The Federal Housing Finance Agency (FHFA) announced, at the June 2, 2010 Elkhart, Indiana industry finance summit meeting, the release of its long-awaited proposed rule to implement the “duty to serve underserved markets” (DTS) provision of the Housing and Economic Recovery Act of 2008. The unofficial text of the proposed rule, which (as of June 3, 2010) has not yet been published in the Federal Register, is available through a link at the conclusion of the attached June 1, 2010 FHFA News Release announcing this action (see, attachment).
A preliminary MHARR analysis of this unofficial text indicates that the proposed rule contains significant weaknesses that are not offset by its more positive aspects. Most importantly, the “duty to serve,” under the proposed rule, does not include either chattel transactions or land-home packages where the land and the home are subject to separate liens. FHFA attributes the exclusion of these types of transactions to the fact that the purchase of such loans has not been an ongoing business activity of the Government Sponsored Enterprises (GSEs), that substantial new efforts would be required by the GSEs to support such lending, and that such support would be inconsistent with the conservatorship imposed on the GSEs after the enactment of HERA.
DTS, however, was adopted by Congress to remedy the GSEs’ failure to properly serve the manufactured housing market and manufactured housing consumers, and to end discrimination by the GSEs against manufactured home purchasers. As MHARR pointed out at the Elkhart summit when this issue was addressed, and will highlight in its written comments, DTS cannot function as an effective and reasonable remedy for past failures by the GSEs when it excludes the more than 60% of the manufactured housing market that is represented by chattel and other non-real estate transactions. Thus, even though the proposed rule would require both GSEs to submit specific “underserved market plans” to FHFA and to re-evaluate their existing underwriting guidelines, and offers the potential for improved GSE participation in the real estate segment of the manufactured housing market, the proposal does not appear to go nearly far enough to help beleaguered lower and moderate-income consumers in need of affordable home ownership.
Comments in response to the proposed rule will be due 45 days after publication in the Federal Register, MHARR will continue to study the proposed rule and will submit appropriate comments to FHFA on behalf of the industry.
MHARR is a Washington D.C.-based national trade association representing the views and interests of producers of federally-regulated manufactured housing.
PRESENTATION OF THE MANUFACTURED HOUSING ASSOCIATION FOR REGULATORY REFORM
THE MANUFACTURED HOUSING ROUNDTABLE
MANUFACTURED HOUSING PUBLIC AND PRIVATE CONSUMER FINANCING
The Manufactured Housing Association for Regulatory Reform
1331 Pennsylvania Avenue, N.W. Suite 508
Washington, D.C. 20004
Tel. (202) 783-4087
Fax: (202) 783-4075
For more information on this important issue: