Washington Update – MHARR September 19, 2018 – an Exclusive Report and Analysis

Washington Update - A 2 MHARR September 192018 - an Exclusive Report and Analysis

EXCLUSIVE REPORT AND ANALYSIS 

IN THIS REPORT:                                                   SEPTEMBER 19, 2018

  • MHCC DELIVERS STRONG REBUKE TO HUD
  • MHARR COMMENTS FURTHER OPPOSE DOE ENERGY RULE 

MHCC REJECTS HUD ACTION ON MULTIPLE ISSUES

The statutory Manufactured Housing Consensus Committee (MHCC), meeting in Washington, D.C. from September 11-13, 2018, tackled a lengthy agenda of proposed items, including proposals derived from deregulatory comments filed by MHARR (and other stakeholders) pursuant to Trump Administration Executive Orders (EO) 13771 and 13777, concerning a wide range of matters, including the Subpart I regulatory process, multi-unit manufactured homes, so-called “add-ons,” on-site construction and HUD’s proposed “frost-free foundation” Interpretive Bulletin (IB) (allof which were raised and addressed in detailby MHARR in its February 20, 2018 manufactured housing program deregulation comments pursuant to EOs 13771 and 13777), as well as separate comments regarding the U.S. Department of Energy (DOE) Notice of Data Availability (NODA) on proposed manufactured housing energy standards (seealso, article below). HUD’s ultimate disposition of these (and other anticipated) deregulatory recommendations by the MHCC (and other program stakeholders), will be a key test of the implementation of the Trump Administration’s deregulatory policies at HUD, including the strength and persistence of Trump Administration appointees at the agency, as contrasted with the entrenched regulatory bureaucracy at HUD and other federal agencies including, but not limited to, DOE.

  • Subpart I Procedures: The MHCC approved a motion to reduce the frequency of in-plant record reviews in 24 C.F.R. 416(a)(4) from “at least” once per month to once per quarter (MHCC Log Item 153).  Industry members will recall that when Subpart I was amended in 2013, as a consequence of a Petition for Rulemaking filed by MHARR seeking wide-ranging reforms to the overly and unnecessarily-costly Subpart I process, HUD – in the final rule (e., afterthe rulemaking comment period had expired) – surreptitiously inserted language in the rule requiring “at least” monthly IPIA record inspections. MHARR, at the time, and ever since, has strenuously objected to the needless and unduly burdensome “monthly” record inspection mandate — including calls to eliminate that baseless mandate in its June 7, 2017 EO 13771/13777 comments to HUD and its February 20, 2018 comments regarding the specific application of EO 13771/13777 to the HUD manufactured housing program. While mandatory quarterly inspections will still unnecessarily constrain IPIA discretion to conduct fewer inspections for manufacturers with proven compliance records, the change would nevertheless help to reduce regulatory compliance costs from current excessive levels and represents a step in the right direction.

 

  • Energy Regulation: The MHCC took several important steps on energy regulation. First, by a vote of 17-1, following extensive comments by MHARR’s representative at the meeting, the Committee rejected a motion by a former MHCC member and energy special interest participant in the DOE Manufactured Housing Working Group (MHWG) that would have put the MHCC on a path to actively consider DOE’s high-cost June 2016 manufactured housing energy standards proposed rule, even though that proposal has effectively been superseded by the August 3, 2018 DOE NODA. Put differently, that proposal (MHCC Log Item 170), would have done an end-run around DOE’s retreat from the fundamentally tainted and arguably scandalous June 2016 DOE proposed rule, and would have retrenched that proposal, effectively, as a potential HUD standard. In addition, the MHCC (with significant input from MHARR’s representative at the meeting), only days before the September 17, 2018 DOE NODA comment deadline, adopted resolutions strongly expressing its continuing disapproval of DOE’s extremely costly and market-disruptive energy proposals for HUD Code manufactured housing (see, article below for the text of the MHCC’s resolution), and calling, as well: (1) for continuing HUD engagement with the MHCC on this matter; (2) for HUD’s Policy Development and Research (PD&R) office to develop information and data on potential energy regulation cost impacts on manufactured housing within sixty days; and  (3) for DOE (and, effectively, Congress) to re-delegate the entire matterof manufactured home energy performance back to HUD. MHARR, as the onlynational industry organization to continuallyoppose this rulemaking from its inception and at every stage, will continue to make this matter a top Association priority going forward.

 

  • Frost-Free” Interpretive Bulletin and “Field Guidance”:The MHCC also took action on MHARR’s call in its EO 13771 and 13777 deregulation comments (see, February 20, 2018 MHARR comments at pp. 28-30) for the withdrawal of HUD’s proposed “Frost-Free Foundation” Interpretative Bulletin, which would unilaterally and unlawfully change the existing federal manufactured housing installation standards be equating “acceptable engineering practice” — currently permitted by section 3285.312 of the standards — with the requirements of the American Society of Civil Engineers 32-01 reference standard in every instance.  By a unanimous vote, the MHCC recommended that HUD withdrawthe existing proposed IB – the development and publication of which MHARR had strenuously opposed in written comments filed with HUD in 2017 and in direct meetings with HUD Secretary Ben Carson and senior-appointed HUD officials – and that further action on an amended, legitimate IB be referred to the MHCC’s Regulatory Subcommittee. Going forward, in addition to necessary changes to any IB, MHARR will also seek a parallel MHCC resolution for the withdrawal of HUD’s Frost-Free Foundation “Field Guidance” memorandum, which preceded the proposed IB and has not been rescinded.  This Frost-Free “Field Guidance” memorandum was addressed in MHARR’s February 20, 2018 EO 13771/13777 comments, which called for the withdrawal and/or invalidation of multiple “Field Guidance” edicts that were issued by HUD without MHCC review and recommendations as required by the Manufactured Housing Improvement Act of 2000.

 

  • Carports, Garages and “Add-Ons”: The MHCC, in addition, addressed multiple proposals dealing with standards changes and/or the withdrawal of HUD “Field Guidance” memoranda (which were never submitted to or addressed by the MHCC, in violation of the Manufactured Housing Improvement Act of 2000) concerning carport-ready homes and attached garages. In part, the Committee voted to recommend the withdrawal of HUD Field Guidance memoranda requiring Alternate Construction (AC) approval for carports, by effectively classifying carport-ready designs as involving an “add-on.” The Committee also adopted a resolution supporting amendments to various sections of the Procedural and Enforcement Regulations to permit specific “add-on” structures, including garages. Again, eachof these changes have been specifically addressed and advocated by MHARR in both written comments and direct interactions with HUD officials.

 

  • Multi-Family Manufactured Homes: Lastly, in response to a specific proposal (MHCC Log Item 160) addressing, among other things, the definition of the terms “dwelling” and “dwelling unit” within the Part 3280 Manufactured Housing Construction and Safety Standards, HUD confirmed that a previous MHCC proposal to permit “multi-unit” manufactured homes – crafted and approved by the MHCC with the strong support and significant substantive input of MHARR – will be included in upcoming standards revisions currently being developed by HUD.

While, as is demonstrated above, the MHCC made important progress in a number of key areas, and particularly with respect to deregulatory proposals submitted in response to HUD’s manufactured housing program-specific EO 13771/13777 regulatory review, significant portions and aspects of the nearly 250-pages of proposals forwarded to the MHCC by HUD (essentially passing-through deregulatory comments submitted by 157 organizations and individuals) remain to be considered and addressed.  MHARR, therefore, will continue to aggressively seek proper HUD engagement with the MHCC, timely MHCC consideration of deregulatory proposals and participation in the program EO 13771/13777 process, and both timely and proper follow-up by HUD in accordance with both EO 13771/13777 and allapplicable provisions of the 2000 reform law.

MHARR STRONGLY OBJECTS TO NEW DOE ENERGY PROPOSALS

MHARR has filed comments strongly opposing alternative new energy proposals put forward by the U.S. Department of Energy (DOE) in its long-running and irretrievably-tainted manufactured housing energy standards rulemaking.

In written comments filed on September 17, 2018, MHARR, in response to an August 3, 2018 DOE Notice of Data Availability and Request for Information (NODA) regarding a series of “alternative” DOE proposals for manufactured housing energy criteria, objected to the adoption of anyproposed manufactured housing energy standards based on – or derived from data developed during – the fundamentally tainted, illegitimate and fatally-flawed “negotiated rulemaking” process conducted by DOE in 2015 and 2016. That process, as demonstrated by documents obtained by MHARR pursuant to the Freedom of Information Act (FOIA), was structured by DOE and special interest allies as widow-dressing after DOE, by its own admission, “impermissibly” distributed copies of a draft energy rule to many of the same special interest groups.

Noting that manufactured homes, built in accordance with existing HUD standards, alreadyachieve whole-house energy operating costs that are less than – or, in the case of electricity — only slightly higher than those for other types of homes, at a significantly lowerpurchase price that is inherently affordable without the need for costly government subsidies, MHARR stressed that the “alternate” DOE proposals (as well as the June 2016 DOE proposed standards) would either: (1) exclude hundreds-of-thousands (and potentially millions) of households from the manufactured housing market and homeownership altogether, with no possible offsetting benefits; or (2) offer minimal benefits to those not altogether excluded from the market at a significant additional initial cost of as much as $5,000.00 for a double-section home in Climate Zone 3 that would harm home purchasers and negatively impact competition within the manufactured housing market to the extreme detriment of smaller, independent manufactured housing producers.

As the onlynational industry association to continuallyand consistentlyoppose DOE energy standards for manufactured housing – during the “negotiated rulemaking” process (and even before), during the June 2016 DOE rulemaking process (including a direct meeting with the Office of Management and Budget’s Office of Information and Regulatory Affairs (OIRA), which ultimately rejected the DOE proposed rule), and now in response to the 2018 NODA – MHARR successfully pursued MHCC comments opposing both the June 2016 DOE proposed rule, and now the NODA “alternate proposals,” with the MHCC stating in a resolution:

“The MHCC objects to the timing and substance of DOE’s request for information and content of the Proposed Rule. [The] MHCC … sees a need for significant review of work done previously as well as further review of conclusions reached in this Notice of Data Availability. The time allotted for comment in this notice is insufficient for the committee to properly consider all of the questions posed by DOE.  We strongly urge the Secretary of HUD to exercise his option under 42 U.S.C. 17071(a)(2) to seek further and ongoing counsel from the Manufactured Housing Consensus Committee (MHCC) regarding proposed rules published by the Department of Energy (DOE) in the Federal Register Vol.83 No. 150.  In accordance with HUD’s preemptive authority under 42 U.S.C 5403 (g), it is the belief of this committee that the goals of affordable and safe energy efficient housing would be best served by re-delegating this regulatory authority to HUD/MHCC.”

MHARR believes, and has advised DOE, that it essentially has three possible courses in this matter, either – (1) abandon any manufactured housing energy rulemaking; (2) re-start its manufactured housing energy rulemaking process from the beginning, to eliminate any ongoing taint or prejudice from the improper and illegitimate “negotiated rulemaking” process; or (3) face potential litigation if it fails to act in accordance with either of the foregoing courses of action.

As it has been from the outset, possible DOE energy regulation, and aggressive, consistent opposition thereto, is – and will remain – a top regulatory priority for MHARR.   

pdf-images.-2jpgMHARR is a Washington, D.C.-based national trade association representing the views and interests of independent producers of federally-regulated manufactured housing.

The “MHARR Washington Update” is available for re-publication in full or in part (without alteration or substantive modification), without further permission from – and with proper attribution to – MHARR.

MHARR to DOE: Only Three Choices for MH Energy Rule – Abandon, Complete Start-Over, Or Face Legal Action

MHARRtoDOEOnlyThreeChoicesforMHEnergyRuleAbandonCompeleteStartOverFaceLegalActionDailybusinessNewsMHProNews

FOR IMMEDIATE RELEASE                                                                    

Contact: MHARR                                                                                                                            (202) 783-4087

Washington, D.C., September 17, 2018 – The Manufactured Housing Association for Regulatory Reform (MHARR) filed written comments (see, copy attached hereto) on September 17, 2018 responding to an August 3, 2018 Notice of Data Availability and Request for Information (NODA) published by the U.S. Department of Energy (DOE) in connection with a rulemaking to establish proposed “energy” standards for manufactured homes that are otherwise regulated by the U.S. Department of Housing and Urban Development (HUD). In its comments, MHARR commends DOE for re-examining and re-evaluating the substance, framework and approach of its earlier June 2016 proposed rule for manufactured housing energy standards, but points out that the “negotiated rulemaking” proceeding which led to the 2016 proposed rule – which was rejectedby the Office of Management and Budget’s Office of Information and Regulatory Affairs (OIRA) – and still forms at least part of the underpinning for the 2018 NODA, was so fundamentally tainted and fatally defective, that no legitimate rule and no legitimate standard can everbe salvaged from that process.

Accordingly, MHARR’s comments tell DOE that it effectively has only three choices in this matter: (1) abandon the subject of manufactured housing energy regulation altogether; (2) re-start the manufactured housing energy standards rulemaking process completelyand in full cooperationwith HUD, so as to eliminate any lingering taint, bias, or prejudice from the illegitimate and arguably scandalous “negotiated rulemaking” process, as well as the impacts and effects of underlying policies that have since been rejectedby the Trump Administration, including the so-called “Paris Climate Accord” and the Obama Administration’s dubious “Social Cost of Carbon” construct; or (3) face potential legal action if it proceeds with anyenergy standards arising out of, or derived from the illegitimate and discredited DOE “negotiated rulemaking” process.

Indeed, DOE’s sham “negotiated rulemaking” process – contrived by DOE behind closed doors with energy special interests and some within the industry itself (as shown by documents disclosed pursuant to MHARR Freedom of Information Act requests) after MHARR had successfully resisted prior DOE rulemaking activity – should never have gone forward in the first place and cannot now be somehow legitimized, after the fact, by DOE’s “alternative” proposals, which themselves continue to be based on data, information and presumptions developed during the course of that “negotiated rulemaking” process.

