“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

HUD Secretary Carson Addresses Manufactured Housing At Oversight Hearing

HUDSecretaryCarsonandMHARR

JUNE 27, 2018  

TO:                 MHARR MANUFACTURERS

                        MHARR STATE AFFILIATES

                        MHARR TECHNICAL REVIEW GROUP (TRG) 

FROM: MHARR 

RE:  HUD Secretary Carson Addresses Manufactured Housing At Oversight Hearing

The House of Representatives’ Financial Services Committee held an oversight hearing for the U.S. Department of Housing and Urban Development (HUD) on June 27, 2018. The sole witness for this hearing was HUD Secretary Dr. Benjamin Carson.  During the two-hour hearing, a number of questions directly relating to HUD-regulated manufactured housing were raised by Committee members.

Multiple Committee members posed questions focusing on the status of the “top-to-bottom” manufactured housing regulatory review announced by the Department in January 2018.

In responding to those inquiries, Secretary Carson first recognized and acknowledged the importance of manufactured housing as a key source of affordable home ownership in the United States, noting that manufactured housing currently represents roughly 10% of the nation’s housing stock. More importantly, the Secretary specifically acknowledged that the regulatory burdens imposed on manufactured housing in recent years by HUD — detailed by MHARR in its written regulatory review comments and emphasized by MHARR manufacturers and staff in a February 2018 meeting with the Secretary – were “ridiculous” and a “major concern” for him and for the Department under his leadership. Further, the Secretary indicated that the Department’s manufactured housing-specific regulatory review – sought by MHARR throughout 2017 as one of its organizational priorities – could potentially be completed before the end of 2018, noting that completion of that review was a “priority” for him and for HUD, and that he would seek to “expedite” that process.

Another more specific question by a Committee member focused on the baseless restrictions imposed by HUD in 2014 on multi-family manufactured housing that are neither required nor authorized by the National Manufactured Housing Construction and Safety Standards Act of 1974, as amended by the Manufactured Housing Improvement Act of 2000. Pointing out that such a restriction appeared to be “illogical,” the same Committee member also asked whether that issue had been addressed by any commenters in the manufactured housing program regulatory review process.

In response, Secretary Carson noted that the specific issue of multi-family manufactured housing had, in fact, been raised within the program regulatory review process, and agreed that the HUD restriction on multi-family HUD Code homes was indeed, “illogical.” Specifically, the matter of multi-family HUD Code homes was raised by MHARR in its February 20, 2018 program regulatory review written comments. (See, MHARR February 20, 2018 regulatory review comments at p. 11, “HUD Should Adopt Standards for Multi-Family Manufactured Homes”).  After noting that a proposed standard to permit multi-family HUD Code homes had been approved and recommended by the statutory Manufactured Housing Consensus Committee (MHCC), but that HUD had failed to take action on that proposal within the 12-month timeframe mandated by the 2000 reform law, MHARR stated, in its comments: “Given the extremely beneficial impact that affordable, non-subsidized multi-family manufactured homes would have for lower and moderate-income American families, and given the fact that such an amendment to the HUD Code standards would be fully consistent with existing law … HUD should take immediate action to publish the MHCC-recommended provisions to authorize multi-dwelling unit manufactured homes as a proposed rule and to promulgate such a rule on an expedited time-frame.” (Emphasis added).

And, in fact, Secretary Carson, in response to this question, confirmed that this baseless, “illogical” restriction was being reviewed by the program as part of the ongoing regulatory review process, while the Committee member observed that there appeared to be no correlation between safety and multi-family habitation in manufactured homes.

In summary, the Secretary’s testimony with regard to manufactured housing was both positive and encouraging in acknowledging not only the substantive importance of HUD Code housing as a key affordable housing resource (including multi-family manufactured housing), but also the importance and progress of the program’s – and the Department’s – regulatory review processes.

MHARR will continue to interact directly with HUD appointed officials and will carefully monitor and keep you fully apprised of all developments affecting the manufactured housing program going forward.

cc: Other Interested HUD Code Industry Members

MHARR Exclusive Report & Analysis, June 25, 2018

MHARR.MHARR Exclusive Report Analysis, June 25, 2018

REPORT AND ANALYSIS

IN THIS REPORT: JUNE 25, 2018

EXCLUSIVE REPORT & ANALYSIS:

  • SAA/PIA MEETING REFLECTS PROGRAM CHANGES
  • NEW POST-PRODUCTION ASSOCIATION ANNOUNCED
  • MONTGOMERY CONFIRMED AS HUD ASSISTANT SECRETARY
  • MHARR CALLS FOR WITHDRAWAL OF HUD MH “GUIDANCE”
  • HUD MUST NOT REPEAT PAST MISTAKES ON CONTRACT
  • UNRESOLVED DODD-FRANK ISSUE RAISES MORE QUESTIONS
  • REACTIVATION OF ENERGY RULE MAY REQUIRE LEGAL ACTION
  • HUD LEADERSHIP CHANGES REFLECTED IN SAA/PIA MEETING

Leadership changes within the HUD manufactured housing program — spearheaded by MHARR — were clearly reflected at the most recent HUD-PIA-SAA conference held from June 19-20, 2018 in St. Louis, Missouri. In both tone and substance, the meeting represented a distinct and positive break from previous such conferences during the tenure of former manufactured housing program administrator, Pamela Danner. This change reflects positively on the leadership of both Secretary Carson and HUD Deputy Assistant Secretary Dana Wade, who have taken the first essential steps toward the implementation of long-overdue program reforms in accordance with the Manufactured Housing Improvement Act of 2000 and the regulatory reform policies of the Trump Administration.

To start, the meeting — although convened by HUD — was organized and led by participating State Administrative Agencies (SAAs), including the Missouri SAA (as the host organization), the Arizona SAA and the Oregon SAA, and included multiple presentations by SAA (and PIA) participants. The conference, accordingly, unlike almost every other such meeting in the past, focused more on: (1) the legitimate role and activities of the states within the federal-state partnership which lies at the core of the HUD program; and (2) practical, cost-effectivesolutions to substantive issues encountered in the field, and less on the overgrown, over-extended and unnecessarily costly activities of HUD’s pseudo-regulatory contractor surrogates. Indeed, HUD’s installation contractor was not even present at the meeting and the program “monitoring” contractor, while represented, played virtually no role in either the conduct or substance of the conference.

Consistent with this fundamentally different theme – and contrary to the baseless regulatory approach taken by HUD and its “monitoring” contractor for the past decade, which has thwarted the performance-based ingenuity that lies at the heart of the affordability of manufactured housing — the Oregon SAA unveiled a new in-plant monitoring/inspection plan focused on actual production outcomes (i.e., specific consumer impacts) rather than seeking, critiquing and tweaking manufacturer quality control (QC) procedures and related minutiae that are not even addressed by the Part 3280 HUD standards, but have instead been unlawfully elevated as defactoregulatory mandates by HUD and its contractors through pseudo-regulatory “guidance” memoranda, “field guidance” pronouncements and other similar devices. This new program, instead of attempting to micro-manage producers’ quality control programs (and thereby expand contractor earnings), if replicated elsewhere, would return the enforcement focus of the HUD program to where it should be – i.e., consumer outcomes related to significantPart 3280 issues, rather than subjective, vague and undefined “process” issues under the QC-based monitoring platform utilized by HUD’s entrenched “monitoring” contractor. This would not only be consistent with the original design of the program and the federal-state partnership which lies at its core, but would also be in accordance with the specific recommendations of the National Commission on Manufactured Housing, which led to the enactment of the 2000 reform law.

Similarly, this approach would also be consistent with MHARR’s separate call — in comments to HUD pursuant to Trump Administration Executive Orders 13771 and 13777 and in a separate communication to HUD based on U.S. Justice Department policy rulings — for the repeal of allsuch pseudo-regulatory “guidance” which was not subjected to notice and comment rulemaking as required both by the Manufactured Housing Improvement Act of 2000. (See, article below).

At the same time, though, the positive and fundamentally different theme of the St. Louis meeting underscores a significant “disconnect” within the program that MHARR has continually emphasized and which must be addressed and corrected by the Trump Administration (and Congress). This “disconnect” involves the radically unbalanced funding of the HUD “monitoring” contractor – with funding that has increased by 62% since 2011 despite substantially declines in industry production – as compared with HUD payments to state SAAs, which have seen their functions expand over the same time period, but have not received a base funding increase in over a decade.

Given the crucial role of the federal-state partnership that underlies the HUD program, and the accountability and responsibility that states bring to the program – as contrasted with unaccountable, revenue-driven contractors – it is essential that the role of the states, at a minimum, be maintained and strengthened. While HUD has already proposed changes to the outdated and clearly inadequate SAA funding system that currently exists, those changes must be advanced more rapidly and implemented in conjunction with fundamental changes to the monitoring contract process, not only to make that process more competitive, but also to restrict and limit the monitoring function to its legitimate PIA evaluation role as prescribed by Congress in the 2000 reform law.

MHARR, accordingly, will continue to seek the renewal, revitalization and reinvigoration of the role of the states within the HUD program and the vital federal-state partnership that lies at the core of both the functionality and legitimacy of that program. This includes – but is by no means limited to – seeking and advancing continued state participation in the HUD manufactured housing program and ensuring a level of funding that will allow and promote that participation. It also includes demanding a legitimatenew monitoring contract and a legitimate procurement process for the next monitoring contract that ensures full and fair competition as required by federal law.

STATES ANNOUNCE NEW INDEPENDENT POST-PRODUCTION ASSOCIATION

State associations representing manufactured housing communities – Manufactured Housing Communities of Arizona (MHCA) and the Manufactured Housing Community Owners Association (MHCO) of Nevada – both of which had previously withdrawn from the Manufactured Housing Institute (MHI), have announced the formation of a new, independent post-production manufactured housing association, similar to that suggested by MHARR in a 2017 study and analysis (see, November 15, 2017 MHARR News Release – “MHARR Releases Study Recommending Independent Collective Representation for Post-Production Sector”) to function at the national level.

In its initial communication regarding the new group, MHCA states:

“The MHCA had joined a national association in the hopes that we would get … representation and effectiveness at a national level. The national legislation and rulemaking over the last ten years has proven that we do not have that representation. *** The MHCA has taken the first steps in establishing a new organization to lobby on behalf of community owners and associations representing community owners. The new organization is the National Association of Manufactured Housing Community Owners, Inc. (NAMHCO)….”

The MHCA communication concludes by observing that “we have a problem at the national level,” and invites other post-production groups to become “part of the solution” by joining and supporting the new national association.

While this action (at present including only HUD Code communities) – is both positive and encouraging, the industry’s entirepost-production sector (communities, as well as retailers, developers, finance providers, insurers and others) remains in desperate need of an independent, collective, national association and representation to deal effectivelywith national-level issues that are today either not being addressed at all, are not being addressed effectively, or are, in effect, being held captive to the interests of the industry’s largest corporate conglomerates.

At present, HUD Code manufactured housing is nearly alone, as a major industry, in being without an independent, national, collective post-production association, and this crucial “missing link” needs to be decisively corrected as soon as possible if the industry is to advance and expand to its full economic and market potential. While HUD Code production is gradually recovering and improving from its recent modern-day minimum level, and manufactured homes, in 2018, offer superb quality with unprecedented value for consumers, the industry’s post-production sector has, conversely, regressed, with repeated failures in critical areas such as consumer financing, placement, zoning and installation, among others.

These failures suppress and unnecessarily restrict industry growth as untold thousands of consumers are eliminated from the market due to unnecessarily high interest rates on manufactured homes and particularly manufactured home chattel loans (due to the ongoing refusal by Fannie Mae and Freddie Mac to provide market-significant securitization and secondary market support for such loans). To make matters worse, even for consumers who would be able to obtain such financing, the refusal of local communities to permit the development of new manufactured housing communities, or otherwise permit the placement of manufactured homes in vast areas of the United States, needlessly drives potential homebuyers away from the HUD Code market. As a result, while manufactured homes have progressed substantially, once they leave the factory, the industry (and consumers) are ill-prepared, ill-equipped and ill-served in the field.

