Manufactured Housing Finance Legislation Introduced in House

On February 1st, during a hearing of the Financial Services Subcommittee on Insurance, Housing and Community Opportunity evaluating the effectiveness of the Department of Housing and Urban Development’s (HUD) implementation of the Manufactured Housing Improvement Act of 2000, Rep. Gary Miller (R-42nd-CA) formally unveiled legislation (H.R. 3849) to reduce regulatory burdens impeding access to affordable manufactured housing financing.

The bill (titled Preserving Access to Manufactured Housing Act) was developed on a bipartisan basis by Reps. Joe Donnelly (D-2nd-IN), Stephen Fincher (R-8th-TN) and Gary Miller (R-42nd-CA), in consultation with the Manufactured Housing Institute (MHI), to address two significant issues impacting the manufactured housing industry:

• Reducing the threshold by which small balance manufactured home personal property loans are considered High-Cost Mortgage Loans under provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (P.L. 111-203) and thereby subjecting manufactured home lenders to punitive and onerous liabilities.

• Clarifying that those selling manufactured homes—who are not fundamentally engaged in the business of mortgage origination —are not to be considered mortgage originators under the federal SAFE Act and thereby better able to provide adequate technical assistance to consumers throughout the manufactured home buying process—similar to the SAFE Act treatment of real estate brokers.

In detailing challenges facing the manufactured housing industry, Congressman Miller cited a number of difficulties the industry has suffered over the past decade, including: a decline in new manufactured home construction of roughly 80 percent; the closure of more than 160 plants; and the loss of over 200,000 jobs. He specified that “Congress must address the problems with regulatory overreach that impedes the ability of consumers to obtain mortgage financing for manufactured homes.”

Upon introduction of the legislation, MHI Chairman and Cavco Industries Chairman and CEO Joe Stegmayer stated “we are truly grateful for the dedicated leadership and work of Representatives Joe Donnelly, Stephen Fincher and Gary Miller on this very important issue. Serving the financing needs of the manufactured housing market has always been a unique challenge. It has grown more challenging by the establishment of new federal guidelines that do not adequately account for the complexities and realities facing the industry and consumers alike. The legislation is an essential step in preserving the affordability advantage of manufactured housing and protecting the equity that 19 million existing manufactured home residents have built in their homes.”

MHI will continue to work on a bipartisan basis to educate Members of Congress and develop solutions to the financing crisis within the manufactured housing market. Click here for a copy of the legislation. Click here for a description of the bill’s impact on SAFE Act and the Dodd-Frank Act.

MHI Testifies Before Congress on Manufactured Housing Program

On February 1st, Cavco Industries Director of Engineering Manuel Santana, P.E., testified on behalf MHI before the House Financial Services Subcommittee on Insurance, Housing and Community Opportunity. The purpose of the hearing was to hear from HUD, the industry, and other stakeholders about the effectiveness of HUD’s Implementation of the Manufactured Housing Improvement Act of 2000.

Mr. Santana told the committee that an efficient, streamlined system of building regulations is important to ensure a robust housing economy, the availability of financing, and enhanced acceptance from homebuyers and communities across the nation.

Mr. Santana, who is also a member of the Manufactured Housing Consensus Committee (MHCC), testified on four key provisions of the Manufactured Housing Improvement Act:

Installation Standards

• HUD’s establishment of minimum installation standards for manufactured homes, while not yet complete, has gone a long way to enhance consumer satisfaction and improve the quality and durability of manufactured housing.

Efficiency of the Rulemaking Process

• HUD has failed to keep the HUD code updated despite the Improvement Act requirement for HUD to act within one year after the MHCC recommends revisions to the standards. This has hindered the industry’s ability to keep pace with consumer demand and expectations.

• Mr. Santana told the committee that inaction by HUD to update energy standards now means the industry will be subjected to costly duplicative regulation by the Department of Energy.

Preemption

• Congress recognized the importance of federal preemption as a key element to the production and distribution of manufactured housing. A single uniform code is essential to manufactured housing in that it preserves affordability.

• Santana testified that HUD has not followed through on requests from MHI and the Consensus Committee to update its policy on preemption so that it is more attuned to the Improvement Act, which calls for the “broad and liberal interpretation of the HUD Code.” HUD’s narrow interpretation has led to an increase in state and local efforts to supplant the HUD Code with additional local and state regulation.

Appointment of a non-career administrator

• Mr. Santana told the committee, that even though the Improvement Act does not mandate the appointment of a non-career administrator, such an individual is key to an effective manufactured housing program in order to oversee the timely development of codes and standards and to serve as a much needed advocate for manufactured housing and its consumers in HUD’s overall mission, policies and programs.

Mr. Santana said that “In spite of a number of regulatory challenges facing our industry, there is no shortage of consumers who want to purchase manufactured homes. However their inability to obtain financing remains the most significant impediment to the industry’s growth.”