Moreover, as MHARR’s comments show, even the modified “alternate approaches” formulated by DOE, would still unnecessarily add thousands of dollars to the purchase price of manufactured homes in many areas of the country, and thereby exclude hundreds-of-thousands or even millions of moderate and lower-income American households from the ability to purchase a manufactured home, or to be homeowners at all – with all of the attendant economic and social benefits of homeownership — as manufactured homes are, have been, and remain, the nation’s most energy-efficient affordable source of non-subsidized homeownership, as determined by HUD itself.  For those Americans excluded from the housing market altogether, the proposed DOE energy standards would have absolutely no benefit whatsoever.  Meanwhile, for those not totally excluded from the market, the DOE standards would have little or no actual benefit, as U.S. Census Bureau data shows that manufactured homes, on a whole-house basis, already are more affordable than other types of homes in terms of energy operating costs for fuel oil and natural gas, and only slightly more costly than site-built homes in terms of energy operating costs for electricity – at an average of only $14.00 more per month.

In Washington, D.C., MHARR President and CEO Mark Weiss stated: “Despite the willingness of the Trump Administration DOE to re-consider and re-examine the substance, framework and approach of the completely illegitimate and indefensible proposed manufactured housing energy rule published by the Department in June 2016, there is, quite simply, absolutely no energy standards formulation for manufactured housing that can rest – or be premised upon – any aspectof that prior rulemaking activity, which, among many other fatal defects, failed to pass the OIRA review process.  There is, very simply, no way to revive, legitimize or bootstrap the fundamentally and fatally-defective DOE “negotiated rulemaking” in this matter. The only way to proceed without litigation, is to undertake a completely new and proper rulemaking, or, more soundly, return this entire matter to – and/or fully cooperatewith – HUD, where it should be in any event.”

The Manufactured Housing Association for Regulatory Reform is a Washington, D.C.-based national trade association representing the views and interests of independent producers of federally-regulated manufactured housing.pdf-images.-2jpg

Double-Digit HUD Code Production Growth in July 2018

DOUBLE-DIGIT HUD CODE PRODUCTION GROWTH IN JULY 2018 -manufacturedregulatoryReform-Org

Washington, D.C., September 10, 2018 – The Manufactured Housing Association for Regulatory Reform (MHARR) reports that according to official statistics compiled on behalf of the U.S. Department of Housing and Urban Development (HUD), year-over-year manufactured housing industry production growth continued in July 2018. Just-released statistics indicate that HUD Code manufacturers produced 6,781 homes in July 2018, a 16.8% increase over the 5,803 HUD Code homes produced during July 2017. Cumulative industry production for 2018 now totals 57,531 homes, a 10% increase over the 52,305 HUD Code homes produced over the same period in 2017.

A further analysis of the official industry statistics shows that the top ten shipment states from the beginning of the industry production rebound in August 2011 through July 2018  — with cumulative, monthly, current year (2018) and prior year (2017) shipments per category as indicated — are:

StateCumulativeCurrent Month (Feb. 2018)20182017
Texas79,216 homes1,26611,3418,897
Louisiana30,535 homes3402,9483,509
Florida25,429 homes5334,0813,404
Alabama18,869 homes2843,1783,515
N.C17,611 homes2882,7102,283
Mississippi16,022 homes2282,2532,073
California15,511 homes2692,2962,112
Kentucky14,355 homes2401,6561,909
Michigan14,293 homes2902,2762,790
Tennessee12,322 homes1951,7201,490

The latest information for July 2018 results in no changes to the cumulative top ten list.

The Manufactured Housing Association for Regulatory Reform is a Washington, D.C.-based national trade association representing the views and interests of independent producers of federally-regulated manufactured housing.

“Another Missed Post-Production Opportunity?”

MHARR.SEPTEMBER2018ISSUESANDPERSPECTIVES

MHARR Issues and Perspectives
By Mark Weiss
September 2018  

HUD Secretary, Dr. Ben Carson, as the saying goes, “gets it.” First, and most fundamentally, he understands – and has very plainly stated — that to successfully address and ultimately solve the nation’s affordable housing crisis, which has some 21 million American families spending more than one-third of their household income on housing expenses and 11 million of those spending more than halfof their income on housing, it is “vitally important … to develop more affordable housing.” Beyond that, he understands (unlike some of his predecessors at HUD) that “the first and most important source” of that much-needed affordable housing, “will always be private enterprise, whether operating independently, or in cooperation with HUD [or] other government initiatives.”  And, perhaps most significant of all, he appears to understand what mustbe done – at HUD– to spur the growth and availability of affordable housing and home ownership from within the private sector and, more specifically, from within the manufactured housing industry that HUD not only comprehensively regulates through its Title VI manufactured housing program, but is also authorized to help finance through programs administered by its Federal Housing Administration (FHA). The question, though, is whether the industry’s post-production sector (i.e., retailers, communities, developers, finance companies, and insurers, among others) “gets it,” and will act to create the type of independent collective representation that will be needed to seize these unparalleled policy opportunities.

In a speech earlier this year to the Policy Advisory Board of the Harvard University Joint Center for Housing Studies, and in a follow-up HUD publication entitled “Regulatory Barriers and Affordable Housing,” Secretary Carson clearly pinpointed the keys to unleashing the enormous potential of the manufactured housing industry to help expand homeownership and fulfill HUD’s essential mission of “ensur[ing] safe, affordable housing for [all] Americans.”

First, Secretary Carson observed that the availability of affordable housing for Americans cannot be achieved “by hindering those who are most responsible for creating it.” He thus emphasized the importance of the current – and ongoing — regulatory review of the HUD manufactured housing program being conducted under Trump Administration Executive Orders 13771 (“Reducing Regulation and Controlling Regulatory Costs”) and 13777 (“Enforcing the Regulatory Reform Agenda”). MHARR, for its part, has strongly supported and encouraged this long-overdue review of HUD regulations and other pseudo-regulatory actions taken in violation of applicable law, and has submitted extensive comments detailing various aspects of the HUD manufactured home regulatory structure that must be changed, not only to achieve the regulatory reform agenda of President Trump, but also to achieve the overriding objective of the Manufactured Housing Improvement Act of 2000 – i.e., “to facilitate the availability of affordable manufactured homes and to increase homeownership for all Americans.”

Significantly, though – and as important as that regulatory review and reform processis– Secretary Carson did not stop there.

Instead, he went on to address two otherkey issues (repeatedly stressed and explained in detail by MHARR to HUD officials and other government decision-makers for years) that have played a crucial role in suppressing the availability of the inherently affordable homeownership sought and needed by moderate and lower-income Americans and provided by America’s manufactured housing industry.  Both of these matters, as emphasized by Secretary Carson — and as previously emphasized by MHARR — need to be confronted and resolvedin order to revitalize and expand the availability of affordable HUD Code manufactured homes in market-significant numbers for the millions of American families in urgent need of affordable housing, and also to comply with the law and policy choices already made by Congress in the 2000 reform law.