This dichotomy, between significant successes in the production realm, as contrasted with significant failures in the post-production realm, not only undermines industry growth and needlessly excludes large numbers of consumers from the HUD Code market, but also harms, as one of its primary victims, the state associations on which post-production industry businesses rely so heavily. While most state associations continue to do excellent work under difficult circumstances, they are unfairly handicapped in many instances, by a lack of centralized policy information, formulation, direction and coordination. This effectively leaves state associations either “on their own” to individually seek relevant factual and policy information from other states, or worse, dependent on MHI and its few industry-dominant corporate conglomerates on matters that rightfully should be discussed, debated, formulated and decided on a collective, independent and collaborative basis. In either case, the collective functionality of the state associations and the post-production sector is not what it should be, or needs to be, in order to successfully advance both the post-production sector and the industry as a whole.

This matter, moreover, has been unnecessarily complicated by the involvement of self-promoting individuals and/or entities that not only have difficulty in grasping the magnitude of the ongoing failures of the post-production sector – and the damage thereby inflicted on the industry and consumers – but also continue to press and advance ostensible remedies (publications, conferences, meetings, etc.) that are overly simplistic, unduly parochial, and simply inadequate to address the much larger and significantly more complex problems underlying this crucial issue.

MHARR, therefore, for reasons that it has previously spelled-out in detail, supports the formation of the new, independent communities association. In addition, MHARR also supports and encourages the expansion and further development of this association going forward.

SENATE CONFIRMS MONTGOMERY AS HUD ASSISTANT SECRETARY

The United States Senate, after a lengthy delay, has finally voted to confirm Brian Montgomery as HUD Assistant Secretary for Housing-Federal Housing Commissioner. The Senate vote brings to an end an eight-month confirmation marathon that began when Mr. Montgomery – who served in the same position in the Administration of President George W. Bush – was nominated by President Trump in September 2017.

While MHARR supported Mr. Montgomery’s confirmation, he returns to HUD at a crucial juncturefor the Department generally and for the HUD manufactured housing program in particular. As industry members are aware, the HUD program is at a potentially groundbreaking turning point. Its former administrator, an Obama Administration holdover, has been re-assigned, and the program itself – including all of its regulations and related pseudo-regulatory actions – are undergoing a “top-to-bottom” review, pursuant to Trump Administration regulatory reform Executive Orders 13771 and 13777.

With the federal program at a potentially historic cross-roads, Mr. Montgomery effectively will have a second opportunity to achieve what he did not do previously – i.e., ensure the full and proper implementation of the Manufactured Housing Improvement Act of 2000 in ways that cannot be immediately undone or ignored by rogue regulators. While Mr. Montgomery had an opportunity to permanently “set in stone” the key reforms of the 2000 law during his earlier tenure at HUD, he failed to do so, instead adopting a passive stance while career regulators undermined key reforms, such as section 604(b)(6)’s requirement for MHCC pre-approval and full rulemaking for all “changes” to policies, practices and procedures relating to inspections and monitoring.

The reform processes underway within the program and within HUD more broadly, provide a long-overdue opportunity to finally undo these and other baseless distortions of the 2000 reform law that occurred under prior career administrators, and return the HUD program to the policy path and direction mandated by Congress in the 2000 reform law. MHARR will carefully monitor Mr. Montgomery’s actions to ensure that such reforms are finally cemented in place.

MHARR CALLS FOR WITHDRAWAL OF HUD “GUIDANCE” DOCUMENTS

MHARR, based on recent rulings by the U.S. Justice Department, has reiterated and amplifiedits call for HUD to immediately withdraw any and all manufactured housing program “guidance” documents that were not: (1) presented to the statutory Manufactured Housing Consensus Committee (MHCC) for prior review and recommendations; and (2) published for notice and comment rulemaking in the Federal Register.

In a recent communication, MHARR calls for fullHUD compliance with the procedural requirements and safeguards of the Manufactured Housing Improvement Act of 2000 – requiring prior consensus committee review and notice and full rulemaking for allnew and modified standards, regulations and Interpretive Bulletins, andchanges to HUD policies, practices and procedures affecting inspections and monitoring — following Justice Department rulings issued on November 16, 2017 and January 25, 2018 asserting that U.S. Attorneys may “no longer use noncompliance with guidance documents as a basis for proving violations of applicable law” in civil lawsuits to enforce federal health and safety laws, such as the National Manufactured Housing Construction and Safety Standards Act of 1974 (as amended) and standards promulgated under that law.

In rejecting enforcement actions based on such unpublished “guidance” documents, the Justice Department maintained that it could not and would not use its “enforcement authority to effectively convert agency guidance documents into binding rules” and that such “guidance documents cannot create binding requirements that do not already exist by statute or regulation.”

HUD, by contrast, has resorted to “guidance” and other pseudo-regulatory pronouncements to skirt rulemaking and other requirements of applicable law for decades. This abusive practice finally led Congress, in the Manufactured Housing Act of 2000, to include a new section 604(b)(6), which – on its face – requires prior MHCC review and rulemaking for virtually any change to existing rules, regulations, interpretations, policies, practices and/or procedures relating to any aspect of enforcement, inspections or monitoring. HUD, however, promptly ignoredthis mandate, issuing an Interpretive Rule in 2010 designed to negate this clear and unequivocal mandate and effectively strip it out of the 2000 reform law.

As MHARR’s communication makes clear, however, the recent rulings by the Trump Administration Justice Department demonstrate and establish (as MHARR has consistently maintained) that the HUD 2010 Interpretive Rule is plainly wrong and invalid, and should be withdrawn, and that any and all HUD manufactured housing program “guidance” documents which purport to establish requirements not otherwise found in the law or properly promulgated standards and regulations, and which have not themselves been subjected to prior MHCC review and full rulemaking, are unenforceable and must be withdrawn.

MHARR, consequently, has asked that such “guidance” documents, as well as HUD’s arbitrary and clearly erroneous 2010 “Interpretive Rule,” be withdrawn as part of HUD’s pending regulatory review process pursuant to Trump Administration Executive Orders 13771 and 13777.