Henry Czauski, Acting Deputy Administrator for HUD’s Office of Manufactured Housing testified that the agency actively listens to all stakeholders to ensure manufactured housing continues to be affordable and a value option for homebuyers. Czauski said “I want to assure the subcommittee that the department has and continues to fairly and diligently implement the 2000 Act in accordance with the statutory purposes to protect the quality, durability, safety and affordability of manufactured housing.”

Ishbel Dickens, Executive Director of the Manufactured Home Owners Association of America (MHOAA), testified in support of the MHCC saying it is the only forum where homeowners have a voice. She highlighted the three major issues of concern to MHOAA: (i) adequate financing products to ensure loans on manufactured homes are as competitive as those for “site built” homes; (ii) long-term security of tenure; and (iii) reasonable rents and rules so that manufactured housing community living really is an attractive option for lower income households and retirees who desire to own their own homes, and so that home owners are not forced to abandon their homes as a result of economic eviction.

Representatives from the Manufactured Housing Association for Regulatory Reform, John Bostick and Edward Hussey, testified that HUD’s failure to properly implement the Manufactured Housing Improvement Act, has been a key factor in the prolonged decline in production levels of manufactured housing.

Oregon’s State Regulator for Manufactured Housing until 2005 and former MHCC Chairman, Dana Roberts criticized HUD for failing to implement the recommendations of the MHCC regarding installation standards. In his written testimony, he said that HUD should have adopted two sets of installation standards; one for homes that are permanently sited, and one for homes that are intended to be moved.

To view a webcast of the hearing and read the complete written testimony, Click here.

Senate Finance Committee Holds Hearing on “Tax Extenders” and Tax Reform

Parallel to the House-Senate conference on extending the payroll tax cut, the Senate Committee on Finance held a special hearing titled: “Extenders and Tax Reform: Seeking Long-Term Solutions” to examine the 80 or more tax extenders that expired in December. The hearing focused on efforts to find a long-term solution for the tax provisions that require frequent renewal. Included among these tax provisions was the New ENERGY STAR Tax Credit (45L) for manufactured and modular homes. Specifically, manufacturers who build ENERGY STAR homes are eligible to receive a $1,000 tax credit while modular home builders are eligible to receive a $2,000 tax credit by exceeding the International Energy Conservation Code (IECC) by 50 percent.

The hearing evaluated what role tax extenders should play in the tax overhaul reform process aimed at broadening the tax base, lowering rates, and making the tax code more efficient and fair. There was general agreement that all of these extenders need to be reviewed in the context of comprehensive tax reform. Several witnesses stated in their testimony the credits and deductions included in the annual extenders provisions help mitigate the impact of our over-burdensome marginal rate and outdated Code structure.

In recent years, it has become the norm for Congress to authorize these tax breaks for a year at a time, allow them to lapse for a short time and then renew them retroactively. Despite protests that this practice creates uncertainty for taxpayers, lawmakers have generally concluded that retroactive extensions are sufficient because the tax filing season itself is backward-looking.

Because of the importance of the New Energy Efficiency Home Tax Credit, MHI is urging members to continue to contact their Representatives to act quickly to extend these pro-growth, pro-job provisions. The lack of timely congressional action to extend these provisions would inject more instability and uncertainty into the economy and further weaken confidence in the marketplace.

Contact information for congressional offices is available by clicking here.

Department of Justice (DOJ) Releases ADA Technical Assistance Document

On September 15, 2010, the Department of Justice (DOJ) published revised final regulations implementing the Americans with Disabilities Act (ADA) for title II (State and local government services) and title III (public accommodations and commercial facilities). The published revised ADA regulations included a new accessibility standard for public swimming pools.

In general, and for purposes of compliance, the definition of “public accommodations” would apply to buildings and/or facilities that are open to the public and affect commerce. As such, swimming pools in manufactured housing communities that are for the exclusive use of the residents do not generally fit the category of “public accommodations.” If, however, a manufactured housing community pool is open to the public (non-residents), then compliance with the new ADA pool accessibility guidelines would be necessary. To be considered in compliance, existing pools and spas must be modified to meet the new 2010 standards no later than March 12, 2012.

A new technical assistance document, “Accessible Pools — Means of Entry and Exit,” (click here to view) has been added to the ADA’s website and is now available to the public. People interested in finding out more about the ADA can access the ADA Web site by (clicking here or call the toll-free ADA Information Line at 800-514-0301 or 800-514-0383 (TTY).

FEMA Announces New Solicitation for HUD Code Temporary Housing Units

On February 1st, FEMA published the long awaited proposal for HUD Code Manufactured Homes. The notice includes a draft solicitation proposal to be used as a basis for interested bidders to ask any questions prior to the release of the final solicitation on or about February 17, 2012. The deadline for submitting questions is 4:00 p.m. EST, on February 8, 2012.

According to FEMA, “proposals are not requested at this time and shall be submitted in strict compliance with the instructions to be provided in the solicitation. However, prior to the release of the actual solicitation, interested parties may contact FEMA regarding their interest and capability to respond to the requirement. “

MHI member representatives plan to meet with FEMA officials during the Legislative Conference on February 28th to discuss MHI recommendations for disaster response and recovery.

Click here to view the FEMA notice.