These issues – and the corresponding actions needed by HUD to address and resolve them, as stressed and emphasized by Secretary Carson — are: (1) action to eliminate the discriminatory exclusion of manufactured homes and manufactured home communities by local governments; and (2) the need to significantly expand the availability of consumer financing for HUD-regulated manufactured homes through both FHA and the HUD-affiliated Government National Mortgage Association (GNMA) (in addition to the establishment of comprehensive and market-significant HUD Code consumer finance programs by Fannie Mae and Freddie Mac, which currently do not exist).

Regarding the discriminatory exclusion of manufactured homes from many areas and communities around the nation, Dr. Carson stated in his Harvard speech: “We are also [acting] to identify and incentivize the tearing-down of local regulations that serve as impediments to the developing affordable housing stock. Out-of-date building codes, time consuming approval processes, restrictive or exclusionary zoning ordinances, unnecessary fees or taxes, and excessive land development standards can all contribute to higher housing costs and production delays.” (Emphasis added).  Moreover, the direct and significant correlation between the discriminatory exclusion of manufactured homes, inflated housing prices and the economically and socially-detrimental unavailability of affordable housing is explained and addressed in HUD’s “Regulatory Barriers and Affordable Housing” publication, which states, in part: “Evidence supports the contention that zoning and land use regulations increase housing prices. *** Zoning that excludes manufactured housing … contributes to affordability challenges, because manufactured housing potentially offers a more affordable alternative to traditionally-built housing without compromising building safety and quality.”

It is thus evident that both Secretary Carson — and the Trump Administration political leadership at HUD generally — recognize that the discriminatory exclusion of manufactured homes from large swaths of the country by local governments is not only bad for the industry, but bad for Americans, bad for the American economy, bad for the availability of affordable housing and, ultimately, bad for the nation as a whole. The next question, then, is whether, having recognized the unequivocally-detrimental impact of this sort of discriminatory exclusion, Secretary Carson, President Trump, the political leadership at HUD and within the Administration more broadly, is willing to take the next logical step to endthat discrimination – via a tool provided in the 2000 reform law, that is specifically designed for that very purpose.

Specifically, as MHARR has written (see, the December 2015 and January 2016 editions of MHARR Viewpoint, “Combating Discriminatory Exclusion” – Parts One and Two) – and as key congressional proponents of the 2000 reform law noted shortly after the law’s enactment – the enhanced federal preemption of the 2000 reform law provides, and was intendedby Congress, to provide HUD with all the authority it needs to preempt, invalidate and supersede local zoning and land use ordinances that discriminate against HUD Code manufactured housing. Thus, in a November 13, 2003 communication to HUD, those Congressional proponents of the 2000 law stated:

“The 2000 Act expressly provides, for the first time, for preemption [to] be ‘broadly and liberally construed’ to ensure that local ‘requirements’ do not affect ‘federal superintendence of the manufactured housing industry.’  Combined with the expansion of the findings and purposes of the Act to include for the first time {facilitating the ‘availability of affordable manufactured homes’ … these … changes give HUD the legal authority to preempt local requirements or restrictions which discriminate against the siting of manufactured homes … simply because they are HUD Code homes.”

(Emphasis added).

Given that HUD – through its most senior official — has now fully and expressly acknowledged and recognized the extremely debilitating impact of local enactments that discriminatorily exclude HUD-regulated manufactured homes from entire communities, with cumulative impacts that needlessly and unlawfully deprive millions of Americans of affordable housing and homeownership opportunities, HUD should – and indeed, must, make use of the remedy specifically and purposefully provided to it by the 2000 reform law, and adopt a policy that preempts local laws which discriminatorily exclude manufactured homes.

 

Beyond this, in the finance arena, the affordable homeownership provided by manufactured homes is an empty promise for millions of otherwise qualified Americans, without available consumer financing, as Secretary Carson recognized in his Harvard speech, stating: “[O]ne of the best things we can do to help creditworthy borrowers obtain mortgage credit is to provide certainty to the market ….  *** [B]ecause of our fundamental housing mission, FHA mortgage insurance program and Ginnie Mae mortgage-backed security guarantees are large and vital components of the housing finance system, HUD will be an active participant in this critical dialogue.”

Based, in part, on this recognition by the Secretary and the Trump Administration, MHARR, in its recent meeting with Federal Housing Commissioner, Brian Montgomery, called for a revitalization of the FHA Title I manufactured housing program, which usedto be an important source of the chattel financing which supports 80%, or more, of the manufactured housing market, but has fallen to negligible numbers over the past decade due, in large measure, to the GNMA 10-10 rule, which severely and needlessly restricts lender participation in that program (to currently just two lenders which are both subsidiaries of Clayton Homes, Inc. and Berkshire Hathaway, Inc.). In part, MHARR called for a fundamental re-examination of the 10-10 rule and its alleged bases and justifications, to provide an alternative source of market-significantsecuritization support for manufactured home chattel loans in view of the failure of Fannie Mae, Freddie Mac and the Federal Housing Finance Agency (FHFA) to implement the “Duty to Serve Underserved Markets” (DTS) mandate in a way that would provide such support to this vital component of the manufactured housing consumer finance market. And with both a new FHA Commissioner anda new GNMA President appointed by President Trump now in place in their respective positions, there is no time like the present to push hardfor changes to revitalize the Title I program in particular.

History shows, however, that neither HUD nor any other component of government will simply “give” the industry what it wants – and what would ultimately be beneficial for millions of mostly moderate and lower-income Americans.  Instead, the industry needs to fightaggressively for the government policies and actions that are essential to its growth and expansion, and to the fulfillment of the fundamental objective of established law – to “facilitate the availability of affordable manufactured housing” for allAmericans. And, while the public record, as demonstrated above, strongly suggests that aggressiveindustry advocacy, right now, could have a significant impact in changing a decade of failed and damaging policies, a fundamental and, indeed, necessary component of that advocacy – a collective national voice and representation for the industry’s post-production sector – where these specific problems exist and cause the most damage, is currently absent.

As MHARR has emphasized before, conducting meetings, conferences, seminars and other similar gabfests will not change government policies in Washington, D.C. – especially ones that have been in place for years or even decades (like the under-utilization of federal preemption authority to clear away discriminatory exclusion enactments).  What is needed is strong, focused, aggressive, collective and most-importantly, independentadvocacy on behalf of the thousands of smaller businesses that constitute the core of the industry’s post-production sector, whose interests todayare, more often than not, sacrificed to the industry’s largest corporate conglomerates.

The opportunity for real change and for real growth in both the near and long-term, clearly exists. The question is whether that opportunity will be seized and maximized where it counts the most.

pdf-images.-2jpgMark WeissMHARR is a Washington, D.C.-based national trade association representing the views and interests of independent producers of federally-regulated manufactured housing.
 

“MHARR-Issues and Perspectives” is available for re-publication in full (i.e., without alteration or substantive modification) without further permission and with proper attribution to MHARR.