MHARR WARNS HUD ON MONITORING CONTRACT

MHARR has again warned HUD against any type of re-solicitation process for the manufactured housing program monitoring “contract” that does not entail — and does not, in fact, produce— full and fair competition for that contract, as required by both the Manufactured Housing Improvement Act of 2000 and federal contracting law, and a new monitoring contractor for the federal program. For the moment, however, the monitoring contract re-solicitation, originally scheduled to begin in December 2017 (before the re-assignment of former manufactured housing program Administrator Pamela Danner) remains on “hold.

In meetings and other communications with the new Trump Administration leadership at HUD, MHARR has stressed that much, if not most, of the dysfunctionality and defactolawlessness of the current HUD manufactured housing program derives from – and is driven by — abuses of the “monitoring” function, which have grown and expanded over the 40-year tenure of the current revenue-driven contractor (particularly during the tenure of the reassigned former program Administrator), to essentially encompass the entire program, while pseudo-governmental powers have unlawfully been delegated to the entrenched incumbent contractor. As has been the case for decades, this unlawful, excessive, unnecessary and unaccountable contractor activity (expanding now into the post-production realm), produces few, if any, benefits for consumers, while needlessly driving-up costs for homebuyers, thus depriving untold thousands of Americans of affordable manufactured homes in violation of the fundamental purpose and objectives of the 2000 reform law.

MHARR reiterated and reasserted allof these points in

written comments recently submitted to HUD in connection with its pending “top-to-bottom” manufactured housing program regulatory review, stressing: (1) that the absurd and indefensible 40-year defactosole-source tenure of the existing “monitoring” contractor must be ended; (2) that there must be full and fair competition for the monitoring contract as required by the Manufactured Housing Improvement Act of 2000 and other applicable law; (3) that the impending RFP for the monitoring contract must be structured to ensure such full and fair competition; and (4) that HUD must award the monitoring contract (or any element of a multi-contract monitoring structure), to “separate and independent” contractors as mandated by the 2000 reform law.

Given the extensive history of abuse – both substantive and procedural – of the program “monitoring” function andthe “monitoring” contract procurement process by both the HUD program and its entrenched contractor, MHARR will closely monitor allactivities relating to the next monitoring contract solicitation and, if HUD violates basic norms and statutory requirements once again to effectively “steer” a new contract to the current entrenched contractor, the Association will have no alternative but to take further action.

MAJOR UNRESOLVED DODD-FRANK ISSUE RAISES NEW QUESTIONS

While Congress has enacted legislation to eliminate certain restrictions in the original Dodd-Frank finance reform law which prohibited manufactured housing retailers from assisting consumers in the home financing process unless qualified and licensed as “loan originators,” that legislation nevertheless leaves intact – and unresolved – Dodd-Frank restrictions on manufactured home consumer loan interest rates and the statutory designation of loans that exceed those rates as “high-cost” loans, thus triggering additional requirements and/or risks for those lenders. Both the enactment of that loan originator language, however, and the corresponding absence of any interest rate relief – after a full decade of supposed full-scale engagement by part of the industry, leave many open and highly-significant questions for the industry and particularly its post-production sector.

On the one hand, the ten-year delay in securing relief for retailers that wish to provide financing assistance to potential homebuyers – and then, only by divorcing that provision from the interest relief amendment that was also included in the version of the Dodd-Frank reform bill passed in the House of Representatives – raises obvious questions as to: (1) whether such relief could have been obtained more quickly with separate relief bills; (2) why separate relief bills (i.e., one bill for loan origination and a separate bill for interest rate/high-cost loan relief) were not attempted, sought, or advanced previously; and ultimately (3) whether loan originator relief was purposely held captive to “high-cost” relief and thus delayed for years needlessly for the benefit of the industry’s largest corporate conglomerates.

Similarly, industry experts are beginning to question whether the industry’s largest lenders and largest producers are serious about the full and robust implementation of the “Duty to Serve Underserved Markets” (DTS). Specifically, what conceivable incentive do those industry-dominant lenders, in particular, have to demand market-significant securitization support by Fannie Mae, Freddie Mac and FHFA for manufactured home chattel loans – which would likely erode already high interest rates and simultaneously draw additional competing lenders into the HUD Code market – when those current dominant lenders can still seek statutory Dodd-Frank relief from Congress to continue making high-cost loans (or charge even higher rates) with no additional liability risk?

All of this, once again, underscores the lack of accountability of the current “umbrella” industry representation to rank-and-file post-production sector businesses, and the corresponding need for a national, independent, post-production association to represent those businesses.

REACTIVATION OF DOE ENERGY RULE MAY NECESSITATE LEGAL ACTION

As reported by MHARR on June 11, 2018, the revival of a previously “inactive” energy rule for manufactured homes by the U.S. Department of Energy (DOE) may trigger legal action by MHARR on behalf of smaller HUD Code industry businesses.

As MHARR previously advised the industry, the baseless, contrived and excessively-costly DOE-proposed manufactured housing “energy” rule, developed as part of an illegitimate “negotiated rulemaking” process — as shown by documents released by DOE to MHARR under the Freedom of Information Act — was designated an “inactive” rule by DOE in the Fall 2017 Federal Semi-Annual Regulatory Agenda (SRA). That proposed rule, however, has now re-appeared in the Spring 2018 SRA, with a notation indicating that a “supplemental” Notice of Proposed Rulemaking (NPRM) is being targeted for publication by DOE by August 2018.

While there is no information yet as to what the “supplemental” NPRM may propose — or alter from the initial NPRM published by the Obama Administration in June 2016 — MHARR (unlike MHI, which voted in favor of the proposed rule as part of the illegitimate “negotiated” rulemaking process) has consistentlyand strongly opposed this proposed rule, which would needlessly explode the retail price of manufactured housing — by $6,000.00, or more, for a double-section home). A retail price increase of this magnitude would not only effectively force hundreds-of-thousands of potential lower and moderate-income HUD Code purchasers out of the manufactured housing market, based on research conducted by the National Association of Home Builders (NAHB), but would also be a major setback for retailers, communities, finance companies and other post-production sector industry businesses that are just beginning to recover from record-low industry production levels just a few years ago – demonstrating, yet again, the urgent need for an independent, national, collective post-production association.

