MHARR Comments on Grossly Inadequate DTS Rule

MHARR logoAttached, for you information, review and use, are MHARR’s comments in response to the proposed Duty to Serve Underserved Markets (DTS) rule published by the Federal Housing Finance Agency (FHFA) – the regulatory agency for Fannie Mae and Freddie Mac — on June 7, 2010.

As promised earlier, MHARR has prepared and filed these comments — detailing the gross weaknesses and inadequacies of the proposed rule — as early in the comment period as possible, so that they can be shared and used as a model, basis, or support, as needed, for individual comments filed by industry members. Given the unparalleled importance of restoring and expanding the availability of private purchase-money financing for manufactured housing — to both the industry and its consumers — MHARR urges all industry members to file comments on this extremely important proposal. Comments are due no later than July 22, 2010. The Federal Register notice, available on the FHFA website (, contains specific instructions for both electronic and mail/hand-delivery filing of comments.

In particular, comments are critically needed from retailers, community owners and finance companies that have first-hand experience with the current unavailability of consumer financing for the industry’s homes and the devastating impact this has had for the industry and consumers of affordable housing. FHFA needs to hear from community owners with vacant land-lease spaces they need to fill with homes that are primarily financed as chattel — but are excluded from DTS by the proposed rule. FHFA needs to hear from struggling retailers with willing, qualified buyers who cannot buy because there is no private financing. FHFA needs to hear from finance companies that want to enter the manufactured housing market, but effectively have been barred.

The proposed rule is as bad as it is — essentially tracking the demands, complaints and historical prejudices of Fannie Mae, Freddie Mac and anti-industry special interest groups — because not enough industry grass-roots members commented last year in response to FHFA’s original Advance Notice of Proposed Rulemaking (ANPR), allowing that proceeding to be swamped and dominated by detractors of manufactured housing. The industry simply cannot afford for this failure to be repeated.

The importance of the Duty to Serve, as a mechanism for expanding the availability of private financing for manufactured housing, is only underscored by the industry’s continuing and inexplicable inability to secure the full implementation of a workable FHA Title I public financing program. Notwithstanding a pledge by Ginnie Mae to lift its moratorium in the wake of the issuance of FHA June 1, 2010 Title I Mortgagee Letter, its June 10, 2010 announcement limiting future securitization of manufactured housing loans to those originated by lenders with a minimum adjusted net worth of $10 million plus 10% of outstanding manufactured home mortgage backed securities (MBS), will severely restrict its reach to only a very few companies. This means that the entry of new lenders into the manufactured housing market will be artificially and unnecessarily restricted, leaving consumers, retailers and others with the few limited choices that they have now, with little, if any, expansion of the current availability of FHA Title I loans.

The continuing inability of the industry to advance the implementation of both DTS and FHA Title I in Washington, D.C. (not to mention the Manufactured Housing Improvement Act of 2000) is preventing the industry and its consumers from participating in what should be a robust revival of the affordable housing. With many industry members in the nation’s capital during the week of July 11, 2010, the continuing unavailability of manufactured home financing — and specifically the inadequate implementation of DTS and FHA Title I and the roadblocks being placed in the path of both programs — should be the main focus of industry contacts with both Congress and the Administration.

Congress passed both DTS and FHA reform in the Housing and Economic Recovery Act of 2008 (HERA) to help the industry and its consumers. It is essential that the industry do its utmost to advance the full and timely implementation of these laws in Washington, D.C. in the weeks ahead.

Please let us know if MHARR can be of any further assistance to you on this very important matter.

Danny D. Ghorbani, President
Manufactured Housing Association for Regulatory Reform
1331 Pennsylvania Ave N.W., Suite 508
Washington, D.C. 20004
Phone: 202/783-4087
Fax: 202/783-4075

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