DOE Issues MH Energy Rule Request for Information

DOEIssuesMHEnergyRUleRequestForInformationDailyBusinessNewsMHProNews-1000

AUGUST 6, 2018  

TO:                 MHARR MANUFACTURERS

                        MHARR STATE AFFILIATES

                        MHARR TECHNICAL REVIEW GROUP (TRG)

The U.S. Department of Energy (DOE) has published a “Notice of Data Availability and Request for Information” (“Notice”) regarding its previously dormant manufactured housing energy conservation standards rulemaking in the August 3, 2018 edition of the Federal Register (see copy attached).

The DOE Notice seeks information and comments on possible alternatives to the horrific proposed manufactured housing energy rule previously published by DOE on June 17, 2016. To refresh your recollection, this rulemaking was initiated in response to language contained in the Energy Independence and Security Act of 2007 (EISA) which purported to shift responsibility for manufactured housing energy standards from HUD to DOE.  This directive – which lacks any substantive basis and is totally unnecessary – as demonstrated by Census Bureau data showing that manufactured housing energy costs are either lower than, or comparable to those of other types of homes, has consistently been opposed by MHARR, which was successful in stopping the imposition of such damaging and discriminatory standards at least three times over the past decade.  

Each time, though, the rulemaking proceeding was revived with the assistance and cooperation of some in the industry. The most recent DOE activity, the January 2017 proposed  rule, was the product of a fundamentally tainted and arguably scandalous “negotiated rulemaking” which MHARR vehemently opposed, and was ultimately rejected by the Office of Management and Budget’s Office of Information and Regulatory Affairs (OIRA) in late 2016.  That proposal was subsequently withdrawn by the Trump Administration on January 31, 2017, after MHARRcast the only “no” vote against the proposed rule within the DOE Manufactured Housing Energy Standards Work Group and emphatically opposed the proposed rule in written comments to DOE and direct meetings with senior DOE and OIRA officials. 

Unfortunately, after declaring the manufactured housing energy rulemaking “inactive” in the Fall 2017 Federal Semi-Annual Regulatory Agenda (SRA), DOE — apparently pressured by litigation filed in late December 2017 in Federal District Court in Washington, D.C. by the special interest Sierra Club – has now revived this manufactured housing rulemaking proceeding once again. 

While the Notice offers certain clues as to the possible direction that DOE may be pursuing, it will require extremely thorough study and an extremely strong response to prevent the imposition of debilitating and discriminatory energy standards on federally-regulated manufactured homes that could potentially exclude millions of moderate and lower-income Americans from the HUD Code manufactured housing market and the only type of non-subsidized home ownership that they can afford.

MHARR will carefully examine the DOE Notice and will respond in a strong and thorough manner consistent with its previous activity on this rulemaking.  By copy of this package, MHARR is urging others in the industry to further oppose any such rule.  MHARR will prepare and submit written comments on this matter soon, and will make those comments available to all HUD Code industry members.pdf-images.-2jpg

HUD Code Production Growth Continues In June 2018

MHARR NEWS ITEM -- HUD CODE PRODUCTION GROWTH CONTINUES IN JUNE 201-A8

Washington, D.C., August 6, 2018The Manufactured Housing Association for Regulatory Reform (MHARR) reports that according to official statistics compiled on behalf of the U.S. Department of Housing and Urban Development (HUD), year-over-year manufactured housing industry production growth was sustained in June 2018. Just-released statistics indicate that HUD Code manufacturers produced 8,258 homes in June 2018, a 1.3% increase over the 8,152 HUD Code homes produced during June 2017. Cumulative industry production for 2018 now totals 50,897 homes, a 9.4% increase over the 46,502 HUD Code homes produced over the same period in 2017.

A further analysis of the official industry statistics shows that the top ten shipment states from the beginning of the industry production rebound in August 2011 through June 2018 — with cumulative, monthly, current year (2018) and prior year (2017) shipments per category as indicated — are:

StateCumulativeCurrent Month (Feb. 2018)20182017
Texas77,950 homes1,56510,0757,911
Louisiana30,195 homes3892,6083,214
Florida24,896 homes6483,5483,043
Alabama18,585 homes3422,8943,295
N.C17,323 homes4042,4222,022
Mississippi15,794 homes3212,0251,847
California15,242 homes3262,0271,839
Kentucky14,115 homes2101,4161,722
Michigan14,003 homes2841,9862,460
Tennessee12,127 homes2321,5251,287

The latest information for June 2018 results in no changes to the cumulative top ten list.

The Manufactured Housing Association for Regulatory Reform is a Washington, D.C.-based national trade association representing the views and interests of independent producers of federally-regulated manufactured housing.

HUD Publishes Notice of Impending MHCC Meeting

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As was referenced in MHARR’s July 26, 2018 memorandum concerning its recent meeting with HUD Assistant Secretary-Federal Housing Commissioner, Brian Montgomery, HUD has now published formal notice of an upcoming meeting of the Manufactured Housing Consensus Committee (MHCC) in the July 31, 2018 edition of the Federal Register (see, copy attached).

The meeting, scheduled to be held from September 11 through September 13, 2018 in Washington, D.C., will be the first meeting of the MHCC – of any kind – in more than a year-and-a-half, with the last telephone conference meeting of the MHCC having been held in December 2016 and the last in-person MHCC meeting having been conducted in October 2016.

Significantly, notwithstanding indications (and assurances) at MHARR’s July 25, 2018 meeting with Commissioner Montgomery that aspects of HUD’s “top-to-bottom” regulatory reform process for the federal manufactured housing program pursuant to Trump Administration Executive Orders (EO) 13771 and 13777 would be presented to – and considered by – the MHCC at this meeting, the bare-bones meeting agenda contained in the Federal Register announcement gives no specific indication of any such activity.  Instead, the “tentative agenda” included in the meeting notice refers to a continuing “Review of Current Log and Action Items,” even though the last “log” of proposed code changes posted at the federal program website – dated April 2018 – indicates that the MHCC (with just one exception) has already taken “final action” on all pending log items and submitted corresponding recommendations for action by HUD.

That said, it remains to be seen: (1) what – if any – presentation or review of proposed regulatory reform actions will be brought to the MHCC for consideration at this meeting; and/or (2) what other new proposals or action items may be brought to the Committee – if any – for consideration at this meeting, given HUD’s failure, to date, to publish or make those materials available to program stakeholders for review priorto the MHCC meeting and possible input or comment to the MHCC, at the meeting, regarding their specific content.  Therefore, while further HUD action on this point is certainly possible prior to the September meeting, it remains to be seen whether such action – if any — will provide either the Committee and/or program stakeholders with sufficient time and information to fully and completely evaluate any such proposals in advance of the meeting, in order to provide meaningful, substantive input.

Given the past history of the federal program in similar situations, MHARR will closely monitor this matter and will take further steps as necessary to ensure the integrity of the MHCC process, while keeping the industry apprised of further developments as warranted.