Furthermore, the phony DOE “cost-benefit” analysis for the 2016 proposed rule, purportedly showing “benefits” for consumers remaining in the market, has been totally invalidated by subsequent actions of the Trump Administration, including: (1) its express disavowal and repeal of the Obama Administration’s invalid “Social Cost of Carbon” (SCC) construct (used by DOE to inflate the alleged benefits of the 2016 proposed rule); and (2) its withdrawal of the United States from the “Paris Climate Accord,” which formed part of the policy basis for the DOE proposed rule.

Consequently, unless the forthcoming “supplemental” NPRM substantiallymodifies and/or withdraws objectionable, unnecessary, and unnecessarily-costly elements of the initial DOE proposed rule, MHARR may have no alternative but to consider legal action to enjoin the enforcement of any resulting “final” rule. Prior to any such court action, however, MHARR (and the industry) will have a further opportunity to comment and take other administrative action, as warranted, with respect to the “supplemental” energy NPRM.

In addition to the revival of the DOE energy rule, HUD announced three regulatory actions in the Spring 2018 SRA impacting manufactured housing. First, HUD has withdrawn a pending “Third Set” of amended HUD Code standards, including recommended standards concerning “carbon monoxide detection, stairways, fire safety considerations for attached garages and duplexes.” Presumably, this action was undertaken pursuant to HUD’s current “top-to-bottom” review of all existing and pending standards and will be subject to further consideration and action as determined by that review.

Meanwhile, HUD has reactivated – on a long-term basis — two other manufactured housing rulemaking proceedings that had previously been suspended under the Trump Administration’s January 2017 regulatory freeze order. These are: (1) an “interim final rule” to amend HUD’s formaldehyde emissions standards based on the new formaldehyde standards adopted by the U.S. Environmental Protection Agency (EPA); and (2) a final rule on amendments to the HUD Code’s regulatory exemption for recreational vehicles. Both of these actions are slated for action by April 2019 and will be addressed further by MHARR on an administrative basis as warranted.

Revival Of DOE Energy Rule May Require Legal Action

A-USDepartmentofEnergySupremeCourtManufacturedHousingAssociationForRegulatoryReformMHARR

TO:  MHARR MANUFACTURER
        MHARR STATE AFFILIATES
        MHARR TECHNICAL REVIEW GROUP (TRG) 

FROM:           MHARR
RE:                 REVIVAL OF DOE ENERGY RULE MAY REQUIRE LEGAL ACTION

The revival of a previously “inactive” energy rule for manufactured homes by the U.S. Department of Energy (DOE) may trigger legal action by MHARR on behalf of smaller HUD Code industry businesses.

 As MHARR reported on December 18, 2017, the baseless, contrived and excessively-costly DOE-proposed manufactured housing “energy” rule, developed as part of an illegitimate, so-called “negotiated rulemaking” process — urged by the Manufactured Housing Institute (MHI) and “energy” special interests, as shown by documents released by DOE to MHARR under the Freedom of Information Act — was designated an “inactive” rule by DOE in the Fall 2017 Federal Semi-Annual Regulatory Agenda (SRA). That proposed rule, however, possibly in response to pending litigation filed by the Sierra Club in December 2017 to force DOE to adopt a final manufactured housing rule, has now re-appeared in the Spring 2018 SRA, with a notation indicating that a “supplemental” Notice of Proposed Rulemaking (NPRM) is being targeted for publication by DOE by August 2018. (See copy attached).

While there is no information available at present as to what the “supplemental” NPRM will propose — or may change from the initial NPRM published by the Obama Administration in June 2016 — MHARR (unlike MHI, which voted in favor of the proposed rule as part of the illegitimate “negotiated” rulemaking process) has consistently and strongly opposed this proposed rule, which would needlessly explode the purchase price of manufactured housing (by $6,000.00, or more, for a double-section home) and effectively force hundreds-of-thousands of potential lower and moderate-income HUD Code purchasers out of the manufactured housing market, based on research conducted by the National Association of Home Builders (NAHB).

Moreover, even for consumers who are able to remain in the HUD Code market, the contrived DOE “cost-benefit” assessment for the 2016 proposed rule, purportedly showing “benefits” for such remaining consumers, has been completely decimated by subsequent actions of the Trump Administration, which: (1) disavowed and repealed the Obama Administration’s invalid “Social Cost of Carbon” (SCC) construct, which was used by DOE to inflate the alleged benefits of the 2016 proposed rule; and (2) withdrew the United States from the “Paris Climate Accord,” which formed part of the policy basis for the DOE proposed rule.

Consequently, unless the forthcoming “supplemental” NPRM substantially modifies and/or withdraws objectionable, unnecessary, and unnecessarily-costly elements of the initial DOE proposed rule, MHARR may have no alternative but to consider legal action to enjoin the enforcement of any resulting “final” rule. Prior to any such court action, however, MHARR (and the industry) will have a further opportunity to comment and take other administrative action, as warranted, with respect to the “supplemental” energy NPRM.

MHARR, accordingly, will continue to monitor this matter very closely and will take further and additional steps as it deems appropriate.

In other matters reflected in the Spring 2018 SRA, HUD announced three regulatory actions affecting manufactured housing.

First, HUD has withdrawn – effective April 4, 2018 – a pending “Third Set” of amended HUD Code standards, including recommended standards concerning “carbon monoxide detection, stairways, fire safety considerations for attached garages and duplexes.”  Presumably, this action was undertaken pursuant to HUD’s current “top-to-bottom” review of all existing and pending standards, and will be subject to further consideration and action as determined by that review.

Meanwhile, HUD has reactivated – on a long-term basis — two other manufactured housing rulemaking proceedings that had previously been suspended under the Trump Administration’s January 2017 regulatory freeze order. These are: (1) an “interim final rule” to amend HUD’s formaldehyde emissions standards based on the new formaldehyde standards adopted by the U.S. Environmental Protection Agency (EPA); and (2) a final rule on amendments to the HUD Code’s regulatory exemption for recreational vehicles.

