Consumer Financing is Job Number One for the Industry

MHARR LogoWith the continuing rapid decline of the HUD Code manufactured housing industry as a direct consequence of the near-total unavailability of purchase-money financing for consumers, through either public or private sources, job number one for the industry must be to ensure the implementation — as quickly as possible – of laws already on the books that offer new and expanded sources of consumer financing.

Consequences of the financing implosion for both the industry and consumers of affordable, non-subsidized housing have been devastating and are only getting worse. The nearly 90% decline in industry production in recent years, to an historic low of 49,683 homes in 2009, represents a catastrophic loss of affordable housing opportunities for lower and moderate-income Americans. The impact on the industry has been no less catastrophic, with the closure of nearly 300 manufacturing facilities over the same period (from over 480 to now over 130) and the resulting loss of hundreds of thousands of jobs across the United States as HUD Code manufacturers, retailers, communities, suppliers, transporters, installers, and other related businesses are either forced to close or dramatically cut-back. In the meantime, retailers report that they have customers who are ready and anxious to buy manufactured homes, but cannot obtain financing to do so.

Because of this unprecedented, unrelenting and accelerating decline, it is critical that significant, real-world progress be made in restoring and expanding the availability of both private and public sources of consumer financing for manufactured homes. Quite simply, time is of the essence for the industry and its consumers.

Toward this end, MHARR, while simultaneously battling limited resources resulting from dramatically reduced industry production, has continued to accelerate and intensify its activities in Congress and with relevant federal agencies and Administration officials in an all-out effort to break the logjam that has been delaying the financing relief that the industry and American consumers urgently need – relief that Congress approved and mandated nearly two years ago in the Housing and Economic Recovery Act of 2008 (HERA).

In a face-to-face meeting with the senior leadership of the Federal Housing Finance Agency (FHFA), the agency responsible for the federal conservatorship of the two Government Sponsored Enterprises (GSEs) — Fannie Mae and Freddie Mac — and charged with developing regulations to implement the HERA-based “duty to serve underserved markets” (DTS) for private consumer financing, MHARR stressed, once again, the importance of expediting the implementation of this reform, this year, as directed by Congress.

Although FHFA could not commit to a specific date for publication of a proposed rule to implement DTS (following the Agency’s June 2009 publication of an Advance Notice of Proposed Rulemaking on DTS and receipt of public comments), the Agency made it clear that work on DTS was ongoing and that action could be expected after the issuance of new 2010-201 1 affordable housing goals for the GSEs, pursuant to a proposed rule published in the Federal Register on February 26,2010. This is consistent with a February 17, 201 0 FHFA news release, which states that FHFA “intends to issue two related proposed rules in the near future — the FHL Banks’ Affordable Housing Goals Rule and the Enterprises Duty to Serve Rule.”

Just as important, the publication of the proposed DTS rule will occur notwithstanding a stringent new FHFA policy – communicated to Congress on February 2, 2010 which instructs the GSEs not to submit any “new products” for approval by FHFA, because “permitting the Enterprises to engage in new products” would be ”inconsistent with the goals of [the FHFA] conservatorship.” While the DTS rule will thus move forward notwithstanding this policy, the clear indication from FHFA is that a final DTS rule – barring other action by Congress — will have to “balance” Congress’ mandate to the GSEs to better serve the HUD Code manufactured housing market with the conservatorship status of the GSEs, their continuing losses, their large volume of seriously delinquent loans and their current reliance on tax revenues to continue operation.

With regard to speculation within the industry that Fannie Mae could self-insure manufactured housing loans under the MH Select program with down-payments lower than twenty percent, FHFA indicated that it was not aware of any such proposal or request, but expressed doubt that Fannie Mae, consistent with its Charter, could securitize obligations with loan-to-value ratios in excess of 80-20, without third-party insurance. FHFA’s February 2, 2010 policy letter barring any new GSE products would also appear to rule out this and other new initiatives by and through the GSEs, such as the securitization of Federal Housing Administration (FHA) Title I loans, unless such steps could somehow be brought within the scope of the upcoming DTS rule.

This makes it all the more important that HUD issue a final rule implementing HERA-based improvements to the FHA Title I program, so that the current Ginnie Mae moratorium on the securitization of new FHA loans can finally be lifted. The publication of this rule, however, has been – and continues to be – delayed, while HUD manufactured housing program regulators work overtime to saddle the industry and its consumers with new regulations and changes to existing practices and procedures that will only make matters worse by increasing the purchase cost of manufactured housing. So, with consumers already unable to obtain financing, HUD’s answer is to increase the cost burdens placed on the industry and consumers, while it takes its own good time to move forward with financing relief that is urgently needed to help the lower and moderate-income consumers served by the manufactured housing industry.

MHARR, again, has sought — and continues to press for – proper leadership at HUD, in part through the appointment of a non-career program Administrator, to re-focus the priorities of the federal program, elevate the program’s profile to housing and spur genuine progress on both production &, Title VI) and consumer financing &, final rules for both FHA programs). These efforts have reached out both to Congress and to senior officials at HUD, and it is imperative that industry members support such MHARR efforts in the nation’s capital.

In MHARR’s view, a sea-change in the focus and approach of the industry is needed in order to make the financing improvements mandated by Congress a reality in sufficient time to help the industry and its consumers.

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

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