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MHARR Meeting with Hud Assistant Secretary Brian Montgomery__

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JULY 26, 2018 

TO:  MHARR MANUFACTURERS
 MHARR STATE AFFILIATES
MHARR TECHNICAL REVIEW GROUP (TRG)
FROM:  MARK WEISS 

RE: MHARR MEETING WITH HUD ASSISTANT SECRETARY BRIAN Montgomery

A delegation of MHARR officials, including MHARR Chairman, James Shea, Jr., MHARR Immediate-Past Chairman, John Bostick, MHARR President Mark Weiss and MHARR Senior Advisor, Danny D. Ghorbani, met on July 25, 2018 with HUD Assistant Secretary–Federal Housing Commissioner, Brian Montgomery, the highest-ranking political appointee with direct oversight of the HUD manufactured housing program, to address issues concerning the both the program and the Federal Housing Administration’s (FHA) Title I manufactured housing loan insurance program. Scheduled shortly after Commissioner Montgomery was confirmed by the U.S. Senate, the meeting represents a continuation of MHARR’s direct interaction with Trump Administration officials at HUD and others agencies concerning both the federal manufactured housing program and federal financing support for affordable manufactured homes, including meetings with HUD Secretary Ben Carson and HUD Deputy Assistant Secretary Dana Wade, and Federal Housing Finance Agency (FHFA) director Melvin Watt, among others.

The main purpose of the meeting with Commissioner Montgomery who, while holding the same position in the Administration of President George W. Bush, was instrumental in establishing the statutory Manufactured Housing Consensus Committee (MHCC) and securing major achievements in the implementation of the Manufactured Housing Improvement Act of 2000, was to address key aspects of the ongoing manufactured housing program review and reform process initiated by President Trump and Secretary Carson, with a view toward putting the federal program back on track, in full compliance with all elements of the 2000 reform law.

Consequently, among other topics, the meeting addressed: (1) the status of the appointed manufactured housing program administrator mandated by the 2000 reform law; (2) the status of the pending “top-to-bottom” manufactured housing program regulatory review pursuant to Trump Administration Executive Orders (EOs) 13771 and 13777; (3) the status of the program monitoring contract, which is slated to expire in August 2018, the urgent need for a fully-competitive contracting process after more than 40 years of defactosole-source monitoring procurements, and the selection of a new program “monitoring” contractor; (4) the necessity of retaining state participation in the HUD program and proper funding for State Administrative Agencies (SAAs); and (5) the restoration of collective industry representation on the MHCC. In addition, the MHARR delegation urged Commissioner Montgomery to consider reforms at the Federal Housing Administration and the Government National Mortgage Association (GNMA), to expand the utilization of the FHA Title I manufactured housing program and the availability of insured manufactured home chattel loans under that program, particularly in light of the highly-restricted implementation of the “Duty to Serve Underserved Markets” with respect to manufactured home chattel loansby FHFA and the Government Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac.

In particular, the MHARR delegation focused on harm to consumers and the industry resulting from unjustified, unwarranted, and/or misdirected HUD regulations (or pseudo-regulations), citing, as an example, HUD’s excessively costly and needlessly burdensome 2016 “on-site” construction rule, which, rather than reducing the cost and increasing the efficiency of on-site work and related approvals, has instead led to a decline in on-site completions and features requiring on-site completion, which has unnecessarily harmed the HUD Code market and unnecessarily denied consumers various on-site features that they seek in HUD Code homes. The MHARR delegation thus urged Assistant Secretary Montgomery to continue with – and aggressively implement and advance – the EO 13771/13777 regulatory reform process within the federal program that was initially spearheaded by Deputy Assistant Secretary Wade. And, in fact, it appears from responses at the meeting, that aspects of the Department’s regulatory reform process will be presented to – and considered by – the MHCC at a meeting currently expected to be held (but not yet formally announced in the Federal Register) on September 11-13, 2018 in Washington, D.C.

The MHARR delegation also addressed the decline – under the former federal program administrator — in the federal-state partnership that lies at the core of the HUD program and its proper operation.  Noting that state SAAs and state Primary Inspection Agencies (PIAs) had been tasked with numerous additional functions by HUD under its change to the “focus” of program inspections and monitoring, from the detection of specific standards violations to a new alleged emphasis on “quality control” and, worst of all, new unwarranted and baseless demands on long-standing and fully-compliant state installation programs – all without any corresponding rulemaking or regulatory process – MHARR pointed out that to date, there has been no corresponding increase in the compensation of such state agencies, leading some to either withdraw from the program or consider withdrawing. This, in turn, increases the power and influence of the entrenched monitoring contractor (and program installation contractor) – which assumes those expanded regulatory roles in “default” states, without the accountability, responsibility and responsiveness of the former state government entities. Meanwhile, a proposal to increase state SAA funding, recommended by the MHCC and published for notice and comment in 2016, needlessly remains in limbo, some two yearsafter-the-fact. The MHARR delegation, accordingly, urged Commissioner Montgomery to address this matter as a priority issue for the program.

In addition, the MHARR delegation encouraged Commissioner Montgomery, as Federal Housing Commissioner, to explore the re-vitalization and expansion of the FHA Title I manufactured housing program which, after being a significant source of consumer financing for HUD Code homes in the past, has declined drastically, to minimal activity levels in recent years.  Such a revitalization and expansion in FHA Title I support for manufactured home financing is particularly crucial in light of the minimal and long-delayed “implementation” of the Duty to Serve Underserved Markets (DTS) by Fannie Mae and Freddie Mac, and their federal regulator, FHFA, and their failure to establish – any time soon – market-significant levels of securitization and secondary market support for manufactured home chattel loans, which comprise upwards of 80% of all manufactured home consumer loans.

In particular, MHARR noted that the “10-10” net worth and reserve rule implemented by the Government National Mortgage Association (Ginne Mae) for FHA Title I financial institutions has severely and unjustifiably limited lender participation in the Title I program to just two approved lenders, both of which are finance subsidiaries of the industry’s largest corporate conglomerate.  As a result, for far too many Americans, the inherently affordable home ownership offered by today’s manufactured homes, is simply not available – contrary to HUD and FHA’s fundamental mission — due to the lack of available, accessible, competitive financing. Consequently, as MHARR stressed, in addition to the reform of its regulatory activities, HUD should also re-examine and reform its financing-related programs for manufactured housing.

MHARR, as it has since the inauguration of President Trump – in all forms of direct and formal interaction with relevant officials — will continue to press the case for HUD Code manufactured housing, for increased governmental support for manufactured home consumer financing, in full accordance with all applicable laws, and for fundamentalregulatory reform within the federal manufactured housing program in full compliance with the 2000 reform law, including proper program leadership in the person of an administrator appointed in accordance with the 2000 reform law.

cc: Other Interested HUD Code Industry Members

“Restoring the Rule of Law To Manufactured Housing Regulation”

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MHARR ISSUES AND PERSPECTIVES
By Mark Weiss
JULY 2018

The rule of law, and the supremacy of law over the arbitrary whims of individuals who happen to wield government power, was a profound concern for the founders who debated and developed the Constitution of the United States. For over two centuries, legal scholars have pointed to the primacy of the “rule of law” in the system of limited government and defined powers established by the Constitution, stating, for example: “The rule of law may be the most significant and influential accomplishment of Western constitutional thinking. The very meaning and structure of our Constitution embody this principle. Nowhere expressed yet evident throughout the Constitution, this bedrock concept is the first principle on which the American legal and political system was built.”