Both of these actions are slated for action by April 2019 and will be addressed further by MHARR on an administrative basis as warranted.

Manufactured Housing Association for Regulatory Reform (MHARR)pdf-images.-2jpg
1331 Pennsylvania Ave N.W., Suite 512
Washington D.C. 20004
Phone: 202/783-4087
Fax: 202/783-4075

MHARR Response to Fannie Mae re: “MH Advantage.”

C-FannieMaeLogoManufacturedHousingAssociationRegulatoryReform

June 5, 2018

VIA FEDERAL EXPRESS

Mr. Jonathan Lawless
Vice President
Fannie Mae
3900 Wisconsin Avenue, N.W.
Washington, D.C. 20016

Re:MH Advantage Initiative

Dear Mr. Lawless:

Thank you for your letter dated June 4, 2018 regarding the impending implementation of Fannie Mae’s “MH Advantage Initiative,” as part of its “Duty to Serve Underserved Markets” (DTS) Plan, as approved by the Federal Housing Finance Agency (FHFA). Naturally, as you request, we will provide these materials to any and all of our MHARR members that may wish to participate. That said, however, the MH Advantage Initiative, both in its underlying concept and premise, is in fundamental conflictwith the DTS mandate – and suffers from other fatal defects – which render it wholly unacceptable to MHARR.

In relevant part, your June 4, 2018 letter states: “MH Advantage homes [will] have design features – developed after consultation with a range of manufacturers – more often associated with site-built homes.” (Emphasis added). The purpose of DTS, however, is not to change the fundamental character of HUD-regulated manufactured housing to be more like site-built homes, or to funnel DTS-based financing to higher-cost homes that are not in the mainstream of affordable HUD Code manufactured housing production. The DTS mandate, rather, as MHARR has noted on multiple occasions, was enacted by Congress as: (1) a congressional finding that Fannie Mae (and Freddie Mac) have not — and still do not — properly serve the manufactured housing market and manufactured housing consumers, despite existing Charter obligations to support homeownership opportunities for very low, low and moderate-income Americans, as well as (2) a remedy for that specific failure.

Two fundamental corollaries necessarily derive from this mandate. First, DTS was not enacted by Congress as an exercise in meaningless tokenism.  DTS, rather, was meant, designed, directed and intended by Congress to materially increaseFannie Mae’s participation in the HUD Code manufactured housing market. Second, and even more importantly, DTS was meant, designed, directed and intended by Congress to materially increase that participation with respect to existing, mainstream types of manufactured homes that are designed to – and do, in fact — provide inherently affordable non-subsidized homeownership for lower and moderate-income Americans, not a new type of significantly more costly HUD Code–site-built hybrid, as your description (i.e., citing “design features … more often associated with site built-homes”) implies.

As the abject failure of the earlier Fannie Mae “MH Select” program should make (and should have made) absolutely clear (resulting, according to available information, in exactly zeroloans), the manufactured housing market is centered upon homes that are inherently affordablefor lower and moderate-income American families that – in many, if not most instances – would not otherwise be able to buy and own a home of their own, nothigher-income purchasers who, as you state, “might otherwise consider only site-built homes.” Indeed, the fact that it has taken ten years to get even this far, after decades of failing to serve the manufactured housing market (as determined by Congress), shows that Fannie Mae has no real intent to comply with DTS as established and designed by Congress.

Instead, prejudice, discrimination and outright bias against those prospective homebuyers – who the GSEs were formed to serve and DTS was specifically enacted to serve and benefit – has been the hallmark of Fannie Mae (and Freddie Mac) policy for decades, leading to the DTS mandate in the first place and now, through the “MH Advantage Initiative,” to a brazen ploy by Fannie Mae to divert DTS away from mainstream, existing manufactured homes and manufactured housing consumers, toward more well-heeled borrowers of a sort that Fannie Mae would prefer to deal with, in defiance of Congress and the law. As such, this program does not constitute a legitimate implementation of DTS as much as a diversion, “bait and switch,” and illegitimate end-run around the consumers and policies that DTS was enacted in order to advance.

This circumvention of the purposes and objectives of DTS, moreover, does not even begin to address other significant competition-based concerns regarding the specifics of the MH Advantage Initiative, including compliance criteria that were developed behind closed doors, in closed proceedings accessible only to select participants (as determined by Fannie Mae); and — according to information available to MHARR, onerous energy requirements that have been advanced by the largest industry manufacturers from both a marketing and regulatory perspective, and specifically favor those manufacturers.  Nor does any of this even begin to address the possible intersection between the MH Advantage Initiative and a secretive “new class” of manufactured homes being advanced by the same large manufacturers – and their trade organization, the Manufactured Housing Institute (MHI) – which supposedly was “well received by Fannie Mae and Freddie Mac.”

The “MH Advantage” Initiative, therefore, is less about implementing DTS for its intended beneficiaries than avoiding the type of market-significant securitization and secondary market support for mainstream, affordable manufactured housing that DTS was designed and intended to produce.  As such, it violates DTS and is wholly unacceptable to MHARR.pdf-images.-2jpg

Sincerely,
Mark Weiss
President and CEO
cc: MHARR Manufacturers
Hon. Ben Carson
Hon. Mick Mulvaneypdf-images.-2jpg
Hon. Melvin Watt
Hon. Mike Crapo
Hon. Sherrod Brown
Hon. Jeb Hensarling
Hon. Maxine Waters

Strong HUD Code Production in April 2018

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Washington, D.C., June 4, 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 April 2018. Just-released statistics indicate that HUD Code manufacturers produced 8,262 homes in April 2018, a 15.0% increase over the 7,184 HUD Code homes produced during April 2017.  Cumulative industry production for 2018 now totals 33,646 homes, a 10.0% increase over the 30,568 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 April 2018 — with cumulative, monthly, current year (2018) and prior year (2017) shipments per category as indicated — are:

StateCumulativeCurrent Month (Apr.. 2018)20182017
Texas74,806 homes1,6216,9315,045
Louisiana29,386 homes4291,7992,227
Florida23,588 homes5602,2401,999
Alabama17,795 homes3612,1042,552
N.C16,518 homes3431,6171,306
Mississippi15,146 homes3201,3771,193
California14,568 homes3161,3531,187
Kentucky13,668 homes220969894
Michigan13,398 homes4061,3811,651
Tennessee11,662 homes2711,060859

The latest information for April 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.

