normal seasonal variations in shipments and projects annual shipments based on the current monthly total.
The number of plants reporting production in December was 123 and the number of active corporations was 45, both unchanged from the prior month.
Note: The purchase of approximately 1,735 manufactured homes by the Federal Emergency Management Agency (FEMA) in the 3rd and 4th quarters of 2011 contributed to the relative reduction in industry shipments and production figures for the current month. The dip in activity is particularly pronounced in states that had significant sales of homes to FEMA in December of last year. Excluding the FEMA purchases, the industry shipped 49,871 homes in 2011. Therefore, the 2012 shipment total of 54,891 represents a 5,020 home or 10% year-over-year increase.