For too long, though, the rule of law, as envisioned by the nation’s founders, has been undermined, ignored, or bypassed by the so-called “Fourth Branch” of government – the permanent, overgrown and largely unaccountable bureaucracy that has ballooned within the federal government, often in concert with overpaid and largely unaccountable government contractors. While this is a major socio-political issue with ramifications that extend far beyond the scope of this column, federally-regulated manufactured housing faces challenges of its own regarding the rule of law, and with a new Administration – with a new regulatory philosophy — now in place, there is no time like the present to clearly address this issue within the unique context of manufactured housing regulation.

In the manufactured housing arena, the most fundamental expression of the primacy of the rule of law is the Manufactured Housing Improvement Act of 2000.  Indeed, the 2000 reform law is a direct outgrowth of – and a direct congressional response to and remedy for – administrative abuses that had piled-up within the federal manufactured housing program over the first quarter-century of its existence. These included, but by no means were limited to: (1) defactorulemaking by “interpretation;” (2) circumventing, evading, or ignoring notice and comment requirements; (3) abuses of the “Interpretive Bulletin” process; (4) closed-door standards development activity; (5) non-consensus standards development; (6) contracting abuses resulting in a non-competitive, defacto“sole-source” program monitoring contract, the same monitoring contractor for the (now) entire40-year-plus history of the program, and the delegation of governmental power to an unaccountable private entity; and (7) activity to subvert the operation and objectivity of the former Manufactured Housing Advisory Council, and a hostof other actions that undermined the basic fairness, reasonableness and, ultimately, legitimacy of the federal manufactured housing program.

Taking cognizance of these (and other) serious program failings, Congress incorporatedmultipleprotections in the 2000 reform law designed to restore and enhancethe program’s compliance with – and adherence to – the rule of law, as reflected in the basic due process norms and substantive protections included in the original 1974 manufactured housing act. In large measure, then, the 2000 reform law is: (1) a reflection of Congress’ concern over program abuses which had – and continue to — unnecessarily limit the use and availability of affordable manufactured housing for millions of Americans and the growth of the industry; as well as (2) a compendium of targeted remedies designed to halt, cure and reverse those abuses.

As a result, the 2000 reform law, among manyother things: (1) established a balanced Manufactured Housing Consensus Committee (MHCC) and consensus process to develop and update consensus standards andprogram enforcement regulations; (2) reiterated and strengthened notice and comment requirements for all standards, regulations and “Interpretive Bulletins;” and (3) made the consensus process andnotice and comment, “mandatory” absent a statutorily-defined “emergency.” Moreover, to make sure that no-one misunderstood the extremely broad scope of the review and approval authority of the MHCC and the other due process protections incorporated in the 2000 reform law, Congress included what is commonly known as a “catchall” provision in the section of the law that establishes the MHCC and defines the scope of its powers.  The specific – and specifically targeted — purpose of that provision, was to ensure that HUD regulators would not fall back on their established practice of bypassing notice and comment rulemaking (and consensus committee review and approval under the new 2000 law) by the simple expedient of calling new (or modified) defactostandards and/or regulations by some other name, whether it be an “interpretation,” “guidance,” a “policy statement,” or some other moniker not mentioned as requiring rulemaking in either the original 1974 law or the federal Administrative Procedure Act (APA).  That “catchall” provision is section 604(b)(6) of the 2000 reform law.

Section 604(b)(6), as MHARR has written and observed many times before, is straightforward and unequivocal. It provides that: “Anystatement of policies, practices, or procedures relating toconstructionand safety standards, regulations, inspections, monitoring, or other enforcement activities that constitutes a statement of general or particular applicability to implement, interpret, or prescribe law or policy by the Secretary is subject to subsection (a) or this subsection. Any change adopted in violation of subsection (a) or this subsection is void.” (Emphasis added). The “subsection (a)” that is referred to, is the part of the 2000 reform law (i.e., section 604(a)) which requires MHCC consideration and approval of new or modified standards and their publication by HUD for notice and comment, among other things. Effectively then, section 604(b)(6) requires the same procedural safeguards mandated by the 2000 reform law for standards and regulations, to be applied with equal force to “any” change to HUD’s policies, practices, or procedures relating to either the standards, the regulations, monitoring, inspections or virtually any other aspect of standards-setting and enforcement in an extremelybroad, inclusive and comprehensive way.

Through this language, Congress sought to ensure the rule of law, rather than administrative fiat, in connection with manufactured housing regulation, in order to preserve the core purposes of the 1974 law as amended – i.e., to ensure the availability and affordability of manufactured housing for all Americans, and to avoid arbitrary, capricious, excessive and/or unnecessary regulation that would undermine or interfere with those objectives.  Or at least, that was the idea.

It did not take long, though, for HUD to start backtracking on section 604(b)(6), with a campaign designed: (1) to first limit its application and scope; (2) to subsequently read it out of the 2000 reform law entirely; and (3) having accomplished that, revert to the type of “sub-regulatory” actions and practices that section 604(b)(6) was designed to stop in the first place.

The first salvo in the war over section 604(b)(6) came in February 2004, in the form of a letter from the MHCC to HUD, asking the Department to confirm the broad scope and applicability of the MHCC’s review authority under section 604. The MHCC stated, in part: “It is the Committee’s opinion that the terms ‘procedural and enforcement regulations’ cited in subsections 604(b)(1) and (2) and ‘procedural or enforcement regulations’ cited in subsection 604(b)(3) refer to ‘any … regulations, inspections, monitoring or other enforcement activities that constitutes a statement of general or particular applicability to implement, interpret, or prescribe law or policy be the Secretary,’ as stipulated in section 604(b)(6), and, as such, must be submitted to the Committee….” (Emphasis added). HUD responded, however, in May 2004, with a five-page tome which drastically curtailed the role and authority of the MHCC. HUD’s opinion letter concluded that section 604(b)(6) – directly contrary to its clear and unequivocal language— rather than constituting a broad “catchall” provision, designed to bring most program activities withinthe scope of the MHCC’s consensus review and recommendation role, was actually designed to limitthe scope of section 604 to an extremely narrow category of HUD “statements on the construction and safety standards and [their] enforcement,” thereby excluding allof the sub-regulatory “interpretations” and other pseudo-regulatory statements and activity that section 604(b)(6), by its plain language, was actually designed and intended to embrace.

Matters, though, only got worse from there. In February 2010, HUD published an “interpretive rule” – without opportunity for notice and comment — which further slashed the scope and applicability of section 604(b)(6), to the point that it waseffectively read out of the law, concluding that section 604(b)(6) applies only to HUD statements and actions that would constitute a “rule” within the meaning of the APA in any event.  This position, however – as MHARR noted at the time and many times since — stands the law on its head and violates a basic rule of statutory construction which prohibits interpretations that would nullify either all – or any part – of an enactment of Congress.  Put differently, since the APA already requires notice and comment for APA “rules,” construing section 604(b)(6) to require notice and comment only for APA rules is redundant and renders section 604(b)(6) – and Congress’ action in adopting that section – meaningless, in violation of settled law concerning statutory interpretation.