MHARR Continues to Press Fannie Mae And Freddie Mac To Fully Engage on Duty To Serve

FannieMaeFreddieMacManufacturedHousingINdustryDailyBusinessNewsMHProNews

Washington, D.C., May 30, 2018 – The Manufactured Housing Association for Regulatory Reform (MHARR) in written comments filed on May 30, 2018, has called on the Federal Housing Finance Agency (FHFA) — the federal regulator of mortgage giants Fannie Mae and Freddie Mac — to significantly revise and amend the final rule that it issued on December 29, 2016 to implement the Duty to Serve Underserved Markets (DTS) mandate incorporated by Congress in the Housing and Economic Recovery Act of 2008 (HERA) and related FHFA “guidance” for evaluating the Government Sponsored Enterprises’ supposed DTS compliance plans that became effective on January 1, 2018.

MHARR’s comments were submitted to FHFA pursuant to a “Notice of Regulatory Review” published in the Federal Register on April 5, 2018, seeking comments on FHFA regulations that “should be modified, streamlined, expanded, or repealed to make [FHFA’s] regulatory program more effective or less burdensome in achieving its objectives” in accordance with a 2012 Regulatory Review Plan developed under Executive Order 13579 (“Regulation and Independent Regulatory Agencies,” issued July 11, 2011).  (Emphasis added).

Based on this request – and in order to bring both Fannie Mae and Freddie Mac into full compliance with DTS — MHARR’s comments call for substantial amendments to: (1) FHFA’s final DTS implementation rule; (2) FHFA’s DTS plan “Evaluation Guidance;” and (3) Fannie Mae and Freddie Mac’s DTS implementation plans themselves, given the patent failure and inability of these regulatory actions to effectively implement the DTS mandate in a market-significant and timely manner.

In part, MHARR’s comments stress that a supposed “lack of information” regarding the performance of manufactured home chattel loans – which comprise upwards of 80% of the HUD Code market) – more than a decade after the enactment of DTS is both disingenuous and evidence of the type of continuing bias against manufactured housing and manufactured homebuyers at Fannie Mae and Freddie Mac that DTS was meant to remedy in the first place. Further, the comments note that the supposed chattel loan “pilot programs” included in the Enterprises’ DTS “implementation” plans, are little more than token efforts that would serve slightly more than 1% of the manufactured housing market with no assurance whatsoever of expanded secondary market or securitization support for manufactured housing chattel loans at any time in the foreseeable future. As such, the supposed DTS compliance plans – and the final DTS rule and Evaluation Guidance that they are based on – are wholly inadequate to “effectively” implement DTS and must be revised in accordance with FHFA’s 2012 Regulatory Review process.

In Washington, D.C. MHARR President and CEO Mark Weiss stated: “The continuing failure of FHFA, Fannie Mae and Freddie Mac – more than a decade after the enactment of DTS — to take concrete and market-significant steps to increase the availability of chattel loans for lower and moderate-income manufactured homebuyers is inexcusable and in defiance of the law and the will of Congress.  Using the alleged lack of chattel loan “data” as a risible excuse, FHFA, Fannie Mae and Freddie Mac are standing in the way of greater competition in the manufactured housing finance market and lower, more competitive interest rates for consumers that would allow many more Americans to purchase a truly affordable home of their own. Conversely, the failure to implement DTS as written and intended by Congress, will have the negative consequence of driving more consumers into the arms of the current industry-dominant lenders and their higher-cost loans. DTS is far too important to allow it to be emasculated by Fannie Mae and Freddie Mac and their enablers within and outside the industry.”

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.

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MHARR.FHFAREGULATORYREVIEWNEWSRELEASE.pdf

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MHARR.FHFAREGULATORYREVIEWCOMMENTS.pdf

Montgomery Confirmed as HUD Assistant Secretary

BrianMontgomeryHUDMHARRManufacturedHousingAssociationForRegulatoryReform

The nomination of Brian Montgomery to serve as HUD Assistant Secretary for Housing – Federal Housing Commissioner has finally been confirmed by the United States Senate, after an extended delay.

Montgomery, who was initially nominated by President Trump in September 2017, was confirmed by a vote of 74-23 on May 23, 2018, following repeated requests from all segments of the housing industry – including MHARR – for final action on his nomination.

Montgomery, who previously served in the same position in the Administration of President George W. Bush, now becomes the Trump Administration political appointee with direct oversight of – and responsibility for — the HUD manufactured housing program.

With major Trump Administration initiatives currently pending within the federal manufactured housing program – including, but not limited to, the appointment of a new program administrator, completion of the “top-to-bottom” regulatory review announced by HUD in January 2018, and indications that the Department, for the first time, will pursue a legitimate solicitation for the program monitoring contract — a continuation of the positive and effective leadership begun under HUD General Deputy Assistant Secretary Dana Wade, will be essential and will be aggressively pursued by MHARR.

MHARR will continue to keep you apprised on this important matter as further developments unfold.

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
Email: MHARRDG@AOL.COM

“Washington Post Article Underscores Clear Need for An Independent Post-Production Association”

MHARRIssuesandPerspectivesWashPostPostProductionAssociation

A recent article in the Washington Post regarding the HUD manufactured housing program and the reassignment of former program administrator, Pamela Danner, vividly highlights the glaring need for a new, independent, collective, national trade association to more effectively represent the industry’s post-production sector.

While the Post article, published May 2, 2018, was surprisingly objective in describing MHARR’s successful effort to change the leadership of the HUD program following the election of President Trump (noting that the Manufactured Housing Institute, by contrast, “did not weight-in on [Pamela] Danner’s reassignment”), the story concluded with an all-to-typically-negative account of late-2017 post-production enforcement activity by HUD regulators focused on homes sited in a Massachusetts manufactured housing community. That HUD and a Washington Post reporter would focus on a post-production regulatory issue and related post-production enforcement activity, however, is not, in itself, surprising, given HUD’s evolving – and expanding — regulatory emphasis on post-production matters and post production issues.

Indeed, such growing emphasis by HUD and its defactoenforcement contractors (i.e., the Institute for Building Safety and Technology and SEBA Professional Services, L.L.C.) – and others — on post-production issues and post-production targets, is an entirely predictable by-product of the success of the industry’s production sector in two crucial areas, and represents a majorchallenge that the broader industry must now step-up to effectively address and resolve.

The first area in which the success of the production sector is inevitably driving regulatory “mission creep” toward the post-production sector (in the absence of an independent, collective, national post-production association), is the modern industry’s unequalled ability to produce safe, high-quality homes that comply with all applicable federal standards, at an inherently affordable price-point.  Data compiled on behalf of HUD proves this point.  In the July 2015 edition of the “MHARR Viewpoint,” MHARR observed that according to HUD’s federal dispute resolution contractor, of the 123,174 HUD Code manufactured homes placed in 23 federally-administered dispute resolution (DR) “default” states between 2008 and 2014, only 24 homes — or .019% — were referred to federal dispute resolution, a process encompassing, and available to, homeowners, producers and installers.  Of those 24 referrals, only 3 – or .002%— were found to actually qualify for dispute resolution under applicable HUD regulations.  Given those undisputed facts, MHARR pointed out that federal DR referrals “are a direct barometer of compliance with the relevant construction and installation standards, and the responsiveness of regulated parties (including manufacturers, installers and retailers) to homebuyers.”

Second, and closely-related to the production sector’s high-level of compliance with applicable standards and correspondingly high-levels of consumer satisfaction, has been the highly-effective (as illustrated by the Washington Post article itself) national-level representation of independent HUD Code producers by MHARR, with its emphasis – and prime mission, as set forth in its founding charter – on fair and reasonable federal regulation that is fully-compliant with all applicable law. Since MHARR’s founding as a production-sector organization in 1985, therefore, HUD Code manufacturers have had a strong, independent, collective, national voice in Washington, D.C., to advocate on behalf of their interests, to hold federal regulators accountable for their actions, and to seek a regulatory climate which – as required by law – maintains a proper balance between protection and affordability.

As with everything else, though, success within the production realm has been paralleled by challenges in other areas which the industry has failed – and continues to fail — to effectively address, precisely because it lacks an independent, collective, national voice to lead and advocate on those matters on behalf of the industry’s post-production sector. And, as the Washington Post article demonstrates, with just a single example, those challenges will continue to fester and expand, limiting the growth potential of the industry as a whole and the availability of inherently affordable manufactured housing for millions of lower and moderate-income American families, unless and until this underlying issue is properly addressed and resolved.

Put differently, the industry’s success in the production realm has elevated HUD Code manufactured housing to a level of quality comparable to any other type of home and, simultaneously, a level of value that exceedsother types of housing, because of the significantly lower acquisition cost of manufactured homes for consumers. While undeniably positive and beneficial for both consumers and the industry, this evolution of manufactured housing, perse, as a product, has had the correspondingly negative effect of shifting much of the focus and attention of industry adversaries, detractors and regulators to what transpires afterthese outstanding homes leave the factory, with profoundly negative impacts for both the post-production sector and the industry as a whole. These adversaries, detractors and regulators — like flowing water naturally seeking lower ground — have figured-out how to attack and take advantage of the post-production sector as the weak link in the industry’s growth and progress.

Nor are these issues — and their negative impacts — confined strictly to “regulation,” perse. Continuing significant problems in areas such as financing, installation/placement, zoning, and an overall plan of action to advance the industry and its products, just to name a few, are the obvious initial challenges which recent history has shown cannot be effectively addressed and resolved unless and until there is an independent, collective, national association to represent the industry’s post-production sector. Indeed, the post-production sector today is arguably at the same juncture that the industry’s production sector was in the early 1970s, facing a stubborn stigma that led to negative publicity for the industry as a whole (as exemplified by the infamous, early-1970s “60 Minutes” expose) and other similar developments, ultimately leading to the enactment of the 1974 federal manufactured housing law.

Thus, an initial list of tasks to be addressed and resolved by a new independent, collective, national post-production association would necessarily include, but not be limited to:

  • All aspects of manufactured home consumer financing, including secondary market support for — and securitization of — all types of manufactured home loans in market-significant numbers by Fannie Mae, Freddie Mac, the Federal Housing Administration (FHA), the Government National Mortgage Association (GNMA) and all other sources of government-supported or sponsored home loans;
  • Effectively opposing and combatting restrictive zoning ordinances and other baseless restrictions, which have prevented the development of new manufactured housing communities and have otherwise been used to exclude manufactured homes from vast areas of the United States;
  • Ensuring reasonable, cost-effective installation and placement criteria that promote a proper policy balance between regulation and affordability consistent with federal manufactured housing law;
  • Promoting increased community responsibility while simultaneously empowering communities in dealing with federal, state and local governments; and
  • Exploring and developing national advertising and other related national promotional opportunities to advance the growth and prosperity of the industry.

And the list does not end there, as there are manyother areas in which an independent, collective, national post-production association would – and would need– to function, in order to advance the industry, promote full and vigorous competition, encourage new businesses to enter the HUD Code market, and simultaneously protect consumers.

Significantly, this is not, cannot – and mustnotbe – an “academic” debate, for the simple and self-evidentreason that unless and until such an independent, collective, national post-production representation is established (or, more accurately, re-established), the growth and expansion of the industry will continue to be needlessly stifled, notwithstanding an economic environment where the need for affordable, non-subsidized housing and homeownership – as provided by manufactured housing – has never been greater. To be sure, there are today, individuals and organizations which claim to advance the industry’s post-production sector.  But seminars, tours, books and meetings are no substitute for a strong post-production sector advocacy organization.  Instead, decisive action will ultimately be required to help move the industry toward a more prosperous future for allof its members and not just a few corporate conglomerates.

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.