The damage had been done, though, and the 2010 interpretive rule, in particular, opened the floodgates for a wave – or, more accurately, flood — of new sub-regulatory and pseudo-regulatory program actions (i.e., at least 14 “guidance” memoranda between 2014 and 2016 alone, not counting “monitoring”-related “guidance”) that imposed new and/or expanded mandates on regulated parties including, most significantly, wholesale changes to the Subpart I-related “monitoring” function, based on a new/modified “focus” that shifted from the detection of specific alleged standards violations, to a broader concentration on “quality control,” at a time when industry production was rapidly declining. This had the effect of maintaining and even increasing contractor work hours and compensation (as previously detailed by MHARR) while resulting in needlessly higher regulatory compliance costs for manufacturers and, ultimately, consumers – not a single part of which was ever considered by the statutory consensus committee or subject to notice and comment rulemaking.

The HUD program, accordingly, has spent much of the past decade operating outside of the rule of law, in direct violation of the clear language of its own authorizing statute, exercising authority it was never granted by Congress, in ways that were never authorized by Congress, while giving short-shrift to the statutory MHCC, all to the detriment of the industry – and particularly its smaller businesses – and the millions of Americans in need of affordable, non-subsidized home ownership.

Just as importantly, through nearly every step of this decade-plus subversion of the 2000 reform law, “deep state” regulators at HUD have been aided and abetted by “institutional” program contractors – i.e., defactosole-source contractors, such as the program monitoring contractor – which constitute a “deep state” of their very own, wielding unlawfully-delegated and largely unaccountable governmental power, together with a built-in incentive to continually expand both the scope and cost of regulation, thereby increasing their own power and influence and, not surprisingly, their contract revenues.  This needless regulatory expansion, in itself, has excluded hundreds-of-thousands of Americans from the benefits of manufactured home ownership, based on studies conducted by the National Association of Home Builders (NAHB), and has unnecessarily slowed and stunted the industry’s recovery from its modern production low in 2009, disproportionately harming smaller industry businesses.  Nor does the industry itself escape part of the blame for this activity, as far too many of its largest corporate conglomerates – and their representatives — have provided protection and “cover” for the HUD statusquoand program “leaders” who have gone to extraordinary lengths to undermine the most important elements of the 2000 reform law.

The change in presidential administrations, however, has opened the door to potential remedies for this fundamentally lawless regulatory activity. In particular, the Trump Administration’s “top-to-bottom” review of HUD’s manufactured housing regulations and “regulatory activities,” under Executive Orders 13771 (“Reducing Regulation and Controlling Regulatory Costs”) and 13777 (“Enforcing the Regulatory Reform Agenda”) provides a viable basis for action to repeal both the 2010 HUD interpretive rule andthe slew of “field guidance” and other sub-regulatory mandates issued by HUD based on the Department’s unlawful construction of section 604(b)(6).  And indeed, MHARR in its February 20, 2018 regulatory review comments to HUD, specifically urged the program to return to the rule of law, through the withdrawal of the 2010 interpretive rule and allof the program’s sub-regulatory mandates issued without MHCC consideration and notice and comment rulemaking.

This effort, moreover, received a major boost when the U.S. Department of Justice notified federal agencies, through memoranda issued on November 16, 2017 and January 25, 2018 that it would no longer enforce administrative “guidance” documents issued without notice and comment rulemaking. In part, the Justice Department stated: “Guidance documents cannot create biding requirements that do not already exist by statute or regulation.  Accordingly … the [Justice] Department may not use its enforcement authority to effectively convert agency guidance documents into binding rules.  Likewise, Department litigators may not use noncompliance with guidance documents as a basis for proving violations of applicable law….”

Based on these memoranda, MHARR filed a separate request with HUD on April 25, 2018, reiterating its call for the withdrawal of the 2010 interpretive rule and all HUD manufactured housing “guidance” documents imposed without notice and comment rulemaking (and/or proper MHCC review), stating: “[A]s is demonstrated by the November 16, 2017 and January 25, 2018 memoranda, the Justice Department would quite properly refuse to enforce any such guidance documents issued without rulemaking and prior MHCC consensus review … in any type of enforcement proceeding sought be HUD, in any event. Accordingly, rather than leaving those unenforceable ‘guidance’ documents on the public record … those ‘guidance’ documents … should be declared null and void in accordance with section 604(b)(6) and formally withdrawn.”

As MHARR has observed, the time has come for HUD to restore the rule of law to the manufactured housing program and to finally obey the 2000 reform law as written.  The pending EO 13771/13777 regulatory review process provides the perfect opportunity for HUD to finally and formally renounce its past lawlessness and withdraw both the 2010 interpretive rule and the invalid sub-regulatory “guidance” documents issued pursuant to that “rule.” The legitimacy of the federal program – and the rule of law – demand no less.

Mark Weiss

MHARR is a Washington, D.C.-based national trade association representing the views and interests of independent producers of federally-regulated manufactured housing.

“MHARR-Issues and Perspectives” is available for re-publication in full (i.e., without alteration or substantive modification) without further permission and with proper attribution to MHARR.

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Industry Production Increases Parallel Strong Trump Economy and Pending Regulatory Review

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Washington, D.C., July 5, 2018The Manufactured Housing Association for Regulatory Reform (MHARR) reports that according to official statistics compiled on behalf of the U.S. Department of Housing and Urban Development (HUD), year-over-year manufactured housing industry production grew again in May 2018. Just-released statistics indicate that HUD Code manufacturers produced 8,846 homes in May 2018, a 12.2% increase over the 7,882 HUD Code homes produced during May 2017.  Cumulative industry production for 2018 now totals 42,492 homes, a 10.5% increase over the 38,450 HUD Code homes produced over the same period in 2017.

A further analysis of the official industry statistics shows that the top ten shipment states from the beginning of the industry production rebound in August 2011 through May 2018 — with cumulative, monthly, current year (2018) and prior year (2017) shipments per category as indicated — are:

StateCumulativeCurrent Month (May. 2018)20182017
Texas76,385 homes1,5798,5106,473
Louisiana29,806 homes4202,2192,703
Florida24,248 homes6602,9002,490
Alabama18,243 homes4482,5522,947
N.C16,919 homes4012,0181,657
Mississippi15,473 homes3271,7041,500
California14,916 homes3481,7011,499
Kentucky13,905 homes2371,2061,463
Michigan13,719 homes3211,7022,071
Tennessee11,895 homes2331,2931,067

The latest information for May 2018 results in no changes to the cumulative top ten list.

The Manufactured Housing Association for Regulatory Reform is a Washington, D.C.-based national trade association representing the views and interests of independent producers of federally-regulated manufactured housing.

Manufactured Housing Association for Regulatory Reform (MHARR)
1331 Pennsylvania Ave N.W., Suite 512
Washington D.C. 20004
Phone: 202/783-4087
Fax: 202/783-4075